Markets

The Enfatico Fiasco: Isn't This All Dell's Fault?

By Jim Edwards

Updated on: April 13, 2009 / 12:08 PM EDT / MoneyWatch

WPP chief Martin Sorrell got a lot of flak for the Enfatico climbdown last week. He's left with a 10-year lease on an office building in Manhattan that he now may not need. He dragged a major client into a pr storm. And whether the Dell-Enfatico relationship will even survive in the long-term is now an open question.

For this, the New York Post dubbed Sorrell a "clumsy peasant," and picture him wearing a dunce's cap.

Here's an alternative take: Isn't this all Dell's fault? It was Dell who asked for an international agency to be created from scratch. It was Dell who then got rid of the executives behind that demand. It was Dell that then cut its ad budget by $130 million, triggering layoffs at the agency.

That, in fact, is the broad conclusion of one source who communicated with BNET last week:

From the start, there was a faction inside Dell that did not like what E! stood for, and I believe that Dell did not do their part in understanding the entire challenge. I also think that Dell could have made a better effort in accepting E!.
As far as [ex-CMO Mark Jarvis] and the others, I believe their exit was also about an existing need to get rid of them, not just the fact that they were the champions of E!s cause. My personal belief is that many of the upper marketing players came to Dell with a suprisingly mediocre skill set. I have been in advertising and marketing almost 25 years and have never seen a global company so devoid of best practices as I saw within Dell.
In some ways, it seems as though that Dell the organization still functions like Dell the namesake did some 25 years ago - fly by night out of a dorm room.
I believe Dell as an organization is culpable as well as E!s lack of organization at the beginning. Dell has downsized so dramatically over the last few years that many of the existing players are wearing too many hats and are in way over their heads.

This self-created fiasco has placed Enfatico in the worst possible position: Distracting its biggest client from its marketing chores by requiring it to address its agency's problems in public. The New York Post:

"We are supportive of this move and believe it strengthens our long term marketing capabilities," Erin Nelson, Dell's chief marketing officer, wrote in an internal email explaining the move. "Dell's marketing leadership team has been working closely with Enfatico/WPP to ensure we have access to the right mix of solutions for our evolving business needs."

The Austin Business Journal reported:

"Following Dell's recent reorganization and recognizing that there are some remaining capability gaps within Enfatico, we've engaged in discussions with WPP to determine the best long-term solution for adapting to the financial downturn, Dell's modified budgets and the need to offer a broader mix of capabilities to our expanding client base," the memo stated.
The memo also informs employees that Enfatico "will remain a standalone brand alongside Y&R's other companies." It's unclear exactly what the merged operations will look like.

What will it mean for Enfatico staff? There's confusion on that issue. BNET predicts layoffs only because the purpose of consolidating operations is to do the same work with fewer staff. AgencySpy says "The 'worker bees' will likely not lost their jobs, but we can expect some high-level reorganzation." The Post says "Enfatico ... is likely to lay off a sizable chunk of its 800-member staff."