Stefano Hatfield on Advertising
There's too much talent at the core for Lowe's network to unravel
Monday 03 April 2006
Steve Gatfield has begun to demonstrate the steadying influence IPG was looking for when it made him worldwide CEO of Lowe, but that is not to say his job will be easy. He already seems to be pushing through some of the much-needed strong medicine needed to rescue a listing ship.
Lowe is to axe some 47 agencies around the world, presumably through sale and closure. It plans to have eight hub agencies in the UK, US, China, India, France, Sweden, Brazil and Thailand. And there are another 28 survivors, both partially and fully-owned. That still leaves 36; still too many to be a micro network like Bartle Bogle Hegarty, Fallon or Wieden & Kennedy, but not large enough to compete head-on with a TBWA or Young & Rubicam. Isn't this a halfway house?
Actually, there is a method to this middle ground. Lowe, because of its network legacy (especially through its Lintas roots), is very strong in some of the faster-growing markets of the world, notably in Asia and Latin America. So it is actually already in some of the markets you can expect those micro networks to expand into.
What's more, as Gatfield explained to me last week, most of these micro networks are essentially Brits and Americans scattered across the globe. The Lowe network is already genuinely multicultural and well placed locally. It sounds good in the telling, especially when you note how the network is just trying to mirror the revised structures of major client organisations, where local country management has ceded power to regional brand management. This is particularly the case in "old Europe", where the restructuring has been severe because of high labour costs.
The question remains: is it the end of the beginning of turnaround or the beginning of the end of the network? For what it is worth, my money's on the former. The network has too much top talent in key places to just unravel. It can have a real point of difference as a genuinely creatively driven network for those clients who care more about such attributes than flag-pins on maps.
* THIS SUBJECT really does come under the header of "boring, but important", so you can choose to skip the next few paragraphs if you like. They are about the TUPE or Transfer of Undertakings (Protection of Employment) regulations, which come into effect on 6 April.
I know some of you have wised up to its significance, because when I asked for enlightenment on the subject last week I got my biggest ever mailbag in return.
Incredible as it sounds, from this Thursday, it seems (and I quote) any agency that wins a piece of business that had a dedicated or "predominantly" dedicated team working on it at the previous incumbent will have to offer jobs to the whole team from the losing agency if the staff choose to move with the account.
Curiously, staff can opt out of TUPE and decline to move with the account, but only if they resign and the agency re-hires them, but at the cost of losing their long-service rights and privileges. What's more, there is no definition of "predominantly".
Sounds crazy? In 1981, TUPE was designed to protect the rights of workers in firms that were being taken over. However, it was never intended for professional service companies.
One obvious potential outcome is that smaller agencies may not be able to land giant accounts, because they will not be able to afford to staff them. Many agencies take on new business in part because they have worked out a more financially efficient way of running the accounts. Opinions are divided over what the legislation will mean. Both advertiser and agency bodies alike have been preparing for its introduction. It will probably mean staff contracts will be reworked across the board to decrease the incidence of key individuals specialising on accounts - something clients are wanting more and more.
Although the IPA will continue to lobby the Government to have this legislation overturned, agencies can't afford to ignore TUPE. It affects absolutely everyone. They should be revisiting each and every one of their clients' contracts. The first test case will surely come however. I can only see chaos ahead.
* KEN KAESS wasn't like most network big cheeses. Of course, the DDB worldwide CEO - who died last week after an intense battle with cancer - had the "smarts", presence, contacts, people-management skills and fierce ambition to execute his job with aplomb, but he seemed to care a little more than most about the business, and its people.
Beneath the "hail fellow, well met" public exterior was a man of quite surprising insecurities. He was an oxymoron: a gauche smoothie. Scratch the permatan, the expensive suits or "business casual" dress code (that's American for polo shirts and chinos), and the just-so hair, or sup more than a couple of his favourite whiskies with him, and he revealed his self-doubts. He was anxious about the wider state of the business, being the man to restore DDB to its past glories, and, naturally, his own personal performance.
This could have been an act, but he seemed so earnestly concerned that it became clear what you got was what you saw. Witness his ability to abruptly cut off his speech mid-sentence when a pretty woman ventured upon his horizon - no matter how important the conversation. Among so many corporate stiffs talking golf and their 401K retirement plans, it was actually refreshingly human in an American CEO.
Ken did a fine job under the pressure of expectations at DDB. His predecessor, Keith Rheinhard, is one of the giants of world advertising, and the legacy of co-founder Bill Bernbach still looms large. Although the agency is still some way off reclaiming its former glory in New York, his tenure brought sustained growth and creative excellence. What's more, he was the driving force behind the annual Advertising Week in New York, a public celebration aimed at restoring the industry's image.
It was stunning to discover Ken was on lengthy sick leave last year, and then, having returned after six months or so, suddenly he was in terrible shape again. The advertising world is a poorer place for his passing.
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