Agencies Abuzz Over P&G's Gillette Deal | Adweek
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Agencies Abuzz Over P&G's Gillette Deal

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CHICAGO The Clairol Girl announced her engagement to the Gillette Guy last week, and the ad industry immediately began swooning over the prospects for the future of the world's largest ad dowry, worth an eye-popping $6 billion-plus at least.

Regulatory approval is six to nine months away for the deal, which would give marketing scale a whole new dimension. But Procter & Gamble's proposed $57 billion acquisition of Gillette sparked a swirl of predictions about winners and losers among the three holding companies that dominate the two giants' rosters: Publicis Groupe, Grey Global Group (to be acquired by WPP Group) and Omnicom Group.

"Nothing has been decided" regarding agency assignments, said P&G rep Robyn Schroeder.

There was plenty of buzz nonetheless. One intriguing question involves two Omnicom creative shops, lead Gillette agency BBDO and TBWA, which last year hired a longtime P&G agency veteran from Saatchi & Saatchi. Another focuses on a possible eventual media-agency shakeout between P&G's Publicis and Gillette's WPP media partner, MindShare, with Aegis Group's Carat, added to P&G's U.S. roster last year, as a potential spoiler. (P&G spends $5.5 billion on advertising globally; Gillette's estimated worldwide adspend tops $800 million.)

Under the deal, Gillette CEO Jim Kilts would join P&G's board and stay with the combined company as vice chairman for at least a year. That news raised the level of optimism at BBDO, sources said.

Schroeder said P&G is "happy with [Gillette's] advertising"-particularly its understanding of men's grooming. A Gillette rep said it was "too early to speculate" about marketing changes.

Another Omnicom strength is Tim Love. A top P&G account executive at Saatchi & Saatchi and D'Arcy Masius Benton & Bowles for 15 years, he joined TBWA Worldwide last May as president of global clients, based in Tokyo. Love's noncompete contract stipulation with P&G expired in November. He could not be reached for comment.

Omnicom also has below-the-line connections with P&G through its TargetBase, Integer and Fleishman-Hillard units. Independent Acme Idea Co. in Norwalk, Conn., handles Gillette's Duracell brand.

Until the Grey deal, WPP's only connection to Gillette was through Ogilvy & Mather in India and Latin America.

P&G, whose portfolio includes Tide, Pampers and a host of other famous packaged-goods brands, works with Publicis agencies Saatchi & Saatchi, Leo Burnett, The Kaplan Thaler Group and Publicis, as well as Grey Worldwide.

One source said he expected P&G to take a wait-and-see attitude toward Omnicom and BBDO, similar to the way it is dealing with Grey's entrance into Unilever-connected WPP.

Agency executives generally expected the same thing with media but saw a greater possibility for real change there. P&G was said to already be discussing possible scenarios, including consolidating at its primary media partner, Publicis' Starcom MediaVest Group. But sources noted that with past acquisitions, P&G waited a year or so to make changes in its media-agency mix.

One executive said the addition of Carat shows how P&G prefers to keep its eggs in more than one basket, and predicted the Gillette deal "will probably trigger some sort of media review within a couple of years."

Ultimately, there are likely to be more losers than winners on the marketing side as a result of the deal, said Michael Nathanson, an analyst who covers marketing and the major holding companies for Sanford Bernstein in New York. "Mergers take money out of the [advertising] market," Nathanson said. "I don't think this is great for the ad industry. Companies will be looking for scale on media and agency relationships. New clients create new opportunities. Consolidations create the opposite of that."

P&G expects $1 billion in cost synergies over the first three years of the deal from purchasing, primarily media and materials, manufacturing and logistics, increased scale, coordinated procurement and decreased administration costs, according to a JPMorgan report.

That, along with the combined distribution and marketing clout of the two companies, left analysts in a generally positive mood. If it goes through, the deal "creates an enterprise unmatched in geographic reach and competitive positioning," said a report from Deutsche Bank. The JPMorgan report cautioned, however: "We are skeptical that simply going from $55 billion to $65 billion in revenues really changes all that much."

Still, sources said Gillette's lines of razors, razor blades and deodorants would raise P&G's voice in the marketing of male-skewing brands. P&G's male-targeted business has been limited mostly to its Old Spice line of products.