WPP's challenge: retaining P&G account

Every time the world's largest advertising and media services juggernaut, the $6.7 billion WPP group, acquires a global agency, it makes the most impact in India.

With the acquisition of the Grey Global group for $1.4 billion yesterday, the London-based WPP group is again consolidating its India presence.

Industry experts say that it pushes the WPP group's current 33 per cent market share in the Rs 9,000 crore Indian advertising industry to around 40 per cent.

Grey Worldwide, the Indian outpost, is a Rs 500 crore agency. But what it gives WPP in India is its client roster. Some of its plum accounts are Procter & Gamble, Britannia, Marico and ITC Foods.

Grey now becomes the fourth global agency on WPP's Indian platter. With this, WPP controls half the top 10 agencies in the national pecking order.

Its other Indian agencies include J Walter Thompson, Ogilvy & Mather, Young & Rubicam""which part owns Rediffusion""and Bates India, along with associate agencies like Contract, RMG David and Equus.

It recently acquired the strategic business consulting outfit, Quadra. Then, there are a host of affiliated public relations and media outfits, the latter integrated under the media umbrella, Group M.

Martin Sorrell, WPP's chairman, is not too forthcoming. "We are delighted by the deal and that is all we can say at the moment," he says. But competitors claim his biggest challenge now will be to hold on to Grey's clients, largely Procter & Gamble.

Procter & Gamble, the world's biggest advertiser, has been a Grey client for more than 40 years, sloshing 10.6 per cent to the agency's 2003 topline.

In India, apart from Grey, Procter & Gamble has two more agencies handling its creative: Saatchi & Saatchi and Leo Burnett, both part of France's Publicis group. The crucial media buying function is with homegrown media agency, Sam Balsara's Madison.

Then there is the issue of Procter & Gamble's arch rival, Hindustan Lever, which is a big WPP client.

While WPP's assorted agencies handle Hindustan Lever creative, its international media house Group M is Hindustan Lever's sole media buying and planning agency.

In fact, Group M has a specialist media agency Fulcrum, to handle just the Hindustan Lever account. "Now, all eyes are on Procter & Gamble. The big question is whether it will move out," says a WPP agency head. Only last month, according to some Procter & Gamble insiders, its chief marketing officer had issued a statement saying the company did not have any issues with Grey, as long as it was guaranteed a completely different set-up.

Will WPP fall in line? "WPP's strategy has always been to retain the individualities of all its acquired agencies. Just because the parent is common, that does not mean there are grey areas," says the erstwhile head of a WPP agency.

But this is one WPP acquisition that has not enthused competitors. As the media head of another leading agency puts it: "Grey is a creative boutique, so WPP will have a great balance sheet. But the money is in media, and Procter & Gamble's media is handled by a WPP rival. And Sorrell being the master of integration will want to integrate it into Group M in future."

If that happens, Procter & Gamble could well spoil the party for WPP.