The Conglomerate Disease

By Michael Willard
Chairman and CEO, Willard

If there is an ad or PR agency that has ever been made better by being acquired by one of the conglomerates, then I think it must exist on some far-flung planet. It certainly doesn't inhabit my universe, which, admittedly - and wonderfully - often lacks hard-candy reality.

While this is my opinion, I believe it is probably the view of the principals and leadership of most of the agencies that have been swallowed by huge companies that are generally called communications conglomerates.
Most, however, have rarely talked.  They cashed in and cashed out. Actually, most founders were mercifully long dead when the deed was done - people such as J. Walter Thompson and John Young of Young & Rubicam. Whether they are rolling over in their graves is purely a matter of speculation. 

Even the advertising lion David Ogilvy, who confessed he was under-employed, had a young third wife to keep and an expensive French chateau to maintain, eventually fell in line and became a spear-carrier for WPP's Sir Martin Sorrell, the conglomerate king.

Ogilvy said he had managed his money poorly, and that he needed the $300,000 salary Sir Martin was paying him to be the face of the agency. As high as that was, it seems today rather paltry for such a stellar brand. Legends should be more expensive.

Basically, this is my view of what happens when another agency is gobbled up: First, the agency's heart is ripped out and stomped on.  The long-instilled company culture becomes homogenized mash.  Decisions are made not on the basis of how it will impact clients, but how it will influence the quarterly report.  It is all rather dreary.

Ogilvy said and wrote that the biggest mistake of his business life was to encourage his partners to take the company public.  This, of course, hastened the day for green eye-shade financial types like Sorrell to instigate a hostile takeover.

I write this being a huge admirer of Ogilvy, probably the greatest light to ever shine in our business. He was more than a pioneer; he was a pathfinder.  I doubt whether an Ogilvy, a Bill Bernbach, a Hal Riney, or a Leo Burnett could be stars today in the conglomerate system.

In the beginning, Ogilvy called Sorrell that "odious little shit", a comment that is sometimes watered-down to "odious little jerk." After the deal was done, Ogilvy had an epiphany and Sorrell was elevated to genius.

I agree with Ogilvy: Sorrell is a genius.  I just don't think he is good for the ad business.

In reality, the conglomerates, in my view, are not ad or PR companies. They are financial companies. They buy, sale, trade and sometimes shut down. I am suspect of the real value they create.

One day, investors will begin to wonder if all this merger fever and high-flying stock really wasn't the equivalent of a scheme that bears some resemblance to one devised by a fellow named Ponzi.

But, for independents, there is good news.

When the smoke has cleared and all the mergers and acquisitions have been completed, we will be down to a couple of mega-agencies. Clients will suddenly and finally begin to wonder why their products are corralled in the same stable with those of their fiercest competitors.

You think not?  Every client I have ever had has been super-sensitive to conflicts, sometimes to an exaggerated degree.

A few years ago, my ad agency began working for a company that made cookies ('biscuits' in Europese). At the same time, we had long represented a giant confectionery company in Ukraine. I told the confectionery's MD that it was not a conflict.

His clear response: "Heck if it's not a conflict.  What if one day your new client decides to put chocolate on top of those cookies?"