What a dark horse Brett Gosper is. The EMEA president of McCann Erickson successfully kept us in the dark, until a week ago, about a McCann-fronted Interpublic bid for Locog’s prestigious 2012 Olympics advertising account. Now he’s stolen it from right under WPP’s nose.
From the beginning of the pitch, WPP had looked a shoo-in. It was one of a remarkably small circle of contenders that had the power and scale to handle what in effect is a piece of global business.
True, the much smaller Chime beat it in a duel for the initial 1-year marketing communications package. But that was a blip. Chime (though part-owned by WPP) simply didn’t have the resources to win part 2 – the much bigger bit of business spanning the 3 years up to the Games themselves. And it showed when, despite a competent performance as incumbent, it was one of two to be eliminated from the frame last week, leaving McCann and WPP.
Even so, no one would have put much money on McCann winning. WPP, now the world’s largest marketing services network, is a far stronger organisation than Interpublic – which has been severely mauled over the past few years.
In addition, WPP’s boss, Sir Martin Sorrell has invested a lot of personal energy in winning the account. The fact that he was actually present in Singapore when the British team, featuring David Magliano and Sir Keith Mills, won the bid to hold the Olympics in London gives something of the flavour of his enthusiasm. For WPP, a win would have been a way of juxtaposing one very British success story with another – its own.
Why did it lose? The devil is in the detail. Locog’s is no ordinary ad account. Though worth a notional £10m over 3 years, this £10m is in fact a benchmark figure for which competing agencies had to tender (as did other services, such as the Locog accountants, Deloitte, and the Locog solicitors, Freshfields).
Agencies were invited to provide services in kind – such a media buying, content, creative ads, sponsorship. If Locog ends up spending over £10m, the winning agency will be quids in, because above that amount it will be conventionally rewarded. If, on the other hand, Locog were to underspend, the winning agency will have to underwrite the difference, and that would mean coming up with cash.
It can be readily seen that this is an expensive but finely judged gamble, and one which may cause collateral damage to the winning network’s normal commercial activities. Though there is glory in getting the business – and a tier 3 sponsorship thrown in – the account could easily turn into a poison chalice.
Sorrell was prepared to take that chance, but was incensed that Locog had spun off the more profitable research part of the business (worth another ‘£10m’) as a separate account (for which, by the way, WPP is not competing).
Failure to strike a deal over this vexed issue was one reason why WPP lost out in the final pitch. In the end, however, it was outbid by McCann, which was prepared to provide more services at a lesser notional price. How it is going to afford this more generous offer is another matter.
Posted by stuartsmithsblog 
