McCann WorldGroup is critical to the performance of Interpublic, the world’s fourth largest marketing services group; it provides about one third of its revenues.
Just recently it hasn’t been doing very well, a worrying state of affairs both for IPG shareholders and McCann’s chief executive of about 18 months, Nick Brien.
The fact is, it has not won any major new business under Brien’s stewardship. Worse, it is in deep trouble with two of its core clients, Nestlé and L’Oréal.
Last month, Nestlé expressed the depth of its displeasure by assigning all of McCann’s signature Nescafé business (nearly everything, globally) to rival Publicis Groupe. Reportedly, that’s $25m revenue down the Swanee.
Now comes news that McCann has screwed up its already troubled relationship with beauty house L’Oréal (which, by the way, is about 30% owned by Nestlé).
The Nescafé affair might – might – be written down to bad luck. Clients do move on eventually, even ones like Nestlé that have been with McCann for several decades.
The L’Oréal fiasco (for such it is) can, on the other hand, only be ascribed to McCann’s managerial incompetence. Stay with me, the story’s a bit complicated but bears retailing.
L’Oréal and its Maybelline brand are even bigger business for McCann than Nescafé: together they account for $100m a year IPG revenue, of which 80% comes out of McCann (according to AdWeek).
Historically, the relationship has been somewhat complicated by the fact US creative for Maybelline is handled by another IPG agency, Gotham, although McCann is responsible for adapting and distributing that work throughout the rest of the world.
Thinking, no doubt, that the account could be more efficiently run as a spin-off unit with its own profit and loss account, Brien and his lieutenants have spent the last year, and an enormous amount of money, creating something called Beauty Village.
Beauty Village was set up at the instigation, and with the full collaboration, of Cyril Chapuy – now global brand president of L’Oréal Paris, but formerly in charge of the Maybelline brand.
Client endorsement enough, you would have thought. But apparently not. No one had checked upstairs with the ‘C Suite’ at L’Oréal, with the result that Beauty Village has now had to be razed to the ground, despite all the hullabaloo a couple of months ago attending its launch.
Fairly or not, the buck for this disaster is going to stop with Brien. Already there is innuendo that the former media man has not got the client-handling skills it takes to run an organisation like McCann.
Whether that is actually true I’m not so sure. Media men may be direct rather than placatory by nature, but that has not stopped the likes of Tim Bell and Rick Bendel (formerly COO of Publicis Worldwide, now marketing supremo at Asda) succeeding in more senior roles.
Besides, there may be a silver lining to the cloud now settling over Brien’s head. At first sight the Nestlé and L’Oréal affairs look like unforced errors playing into the hand of Maurice Lévy, head of Publicis Groupe (core clients, both, at Publicis Worldwide). But Lévy has troubles of his own, with the Nestlé relationship at any rate.
For one thing, he has just lost Carter Murray, his key Nestlé point man, to WPP – which poached him as president-CEO of Y&R Advertising North America. Murray managed to raise Nestlé to Publicis’ premier and most profitable client.
For another, Lévy appears to have overplayed his hand by winning the £250m Ferrero European media business last month. Yes, it’s only media and, yes, a small part was already handled by PG media arm Zenith Optimedia. But now that Ferrero has upped the ante, Nestlé is feeling distinctly uncomfortable about sharing a media agency with its most deadly European rival.