World Wide :Ford to sign global ad pact with WPP - Ford Forums - Mustang Forum, Ford Trucks, Ford Focus and Ford Cars

Stacy94PGT · 07-06-2003, 23:10

Advertising Age
By Jean Halliday
July 07, 2003

Ford Motor Co. will sign a global contract with advertising giant WPP Group for 2004, replacing local agreements with three WPP agency networks that handle major Ford brands worldwide.

WPP may get more Ford business across its 130 companies that also provide market research, public relations, events and logo design, said Jan Valentic, Ford's vice president of global marketing. WPP also will be invited to any account pitches around the world, along with non-WPP agencies.

In exchange, Ford expects a sort of "favored-nation rate � like a frequency discount by having so much volume," she said, without giving specifics.

Ford Motor is WPP's largest client globally, accounting for $529 million, or 9 percent, of WPP's 2002 revenue, according to Advertising Age, a sister publication to Automotive News.

The three major Ford agencies in WPP Group are J. Walter Thompson Co., Young & Rubicam and Ogilvy & Mather Worldwide.

The new deal differs from one proposed earlier this year by Ford President Nick Scheele that would have given WPP so-called single-source supplier status. That led to speculation that Ford would drop non-WPP agencies. Scheele's proposal set off a public controversy after a Ford insider in March released an internal memo questioning WPP's single-source supplier designation.

Ford said at the time that Scheele may not have followed purchasing procedures. The company formed a cross-departmental task force to study the WPP issue.

Valentic headed that 20-member task force. Whoever wrote "the infamous memo," she said, "had no idea how we manage our agencies." That's because advertising services are bought differently from the car parts bought by the purchasing staff.

Ford has a "very transparent financial agreement with our agencies, and WPP has been terrific in essentially opening up their books to us so we understand how the costs come to light," she said.

Independents are safe

Valentic said the global WPP deal won't affect Ford Motor's agency relationships with independent Doner in Southfield, Mich., or Havas' Euro RSCG MVBMS in New York. Doner handles Ford-controlled Mazda North American Operations; Euro has Volvo globally.

Ford anticipates cost savings through global synergies and standardization.

Valentic said the carmaker hopes to get more access to WPP resources, including off-the-shelf data such as market research "kind of free of charge."

The automaker has been cutting costs across all areas of its business since losing more than $5 billion in 2001. Ford wants to cut $1 billion in costs not directly related to products, a category that would include advertising.