WPP and Publicis favourites for London 2012 Olympic account

A number of high profile agencies have pulled out of the bid for the London 2012 Olympic Games, due to what a representative for one of the bidders called “commercially inappropriate” terms and conditions, leaving WPP and Publicis as favourites to win the account.

The deal, as one of the bidders confirmed to Campaign India was along the lines of “Give us £20m of Value in Kind (VIK) through services, materials, costs or cash in return for being the official supplier of marketing services to LOCOG.”

The new terms and conditions make it well-nigh impossible for small and medium agencies and creative shops to handle the account, leaving a clear field for the larger networks. The implication is that the best effort might not necessarily win the account.

Reacting to Campaign India’s questions on the wisdom of the route being followed, a London 2012 spokesperson said: “We went into this process with a relatively open mind and were interested to hear what the industry thought about the prospect of a Tier 3 sponsorship deal."

During the process all agencies were asked if they would be interested in discussing a sponsorship deal. This is not something that was sprung on them.

"We have had a very good response from agencies who see the value in working with us on a sponsorship basis and are currently in detailed discussions with agencies who want to work with us in this way. It isn't appropriate to comment further at the moment as we are in the middle of commercial negotiations,” the London 2012 spokesperson added.

Speaking on the fairness of the terms, a senior executive from a UK based agency which has opted to pull out said to Campaign India, “This is very difficult for an agency with an unpredictable revenue base, fixed costs and no easy way to translate this 'sponsorship' into revenues immediately (especially since £20m of services would swallow up much of our resource over the next two years).

The spokesman for the agency added, “I do think it sets a dangerous precedent for future sponsored events. I think it devalues the services that we all offer and I think all agencies should pull out. Not over the principle - I guess it would be unfair of us to decry the usefulness of sponsorship in business when we recommend it to some of our clients - but at the sheer level of the VIK requested.”

”This is so out of whack with the reality of our business - how can we make more than £20m of business off the back of this alone?  And how long does that value last?”

"I think if it had been £1-2m of value in kind and no fees then it would have been worth discussing."

"And YES, LOCOG are going for the biggest and the cheapest and not necessarily the best. I think agencies should have united and all pulled out.”