A matter of survival - UniWorld Group and WPP Group form advertising partnership - Brief Article

Black Enterprise, Sept, 2000 by George Alexander

To stay competitive, UniWorld Group forms advertising partnership with WPP

Size does matter, especially in the increasingly competitive advertising industry. Recognizing a changing battlefield, New York-based UniWorld Group Inc., the nation's largest African American-owned multicultural advertising firm (No. 1 on this year's BE ADVERTISING AGENCIES list with $230 million in sales for 1999), has announced a strategic alliance with WPP Group P.L.C. (WPP), a London-based communications giant. Under terms of the transaction, WPP will acquire a 49% interest in UniWorld for an undisclosed sum.

"Joining forces with WPP was a case of facing the facts of the advertising business. All of our direct competitors had already formed strategic bonds with larger mainstream agencies, and the mega-agencies are now reacting to the dramatic growth of the African American market, making it difficult to compete," says Byron E. Lewis Sr., the chairman and CEO of UniWorld. "The rising tide lifts all boats, but you can't use paddles when everyone else is using nuclear-[powered] engines. Choosing WPP as a partner gives us access to greater resources while still allowing us to operate autonomously."

The UniWorld-WPP alliance follows a string of recent marriages between minority-owned firms and mainstream advertising powerhouses, among them Burrell Communication Group's (No. 3 on the BE ADVERTISING AGENCIES list) June 1999 merger with Publicis and True North's September 1999 alliance with Don Coleman Advertising (No. 2 on the BE ADVERTISING AGENCIES list). These mergers reflect the broader market's growing awareness of the impact and importance of ethnic sectors in the global economy. In addition, it gives larger, majority-owned agencies access to an established and proven talent pool.

John Zweig, CEO of WPP's branding and identity, healthcare, and specialist communications businesses says of the alliance, "We really see an opportunity in the expertise at UniWorld, which we do not have. The entire marketing world now requires a diverse global perspective and a range of ethnic capabilities in comparison to the mass media approach of the past."

Named Advertising Agency of the Year in BE's June 2000 issue (see "Changing Culture"), UniWorld boasts a client list that includes such Fortune 500 companies as AT&T, Colgate-Palmolive, Burger King, and Ford Motor Co. It had been the last of the top three black-owned advertising agencies to remain 100% independent.

WPP brings enormous resources to UniWorld in research, healthcare and specialty communications, promotion and event marketing, media planning and buying, and interactive and new media. WPP also recently announced plans to merge with rival agency Young & Rubicam, New York's largest agency, which would make WPP the world's largest advertising agency, supplanting the present leader, Omnicom. UniWorld would thereby become part of the first family of mainstream as well as ethnic market advertisers.

Further, WPP operates some 70 companies, including J. Walter Thompson, Ogilvy & Mather Worldwide, MindShare, Kantar Media Research, Millward Brown, Research International, Hill and Knowlton, Ogilvy Public Relations Worldwide, Common-Health, and Enterprise IG. Clients include more than 300 of the Fortune 500 companies and over one-third of the companies listed on the Nasdaq 100. In 1999, WPP had billings of $15 billion.

UniWorld will continue day-to-day as an independent entity and will look to form cooperative ventures with various WPP companies when beneficial to clients. When appropriate, UniWorld will work with WPP's existing marketing units, such as Mendoza Dillon and Asociados, a leading Hispanic agency, as well as the Market Segment Group, brand consultants specializing in multicultural and segmented markets. Management does not expect any staff reductions among UniWorld's 150 employees.

In examining the impact of mergers between ethnic advertising agencies and mainstream shops, Heide Gardner, vice president of diversity and strategic programs at the American Advertising Federation Foundation in Washington, D.C., says, "In theory these alliances should result in more advertising dollars going to ethnic agencies and ethnically owned media. However, the downside is the potential loss of important institutions in the African American economy and the decline in African American entrepreneurship."