Sir Martin Sorrell criticises ad network rivals for 'desperate' behaviour
LONDON - WPP Group's rival advertising networks behave in an 'irrational' and 'desperate' way in their attempts to win new business, Sir Martin Sorrell has said.
Speaking at a conference in Barcelona, the WPP chief executive mentioned British rival Aegis Group and Havas as two companies that had guaranteed media rates to their clients -- meaning that the agencies' fees could be eaten in to if the guaranteed rate can not be secured.
"It is the act of an irrational competitor. It is a little bit disturbing. It is driven by people in the mid-market who are a bit worried about what the consolidators are doing," Sorrell said in the Financial Times.
His comments come amid rumours that WPP is set to make a bid for Aegis, which owns Carat and Synovate, and whose largest shareholder is Havas chairman Vincent Bollore. The deadline for companies to bid for Aegis is November 25.
Shares in Aegis had risen on the speculation, but criticism from Sorrell could dampen investors' enthusiasm. WPP is bidding alongside US private equity firm Hellman & Friedman, with the UK ad giant interested chiefly in the Synovate market research business.
Yesterday, Sorrell would not comment on whether WPP was making a bid. However, he said that Aegis had effectively lost its independence, with Bollore owning almost 25% of the company, and that he "has control now, in a negative way".
According to the FT, Aegis has hit back at Sorrell's criticism of its media-buying practices, saying that the comments were "well wide of the mark".
At the same conference, Sorrell also criticised Interpublic Group, which is still in the process of sorting out accounting difficulties dating back to the late 1990s.
"IPG is a wounded animal and it lashes out. I do not think there is much in the way of cost control in terms of hiring people. You do not give people three-year guarantees to move unless you are pretty desperate," Sorrell said.
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