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HSBC’s £400m global review that never was

March 9, 2013

Chris Clark HSBCSo, what was all that about? HSBC’s group marketing director Chris Clark calls a review of the “£400m” (actually rather less these days) global account late last year. Well, not exactly a review. More a series of private meetings that happen to take in the incumbent agency’s rivals at Omnicom, IPG and Publicis – just in case they have any bright ideas. No fundamental discussions take place on either strategy or creativity, because none are called for, even from the incumbent JWT.

Sniffing a rat, McCann (IPG) and BBDO (Omnicom) pull out. Late yesterday (a good time to bury news) it trickles out that WPP has, er, retained the account. But there have been a few twists of the kaleidoscope. Most salient is that outsider Saatchi & Saatchi (Publicis) will now handle the small-spending (relatively speaking) retail banking and wealth business across Europe and in Latin America. JWT is still at the epicentre, with the global brand business, but will now share the rest of the account with its WPP sister agency, Grey London.

Is this a classic piece of agency punishment meted out by the client? We still like you, WPP: but you’ve gone a bit flabby. So, just to make sure you’re on your toes, we’ll keep you on tenterhooks for a few months and then award a chunk of business to one of your rivals – to see how hungry they are.

Was it simply an exercise in cheese-paring the fees, as JWT officially likes to see it, on the part of one of the world’s wealthiest institutions?

Or is this Chris Clark desperately trying to justify his job as CMO (in all but name)? A marking time exercise, while he and his boss, HSBC chief executive Stuart Gulliver, dream up a successor to the faded strap line, The World’s Local Bank?

Because, of course, it isn’t anymore. If you rolled the market capitalisation of Barclays, Lloyds Bank and RBS together, they wouldn’t add up to that of HSBC – which remains by far Britain’s largest bank. But internationally, Gulliver has been busy rolling back the borders, with the divestment of businesses from as far afield as Argentina, Russia and Singapore. The proceeds of which were one contributory reason for the humungous profits the bank was able to declare only last week.

In the recent past, Clark has talked up the need to spend more marketing pounds on the product side (i.e., the separate bank businesses) and less on the corporate brand. One reasonable interpretation of this stance is that banks, in these bonus-bashing times, would do well to get their heads down to providing some basic customer service, as opposed to extravagantly boasting about their global expanse.

Another (they are not mutually exclusive) is that Clark and his colleagues haven’t got a clue what they should do. “In the future” doesn’t quite do it, does it? And in any case, as Clark himself once quipped, it’s more of a start than an end line.

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Neogama loses Bradesco, Omo to Interpublic – and 40% of its revenue

January 30, 2013

alexandre-gamaNot all fairy tales have a happy ending. One such is the marriage of convenience between Brazilian hotshop Neogama, its micro-network affiliate BBH and Publicis Groupe. Readers of this blog will recall that, a little over six months ago, Publicis chief Maurice Lévy bought out the 51% of BBH PG did not already own. A useful by-product of the deal was that he acquired not only BBH’s 34% stake in one of Brazil’s hottest agency properties, but the majority shareholding of its founder and creative supremo, Alexandre Gama, at the same time. Neatly, Lévy solved the creative succession crisis at BBH with the same stroke of his pen – by appointing Gama as BBH’s global creative chief, replacing Sir John Hegarty.

Alas, the deal has worked out somewhat better for Gama than for Lévy and Publicis. Gama managed to bank his cheque, but Neogama has just lost about 40% of its revenue, and two of its principal clients. Or so I hear.

It is common knowledge that one of the reasons Gama was hawking his majority stake in the first place was that he feared his agency was too reliant upon a single account, that of Brazilian bank Bradesco. Indeed, rumours soon began to surface that the bank was about to review. Well, now it has: and placed the account with McCann.

For Interpublic, McCann’s parent, Neogama’s plight is, however, a double joy. Another major – this time multinational – client has also fallen into its lap. I mean Omo (“Dirt is Good”), which has moved to Lowe.

In retrospect, we can see this was an accident waiting to happen. As is well known, PG is a Procter & Gamble agency group, and Omo is owned by Unilever. Under the status quo ante, Neogama had an element of protection from client conflict, in that BBH – itself a major Unilever network – was still majority-owned by its founding partners (i.e., Nigel Bogle and Hegarty). All that ring-fencing was swept away by the Lévy deal.

8027388763_a9feed3b19_zIt will interesting to see who gets the blame for this cock-up. My money is on Jean-Yves Naouri, the once but not future king of Publicis.

One thing you can be sure of: it won’t be the Silver Fox himself, who now seems comfortably ensconced in a permanent chairman role, despite recent protestations that he was – at 70 – on the point of retiring.


Ask not what I can do for my company, ask what my company can do for me

May 13, 2010

Let’s face it, no one ever went into advertising to remain poor: the extravagant severance payments awarded to top executives by compliant remuneration committees in London, Paris and New York are the stuff of legend. But, as RBS’ Fred the Shred discovered, being filthy rich isn’t much fun if you end up a pariah. The context of gain matters.

John Dooner, latterly chief executive of McCann Worldgroup, recently retired from Interpublic Group with a pension of $37.7m. This extraordinarily generous provision was bolstered by payments made during his years as IPG group ceo – a position from which he stepped down in 2003. Had he actually done a good job in either of these roles, no one would have batted an eyelid. As it is, the IPG years were mired in scandal and the normally reliable McCann has been haemorrhaging major accounts. By any standards,  $37.7bn is a handsome reward for failure.

Unlike Dooner, Publicis Groupe chief executive Maurice Lévy deserves well of his company. He has made it a global force to be reckoned with, while Dooner has presided over decline. And he will duly be compensated  – with a financial package worth, perhaps, £30m when he retires. Nevertheless, it is unfortunate that the calculation of this generous severance payment involves factoring in, at the full measure, a phantom bonus payment he never awarded himself last year; in the midst of recession, he had made great play of sacrificing this self-same bonus as a token of socialist “solidarity” with the many staff whom he had had to make redundant or, at least, whose salaries he had slashed.

However, that is no more than a faux pas compared with the predicament John Wren, group ceo of Omnicom, is in. Wren stands accused of profiteering from cheap stock options while, all around him, his agencies withered on the vine and staff were put out on the street to help make corporate ends meet. The accusation comes from a maddened activist shareholder – investment manager David Poppe, of Ruane Cunniff & Goldfarb’s Sequoia Fund, a 1% owner of Omnicom stock. Poppe has sent a circular to other shareholders which alleges that a massive grant of 22 million stock options on March 31 2009, plus another 3.5 million awarded on the last day of 2008, enabled Wren and his senior management team to acquire 8% of the company at bargain basement prices. And there’s more. Poppe reckons it’s part of a pattern of behaviour stretching back a decade. He just stops short of accusing Wren of backdating these options, in order to achieve a favourably low exercise price; which is actually illegal.

The thing about options, of course, is that they are a gamble which can end up being worthless. But Wren, a former accountant, is a wily operator. With the stock market rallying, what was virtually valueless in 2008 has turned into pure gold. The result being that his 2009 annual “compensation”  shot up to $7.9m – compared with $2.9m the year before – according to SEC filings.

Wren should watch out. Fund manager activists have had surprising success in toppling the mighty. Remember David Herro, who was responsible for the nemesis of the Saatchi brothers back in the nineties?


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