By Kate Holton and Gaurika Juneja
(Reuters) - Ford (N:F) has chosen Omnicom's (N:OMC) BBDO as its lead creative advertising agency in a symbolic blow to its partner of 75 years, WPP (L:WPP).
The British group, the world's largest advertising company, is in the process of rebuilding after the sudden departure of its founder Martin Sorrell earlier this year.
New boss Mark Read is planning fresh investment in the creative talent of its big agencies as the broader industry goes through a period of unprecedented change. Clients are increasingly taking work in house and using the giant online platforms of Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) to reach consumers.
Named as 2018 Network of the Year at the annual Cannes awards, the New York-based BBDO replaces WPP on the creative front at Ford from November 1, while independent agency Wieden + Kennedy will also be a creative partner on some projects.
WPP, which has worked with Ford since 1943, has however retained much of Ford's most profitable work, such as media planning and buying and customer retention following a five-month review by the automaker.
It also frees up the group to bid more aggressively for work with other auto makers. Its shares were down 0.9 percent at 0930 GMT.
Liberum analyst Ian Whittaker said the financial impact on WPP would be limited, as it had lost only less profitable creative work, although the decision could spark questions as to whether it is the beginning of the end for WPP's tight relationship with Ford.
"The greater impact is more symbolic than anything else - Ford has been WPP's flagship client and, with the departure of Martin Sorrell, there will be inevitable questions over whether that was a factor," he said.
NEW IDEAS
Ford, the No. 2 U.S. automaker, is looking for new ideas after struggling with slumping sales, weak demand in Europe and trade tariffs with China, forcing it to cut costs.
"Today is a big big day," BBDO Worldwide said on Twitter. "We have a wonderful new brand to help build."
Like many other big ad spenders, Ford said it would also create more than 100 new in-house global marketing positions, a trend that has stripped the big advertising groups of some of their income in recent years.
WPP, which had created an entire agency to support Ford, said it would continue to handle some advertising work for the car giant in the U.S., the China advertising operations, advertising for Ford's luxury vehicle brand Lincoln and all Ford's public relations.
The sudden departure of Sorrell, who built WPP into an advertising giant through 33 years of dealmaking, prompted fears that without his contacts WPP could lose clients.
Major WPP clients have put a raft of work out for review this year, putting pressure on the market leader. It has retained ties with Sky (L:SKYB) and BP (L:BP) but lost HSBC (L:HSBA).
WPP owns some of the most storied names in advertising, such as JWT, Ogilvy, Grey and Y&R. It combines these with data analytics, media planning, public relations and consultancy work and had outperformed peers for several years until 2017.
Clients such as Unilever (LON:ULVR) have also called for WPP to simplify its offering and provide an integrated service, rather than different strands of work via multiple agencies.