- Ad giant WPP has been dropped from Philips’ ad agency search, a move that will cost WPP around $30 million in annual revenue.
- The Dutch conglomerate plans to consolidate global advertising, PR, and media with one ad holding company.
- Its decision marks an end to a 10-year relationship with WPP agency Ogilvy.
- See more stories on Insider’s business page.
Consumer goods and healthcare giant Philips dropped WPP from its agency search, a move that will cost the advertising company more than $30 million in annual revenue, according to three people with direct knowledge.
WPP will keep working with Philips after winning digital and performance media duties in a separate review last December, but most of the business is now gone. The news marks another significant hit to the company, which just lost Unilever’s North American retail marketing business to rival Publicis.
Philips plans to consolidate its advertising, PR, production, and media-buying business with one holding company. Sources said WPP agencies Ogilvy, PR firm BCW, media agency Wavemaker, and production company Hogarth sought the business, along with other holding companies Dentsu and IPG.
WPP was eliminated early in the process after it failed to meet Philips’ expectations, one person said.
Consulting firm Comvergence estimates that Philips spends $300 million on advertising each year. But Philips is known to be a challenging client for an ad agency because it’s a multi-faceted business, with healthcare services, consumer appliances, and licensing on products like televisions. CEO Frans Van Houten, who took over in 2011, plans to sell much of the consumer portion, and a spokesman said Philips considers itself a “health technology company.”
Ogilvy has been Philips’ lead ad agency since 2011 and was one of its largest global clients along with Unilever, Samsung, and IBM.
WPP has also recently won new clients including Victoria’s Secret, and it was the top holding company in consulting firm R3’s compilation of new business wins for 2020. Ogilvy’s recent wins include Zippo and Pernod Ricard.
WPP and Ogilvy did not immediately respond to requests for comment. Philips said it would update its agency search at a later date.
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