Holding Sway

Few press releases manage to catch our attention let alone become the topic of conversation. But one notable exception arrived just last week.

The headline read: “Verizon Appoints New Partnership of Draft Worldwide, N.Y., and Lowe Lintas Partners, N.Y., as Advertising Agency of Record.” Cumbersome yes, but also telling. It was preceded, a few months earlier, by another interesting announcement involving IPG and its agencies. This one read: “Coca-Cola Company Establishes Alliance with Interpublic.”

Since when did holding companies start pitching and winning business? Granted, it’s nothing new for a holding-company CEO to maintain a special relationship with certain clients. Former IPG boss Phil Geier, for example, made no secret of his ties to Unilever and General Motors. WPP chief Martin Sorrell watches closely over Ford, among others. But it’s clear they are becoming more intimately involved.

Some claim it was Omnicom and CEO John Wren that made all the difference in DaimlerChrysler’s $1 billion review.

As more big corporations consolidate and scrutinize all their resources, including their marketing outlays, expect more of this.

Says one agency executive in the Omnicom family, “As companies consolidate and look for efficiencies, holding companies are supposed to come up with business solutions and agencies are supposed to come up with ideas to drive those businesses.” Regarding Chrysler, he adds, “Wren delivered a single solution to Chrysler, and they bought it.”

Similarly, new IPG chief John Dooner, who has 20 years of agency experience, is said to have closed the deal with Verizon on behalf of his various agencies.

At first glance, everyone comes out a winner. Clients get their multiple resources in a more cost-effective way. Agencies get to reap the rewards of their bosses’ efforts, even though some complain it leaves them out of the loop. “It seems like most of the really big decisions are made above me,” gripes one agency CEO. We can debate whether wooing or managing clients is the role of a holding company CEO, but ultimately, that’s between him and his shareholders.

The bigger question, however indelicate, is: What does all this mean for client conflicts?

When Marion Harper created IPG in 1961, the central idea behind the world’s first holding company was simple: house competing agencies and competing accounts under one roof. But doesn’t the growing involvement of holding companies threaten to jeopardize this neat little arrangement?

How does the Sprint client at McCann-Erickson, for instance, feel about Dooner’s involvement in the Verizon win? Or AT&T at True North shop FCB, which is about to come under IPG’s auspices?

And what about the dozen or so car clients at Omnicom? That company’s typically hands-off approach became hands on when its DAS division was credited with the Mercedes win a year or so back. “It’s an interesting dynamic,” says one executive. “And the sword cuts both ways. Operating companies are independent until they are told to work together.”