WPP Wpp Plc

By Nick Kostov 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 9, 2018).

Ford Motor Co. has appointed Omnicom Group Inc.'s BBDO as its lead creative agency, following one of the most closely watched reviews on Madison Avenue this year.

The automotive company announced the appointment on Monday, casting it as part of a new marketing strategy it said would yield $150 million in cost savings annually. Ford is also planning to put a greater emphasis on emerging technologies to create more personalized brand marketing.

The news is a setback for WPP PLC, which counts Ford as a top client, and comes a few weeks after the ad-holding firm named a new chief executive. Ford began re-evaluating its marketing model months ago, including the company's relationship with WPP, which had worked with the car marketer for decades.

Following the review, Wieden + Kennedy has been named as a "creative and innovation partner" for specific projects, Ford said.

WPP will continue to work with Ford on duties including its media planning, media buying, shopper and performance marketing, website development and customer-relationship marketing.

Although it remains unclear whether WPP sustained a fee cut on the business it kept, the loss of the Ford's creative duties will cut between $100 million and $150 million from WPP's annual revenue, according to a person familiar with the company.

A spokeswoman for WPP declined to comment on the question of fees.

Creative work for Ford accounted for 1% to 1.5% of revenue at WPP, while overall duties for Ford comprised 5% of revenue, analysts at Kepler Group LLC said in a note last month. WPP reported revenue of $19.7 billion last year.

"We accept this difficult decision with our heads held high," Satish Korde, who leads WPP's work on the Ford account, said in an internal memo. "WPP is assessing the impact and implications of this decision, which cannot be fully determined until more detail is known."

In a note on Monday, Pivotal analyst Brian Wieser said the news is negative for WPP, but "not as negative as it could have been, given the parts of the business they are retaining, which are all generally the faster growing aspects of any given account."

Ford is under pressure to cut costs as profit shrinks and its share price remains stuck near a decade low. Chief Executive Jim Hackett, appointed last year, has made improving Ford's "fitness" his main near-term focus, including a plan to cut $25.5 billion in cumulative costs by 2022 across engineering, manufacturing, marketing and other areas.

WPP created a dedicated agency group for the automotive giant, now called GTB, pulling in advertising and marketing resources from its various agency groups. The Ford account generated more than $500 million in annual revenue for the holding company, people familiar with the matter told The Wall Street Journal in April.

--Mike Colias contributed to this article

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

October 09, 2018 02:47 ET (06:47 GMT)

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