ANALYSIS: Success of WPP's deal with Pfizer is difficult to forecast

WPP's new assignment to handle Pfizer's global PR will undoubtedly open doors for the firm, but it is tough to tell if the multi-agency PR team will work.

WPP's new assignment to handle Pfizer's global PR will undoubtedly open doors for the firm, but it is tough to tell if the multi-agency PR team will work.

Last week, PRWeek reported on Pfizer's decision to entrust WPP with global PR responsibilities for three leading products in its cardiovascular franchise. The selection, which put Cohn & Wolfe (C&W) at the helm, came two months after Pfizer invited the three largest marketing holding companies, WPP, IPG, and Omnicom, to each assemble their strongest PR teams to pitch for the business. To service the account, WPP formed a new entity called WPP Health Success, which will incorporate resources from C&W, Hill & Knowlton, Burson-Marsteller, Feinstein Kean Healthcare and Wunderman. The pharma giant's demands doubtless have created a world of new opportunities and challenges for WPP, but because there is such little precedent for this kind of intra-agency reorganization at the behest of a client, making predictions about its success is difficult. Similarities and differences Within the healthcare sector, there are a few vague parallels. In the same month that Pfizer issued the RFPs to the holding companies, Aventis handed all marketing responsibilities for its global oncology franchise to Omnicom. In that case, Omnicom formed a new entity - Team Aventis Oncology - solely to service the account. But Porter-Novelli was the only PR agency included. Moreover, Novartis is rumored to have issued an RFP for one of its pipeline diabetes drugs that calls for a similar integrated approach across marketing disciplines. The closest the PR industry has ever come to witnessing a holding company combine its PR agencies to jointly service an account was in August 2001, when Omnicom created One Blue to service the customer contact portion of IBM's PR business. Despite some similarities, not least the sheer size of the clients, the IBM situation differs in several ways. For one, taking a cross-agency approach was Omnicom's idea, not IBM's. Secondly, although account revenue resides in One Blue (not at any one agency), the people working on the business all work from their respective agencies, either Ketchum or Brodeur. Conversely, at the request of Pfizer, WPP will assemble a team to work solely for WPP Health Success, which will operate out of the lead agency's New York headquarters. Perhaps the most telling difference is that One Blue is backed by Text 100 and Magnet Communications, the other two agencies selected by IBM when the PC company decided to consolidate its global PR business from 50 firms to three. Further, one could argue that because One Blue only handles the customer contact portion, the firm that's entrusted with reputation management, Havas-owned Magnet, serves as a virtual safety net should Omnicom's operation have problems. The Pfizer account will be handled entirely by WPP Health Success. Granted, One Blue was one of three agencies selected to manage all of IBM's global PR business (estimated at $60 million), while WPP Health Success, albeit alone, will just work on three brands - Lipitor, Norvasc, and Caduet. The distinction is relative, however, considering Lipitor, the world's best-selling drug, drops about $8 billion a year in Pfizer's bank. Similarly, Norvasc, Pfizer's second best-selling product and the fourth-best selling drug in the world, reached $3.8 billion in sales in 2002 and experienced 15% growth in the third quarter last year. And Caduet, a dual therapy of Lipitor and Norvasc, just received FDA approval last week. Analysts have predicted sales of Caduet could reach $1 billion in a few years. Neither Pfizer nor WPP would comment on the budget, but given how profitable the brands are, the account is surely considerable. Pfizer's decision to take what can truly be called an innovative approach to client-agency relations was part of the concerted communications restructuring that the company underwent following its acquisition of Pharmacia in April. The merger made Pfizer more than 50% bigger than its closest competitor, GlaxoSmithKline. Since the transaction was finalized, Pfizer has made several changes in its approach to communications, including the formation of a new product PR department, staff restructuring, and a heightened consumer focus in some of its accounts. In October, Pfizer selected Weber Shandwick's consumer marketing group to lead the global account for Viagra, its blockbuster erectile dysfunction drug. Pfizer might be alone at the top, but in its decision to combine forces with another pharmaceutical company, it is joined by many. Consolidation's future What continued consolidation in the pharmaceutical industry means for the joined companies' approaches to communications, and the agencies that serve them, is still up for debate. Will others be forced to follow Pfizer's lead in order to achieve the same level of brand awareness? Or, does Pfizer, because of its size, hold a unique position in the marketplace, and hence require an approach to PR that others do not? And finally, should cross-agency strategies become a more common practice, will the holding companies be equipped to handle it? Laura Schoen, president of global healthcare for Weber, says she believes tackling PR in this manner "could become a trend," but admits, "It is going to be an interesting challenge for both clients and agencies." She explains, "Within a holding company, there are many companies that can be deployed. For firms, it's a matter of understanding which resources are relevant. For clients, it's about being very specific with their needs." Schoen said she knows of two top ten pharmaceutical companies other than Pfizer that have plans to issue RFPs calling for holding companies to assemble their best-in-class PR teams. Those staffers assigned to WPP Health Success, along with those from other companies that might follow suit, are going to be forced to let go of a lot of old habits. After years of operating under the traditional model whereby several agencies are held by one company but operate very much independently and often in stark competition, agencies need to figure out a way to work toward common goals. Schoen questions whether the holding companies are prepared. She says, "If you have multiple PR offerings, how do you manage conflicts? How much of it is going to be mandated by the holding companies? Right now, holding companies operate more as facilitators. They are going to have to develop a staff" to oversee and deal with these kinds of issues. A few people have officially been named part of WPP Health Success, including C&W's head of healthcare, Kathryn Metcalfe, who will lead the effort. But for the most part, the team is yet to be determined. WPP director and EVP of PR/public affairs Howard Paster says selecting the dedicated team is a process that will involve a "an ongoing series of meetings to determine how to align our teams against" Pfizer's. Clearly, as it would be for any holding company, WPP's decision to alter its traditional agency model to cater to Pfizer's needs is a big undertaking and is likely to present some challenges going forward. But tough economic times have created a situation for agencies in which business is not as easy to come by as it used to be. In the pharmaceutical industry, circumstances are compounded by the consolidation trend that continues to create fewer and fewer clients, for which external communications counselors are forced to compete fiercely. Paster puts it simply: "We adapt to them." On some level, clients have always called the shots, but conditions under which a holding company that pulls in close to $800 million in PR revenue is willing to change its organizational model might have gone unpredicted by even the most perceptive of industry analysts.

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