The recent departure of Siegel & Gale from the Saatchi & Saatchi network has put the issue of marketing conglomerate membership high on the industry agenda (DW 5 June).
While this particular parent/ consultancy relationship appears to have failed, others have benefited from the opportunities and resources offered by membership of a mature marketing network.
WPP Group is the largest such organisation in the world, with five design groups in its stable, including the 350-strong identity consultancy Enterprise IG.
This comprises five operations around the world which trade collectively as Enterprise IG and under individual names for standalone projects. London’s former Sampson Tyrrell Enterprise has dropped its own name altogether and now works as Enterprise IG (Europe) on both joint and standalone projects.
The other four Enterprise IG member groups will do the same shortly. This is contrary to reports from the group saying all members dropped their individual names on 19 May (DW 22 May).
“Joining Enterprise IG has projected us into a totally different league,” says Anspach Grossman Enterprise chief executive officer Jim Johnson. His group becomes Enterprise IG (Americas) next month. “Anspach Grossman was a 25-year-old niche identity group when I joined four years ago, to help build what is now Enterprise IG. Since then the group has become part of the world’s largest identity group,” he says.
Marketing conglomerate membership makes good sense for the Enterprise IG identity groups, since identity projects are increasingly global and clients are demanding consultancies with an international capability.
Other WPP design consultancies have not evolved into global outfits and appear to have gained less from group membership.
Packaging group Coley Porter Bell saw a 42 per cent drop in fee-income in 1997, the highest listed in DW’s recent Top 100 consultancy survey (DW 27 March).
Although CPB managing director Amanda Connelly says WPP membership “helps it to think big”, a group spokeswoman concedes some clients may see the group as “a small fish in a big pond”.
With 90 per cent of revenue coming from standalone projects, CPB appears to be on the margins of the WPP network.
Scott Stern chief executive Raymond Stern says that, being in Scotland, his group is also outside the central core of the network. The group closed its London office in 1991 because after eight years (four of them under WPP) it was “just beginning” to make a loss (DW 6 December 1991).
Over the last six months, the group has worked with media buying and planning stablemate Mindshare and BDG McColl – with 95 per cent of its revenue generated by standalone projects and 5 per cent from cross-referrals.
A WPP management source says it is largely up to the groups themselves to forge their own relationships. “But we do encourage consultancies to share client information with pitches and keep them informed about who’s working with who on what,” says the source. WPP groups are free to bring in outsiders, and they do. In the main, however, they stick with their sister groups. “You have to treat it [the WPP network] as a market and do all the things you’d do if you were an independent group. It’s a much better market, but you still have to build the relationships,” says the source.
Annual report group Addison only joined WPP last October and is still in the early stages of relationship-building. Joint projects (with other WPP groups) now account for around 10 per cent of its revenue. Addison director Quentin Anderson plans to increase the proportion over time.
But there is a sense that what some groups gain from conglomerate membership – in referrals, profile and a support infrastructure – they might lose in other ways. As a member of a quoted company, a group must publish its financial results and become accountable to a new boss.
“If you want to manage a business you love, don’t join a big network. Nor should you join for [personal] long-term profit as, in the long run, you won’t be better off, the network will,” says a well-placed source. And some clients shy away from large networks.
Design group Browns was formed four months ago by Jonathan Ellery, of Sampson Tyrrell Corporate Marketing (which formerly merged with Addison) and Graham Taylor and Mike Turner from Addison.
“We wanted to set up our own business and saw an opportunity for a smaller, flexible, creative consultancy. There is a trend towards clients using smaller creative boutiques over larger conglomerates, so they can put together their own teams,” says Browns director Ellery.
Nonetheless, in the right circumstances, the arguments for joining a conglomerate remain extremely persuasive – as demonstrated by the meteoric rise of Enterprise IG’s member groups.