Merger? Or Manslaughter? Asks Michael Farmer's Ad Age Article

11/30/2018 Unknown 0 Comments

In a November 29th Ad Age article, BIC Professor Michael Farmer challenged the notion that the recent high-profile WPP mergers that formed VMLY&R and Wunderman Thompson are savvy strategic unions designed to optimize WPP capabilities. Instead, he describes them as industry-killing, cost-cutting measures that WPP has practiced since 1986.

As WPP’s growth and profitability have led to a serious decline in its share price, such moves seem justifiable, especially since they can be disguised as “strategic.” But as Farmer points out, “these mergers/cost reductions focus on the wrong problem. What's really killing agencies and holding companies is the declining level of agency fees and billing rates, and the uncontrolled growth of agency workloads.”

The article further states that if WPP CEO "Mark Read wants to make an enduring long-term impact at WPP, he needs to refocus his agencies on 'getting paid for all the work they do' at appropriate rates."

Such sage advice is more fully developed in Farmer's book Madison Avenue Manslaughter which is a starting point of classroom discussions in the Spring semester's B3003 Internal Management course, which he co-teaches with Rodes Ponzer.
To read the entire article, click here