Magazine article Marketing

News Analysis: Making Peace from Conflict

Magazine article Marketing

News Analysis: Making Peace from Conflict

Article excerpt

Fewer, but bigger, media buying groups mean client conflict is on the rise. But can it be resolved?

The perennial problem of client conflict has been reawakened with the news that Nestle is conducting a global review of its media planning and buying (Marketing, 23 June). Two shortlisted agencies - ZenithOptimedia and MindShare - have major conflict issues, working for Masterfoods and Kellogg respectively. ZenithOptimedia also works for Muller Dairy in the UK.

A spokesman for Nestle says the Swiss firm is happy with arrangements, no doubt because of the power of its pounds 819m account. The two US food firms, however, are less likely to be so content.

Historically, client conflicts have primarily affected creative agencies, with clients suspicious of their tendency to gossip, according to Martin Jones, director of advertising at the AAR. But the issue is now affecting agencies of all disciplines, thanks to the trend toward global relationships and consolidation of the media buying industry.

The major agency networks are in a catch-22 situation. With global brands demanding that agencies deliver equivalent global networks to service their requirements across different markets - and, in the case of media, deliver economies of scale - the networks have consolidated into a few huge groups.

In parallel with this trend, some of the biggest clients have realised it makes sense to pool their requirements into a single global network. This was the thinking behind HSBC's pounds 350m account going to WPP in May and Samsung's dollars 400m (pounds 220) global pitch, currently being contested between WPP and Publicis Groupe.

But fewer global groups mean a reduction in choice for clients, which creates the dilemma of conflicts.

In addition to the HSBC media business, for example, WPP agency MindShare buys Abbey's media in the UK, and American Express globally - its dollars 375m (pounds 206m) media account is handled by MindShare everywhere except in the UK, where it uses Carat.

When it comes to media, WPP director of strategy Mark Read says that clients are benefiting from substantial cost reductions resulting from the global consolidation of buying agencies, but he admits: 'If clients want that scale, they have to be prepared to deal with a certain level of conflict. …

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