Arun Sudhaman 06 Mar 2012 // 12:00AM GMT
SEOUL--WPP’s LG-One unit is preparing to defend its remit on LG Electronics’ global PR business, as its three-year contract with the Korean company comes to a close.
LG-One, a multi-agency team comprised of Ogilvy PR and Hill + Knowlton Strategies, won the global corporate PR mandate in mid-2009, and has since extended its relationship with LG Electronics to more than 40 markets. The business is estimated at upwards of $5m.
LG Electronics global communications director Ken Hong confirmed the review in response to enquiries from the Holmes Report, and said that the company is still finalising the list of firms that it plans to invite. “It will be agencies with large networks,” said Hong. “The review has nothing to do with any dissatisfaction - we are just following regular procurement processes.”
The electronics company, which includes interests across mobile communications, home entertainment, home appliances and air conditioning/energy, has posted disappointing returns over the past 18 months, including six consecutive quarters of losses at its mobile handset unit.
“We want to get back to the company that we can be, especially now that the recession may be lifting in some markets,” explained Hong. “We need help from a very strong partner to get us there faster.”
The decision to appoint LG-One came after a major competitive review, and allowed LG Electronics to navigate its concerns over client conflict. The mandate is split by market between either Ogilvy PR or H+K, with Ogilvy PR technology head Luca Penati playing an overall leadership role on the account.
After seeing the relationship expand to numerous local markets, including product PR activity, Hong said that the focus would now be on “top-tier markets”, such as the US, Russia, China and India.
The creation of LG-One, coming after WPP’s ill-fated Enfatico experience on the Dell account, drew some scepticism from the agency world. However, the experiment, which Hong called “eye-opening” has fared relatively well, and the structure is expected to be retained for WPP’s defence of the business.
“Those sceptics can go back to their drawing board to figure out why they were so negative about it,” said Hong. “We showed the benefits of working together as a network company.”
Hong also said that the company is “much more open-minded” about conflict concerns, after including a lengthy list of conflicting companies in the previous RFP.
“We want to continue the success we’ve had, tweak our current strategy to fit into the current environment, and look for better ways to work more efficiently,” he added.
LG Electronics has restructured its leadership since the last PR review, appointing a new CEO and seeing its CMO depart. One source involved in the process told the Holmes Report that the changes have impacted the company’s marketing focus. “It’s a very different company now,” said the source. “Previously, the marketing operation held considerable influence, but now the business units have moved back up.”