Ogilvy Chairman Upbeat but Old-Timers, Clients Wary

Just 10 hours after signing an $864-million deal to link their two big advertising firms, Martin Sorrell and Kenneth Roman appeared almost chummy as they greeted the press Tuesday with details of the merger between WPP Group and Ogilvy Group.

While making it clear that his first choice would have been to stay independent, Ogilvy Group Chairman Roman said at a news conference preceding the Ogilvy annual meeting that WPP Group’s $54-a-share cash bid “was far and away the best alternative” for Ogilvy shareholders, employees and clients.

Several of Ogilvy’s largest clients had warned that they might bolt in the event of a WPP takeover, and some were expressing displeasure with the merger Tuesday. But none of the half dozen contacted--from American Express to Ford Motor Co.--indicated that they would leave the newly merged firm. WPP and Ogilvy executives were upbeat.

“We go into it with a most positive attitude,” said Roman, who will remain chairman of Ogilvy and will become a vice chairman of WPP Group, the British-based company that acquired a staunch Ogilvy rival, J. Walter Thompson, in a hostile takeover in 1987.

Creates Largest Ad Firm

The two companies signed a definitive merger just before midnight Monday after Ogilvy’s board agreed unanimously to the rich price. The agreement was reached in a short two weeks, after Sorrell, chief executive of WPP, convinced Roman and the board that he intended to let Ogilvy maintain its independence.

The combination, which continues the recent wave of consolidation in the advertising industry, creates the world’s largest advertising and communications company, with annual revenue of more than $2 billion and yearly billings exceeding $13.5 billion.

Sorrell, a 44-year-old Harvard-trained accountant, built WPP Group into a worldwide power. To get this deal done, he agreed to what Roman described as “very significant assurances in terms of (Ogilvy’s) autonomy and continuity.”

“Our clear objective has always been to build the finest advertising and marketing services company in the world,” Sorrell said as he stood side by side with Roman at a lectern in a meeting room of the Marriott Marquis hotel. “Today we are in sight of that goal.”

Even so, there was one poignant sign at the shareholders meeting late Tuesday morning that not everyone greeted the deal enthusiastically. Ogilvy founder David Ogilvy, 77, appeared shaken and emotional as he sat among the audience in the main auditorium of the Equitable Building on Seventh Avenue.

Old-Timers Skeptical

An assistant stood guard near his seat to fend off reporters. Minutes before the meeting began, Ogilvy’s name card was quietly removed from the front table of directors on stage. But obviously sensitive to criticism of his handling of the JWT takeover, Sorrell has persuaded David Ogilvy to serve as “non-executive chairman” of WPP.

Other Ogilvy employees expressed disappointment.

In an interview before the meeting, one employee of Ogilvy & Mather’s New York office described the mood among old-timers there as “bordering on depression” and expressed skepticism that the two firms will remain autonomous.

To Roman’s clear surprise, none of the approximately 225 people at the Ogilvy Group shareholders meeting posed hard questions about the deal. Roman, 58, emphasized at the news conference that no Ogilvy clients have threatened “to pull the trigger” and take their accounts to other firms.

But in various telephone interviews Tuesday, many of Ogilvy’s clients said they want an answer to one question: How will the merger help them?

“I still don’t know what it all means,” said Lawrence A. Armour, senior vice president of corporate communications at American Express, for whom Ogilvy created the “Do you know me?” ad campaign.

“All we see are potential problems,” said Jim Donahue, director of communications at Duracell, which still plans to stick with Ogilvy. Added Doug McClure, executive director of marketing at Ford Motor Co., “I don’t see a single advantage to us.” And longtime client Owens-Corning, for whom Ogilvy created the popular Pink Panther ad campaign, doesn’t like the change, either. “But it’s awfully disruptive to go out and review agencies,” said Joe Doherty, vice president of marketing at Owens-Corning.

Concerned About Cuts

Only one client, Cotton Inc., said it was placing its business up for review. But J. Nicholas Hahn, president and chief executive of Cotton Inc., said the first ad agency it will talk to next week is Ogilvy.

Some clients are concerned that WPP will cut back on services. But Burt Manning, chairman of J. Walter Thompson advertising, said in a telephone interview Tuesday that WPP has found other ways to cut costs at his agency, such as selling off unneeded real estate and closing unproductive offices, and will likely do the same at Ogilvy.

“We have to send a daily cash flow statement to WPP,” Manning said. “They pore over these statements, and if there’s a sudden drop in cash coming in, or a jump in cash going out, you can bet we get a phone call from WPP.”

But at the news conference, cost-cutter Sorrell sought to allay concern that he would immediately turn around and sell Ogilvy divisions. “Our objective has been to build a group for quality. . . . We are totally committed . . . to building the brands within the group,” Sorrell said.

Asked whether layoffs are planned, he said tersely: “None.”

Martha Groves reported from New York and Bruce Horovitz reported from Los Angeles.