HSBC HSBC Holdings PLC

By Alexandra Bruell 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 23, 2018).

Omnicom agency PHD has won the global HSBC Holdings media buying account, according to people familiar with the matter, dealing another blow to rival WPP.

The review, which was conducted by consultant ID Comms on behalf of HSBC, came after the bank hired a new chief marketing officer, a move that often leads to a change in agency roster. Last year, HSBC hired Leanne Cutts, a former marketing executive from Mondelez, as its chief marketing officer.

The account has billings of about $400 million and is worth an estimated $20 million a year in revenue for WPP, according to a person familiar.

"We have selected PHD as our preferred Media Planning and Buying Supplier as they demonstrated strong strategic skills and advanced digital transformation capabilities," said Ms. Cutts in a statement. "In a complex media and communications marketplace, PHD's overall approach stood out as being forward thinking, yet straightforward and pragmatic."

WPP has long had a close relationship with HSBC. WPP's Mindshare has been handling the media account for over a decade, and JWT also handles some of HSBC's creative duties.

Mindshare's American Express business is also up for review. Sister agency Ogilvy recently lost its longtime American Express creative account to Dentsu-owned McGarryBowen.

The news is a setback for the world's largest ad holding company, which is currently also trying to keep its relationship with Ford, one of its largest and longest standing accounts that's now up for review.

Just last month, WPP announced the abrupt exit of WPP CEO Martin Sorrell after an allegation of personal misconduct.

WPP has had a particularly tough time over the past couple years. The company reported a slight decline in net sales in the most recent quarter. The firm also said it is forecasting no revenue growth this year, after having already cut its forecast three times. Account losses exacerbate the holding company's financial struggles and spook investors that are already wavering in their confidence in the ad holding company and its model.

Mr. Sorrell built WPP into an ad services giant through an aggressive acquisition strategy. For years, the agencies enjoyed longtime relationships with clients. But more recently, advertisers have come under pressure to cut back, and rethink their advertising models.

Mr. Sorrell's exit creates more confusion and chaos at a holding company that's already facing a number of challenges. WPP is currently conducting a search for his replacement.

While WPP has lost a number of accounts in recent years, including ad giants AT&T and Volkswagen, the holding company is not alone in its turnover. The media buying sector has been mired in a prolonged tumultuous period in which many clients have reviewed their ad buying business relationships in an attempt to cut costs, adapt to a faster-paced digital environment and rebuild trust amid concerns around non-transparent media buying practices.

Despite its recent challenges, WPP recently won some media business for Tesco.

Omnicom referred calls to the client. WPP's GroupM, the ad-buying division that includes Mindshare, also didn't immediately respond.

Write to Alexandra Bruell at alexandra.bruell@wsj.com

(END) Dow Jones Newswires

May 23, 2018 02:47 ET (06:47 GMT)

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