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Why Mazda's "One Throat to Choke" Policy Will Not Help Its Advertising

By Jim Edwards

Updated on: July 26, 2010 / 12:42 PM EDT / MoneyWatch

Undaunted by the fiasco that ensued when WPP (WPPGY) built an international advertising agency from scratch for Dell, the holding company is trying the same formula again, this time with Mazda and its $150 million account. Mazda chief marketing officer Don Romano, calls this: "'One throat to choke' -- our throat as well as theirs." That sounds more like a suicide pact than an agency-client relationship, but if Mazda wants WPP to build it a new agency out of thin air, then who is WPP to turn down those billable hours? Mazda should know that the process will come with its own built-in set of flaws: It is simply less efficient to build a new agency from the ground up than it is to expand the services of an existing one.

This truism was writ large during WPP's first few years trying to service the Dell account. That ended in disaster when the 1,000-person shop, "Enfatico," collapsed after it became clear that the new entity was failing such basic tests as getting new ads on the air in a timely fashion.

WPP CEO Martin Sorrell wrote that down to changes in personnel and attitude at the client. But those changes obscured the difficulties that Dell went through with Enfatico even during the period when the agency had champions at the client. Mazda, then, should look for the following warning signs emanating from "Team Mazda," which the car company hopes will spring up like an army sown from dragon's teeth in Irvine, Calif.:

Team Mazda will get off to a slow start: It's just not possible to source real estate, staffers, IT services and all the hundreds of other things this new agency will need in a week or two. It will take months before this shop is functioning at full capacity. Enfatico had more than a year on Dell's business before it claimed it was out of the "transition" stage.

The little things will handicap you as much as the big things: When agencies win a new account, their major problem is executing the winning idea, or selling through more ideas to bolster the ones that won the business. All the little things -- HR, desks -- are already in place at an existing agency so the staff can just get on with the business of being successful. For Team Mazda to be successful, it first must put in place all the little things -- desks, HR -- that other agencies don't waste time thinking about. This is easier said than done: Some Enfatico offices were still working out of Starbucks a year after they won the business.

Staffing will be hit or miss: Staffing a new account is usually not difficult at an existing agency because you look at the average number of staff on your other accounts and use that as a guide for adding new members. At a brand new agency, those numbers are confused by all the extra non-account people you're employing (freelance and temporary) in addition to all the new non-advertising people you're employing (janitors, drivers, interior decorators, etc.) which are already there at existing agencies. That's one reason after Enfatico ramped up its staff so quickly it almost immediately had to start laying them off again. It's also why Enfatico had to take on freelancers, which it then could not keep track of.

There will be confusion: All of the above will distract from the main goal: Getting new work out the door. Management will be stretched between reassuring the client that their strategic goals are being hit, and micromanaging all the little crises that come with a new building (why does the AC shut off on Friday nights?!) Expect Mao-esque turnaround deadlines as a result.

So why is WPP doing this if it's got so much inefficiency built in? It's worth remembering what happened to the Dell account when Enfatico was snuffed out: It was folded into Y&R, another WPP agency. In fact, it was Y&R that signed the contract with Dell in the first place. However badly it was handled, the flow of ad dollars went in only one direction: From Dell to WPP. Adweek says Mazda's account is worth $25 million in revenue to WPP. It's not WPP's job to care if Mazda wants to spend that money in the most inefficient way possible.

Interestingly, Dell's three-year-deal with Y&R ends in December 2010, and the main account man on the business has jumped ship to McCann Erickson. If Dell puts the business out to bid I can guarantee it will not be looking for a built-from-scratch shop. Gentlemen, start your engines!

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Image by Flickr user littlefox, CC.