GroupM’s COI win ensures no one will profit from £250m media account
GroupM’s COI win last week guarantees that no one in the UK will benefit from the profits of the nation’s most valuable media buying business.
Lest we forget, Martin Sorrell’s WPP Group, parent to GroupM, officially left the country at the end of last year and set up its legal headquarters in the tax haven of Ireland.
The move ensured the Government could not tax the group’s foreign earnings, which, in the case of multinational WPP, account for more than 80%.
So last Thursday’s appointment was an interesting one for a Government that has been keen to increase taxes on the rich and now needs to recoup as much as possible after running up the biggest national deficit we’ve ever known.
However, take a closer look at the other two shortlisted consortia the COI had to choose from - French-owned Starcom MediaVest’s alliance with Andrew Walmsley’s i-level, and French-owned Aegis’ offering Unify - and you soon understand its hands were pretty much tied.
Not one consortium competing for the Government’s lucrative and highly-contested media account was a complete British tax domicile.
Of course, as current part-incumbent on the account, Walmsley’s digital specialists will have been making a hefty contribution to Her Majesty’s Revenue and Customs. In addition, the i-level co-founder known for his love of porshe 911s, has personally been doing his bit too.
But as one exasperated MediaCom exec told me, GroupM’s chief executive Martin Sorrell continues to spend much of his time and money in the UK, adding for good measure, “more than can be said for Publicis’ Maurice Levy”.
On a more general note, Government ad spend has emerged as one of the absurd key battlegrounds in the run up to the next election, which is now almost certain to be held on 6 May.
The debate among the warring parties is not over “if” it is wise to slash the COI’s marketing budget, but merely “when” is the best time to do it. The Tories say immediately, while Labour prefers to put the pain on hold for one more year.
Savage ad cuts are clearly viewed as an easy win by both sides, because let’s face it, how much of the electorate really care about “admen” anyway? And as for all those millions spent on TV ads, it’s clearly money down the drain in the Sky+ age, isn’t it?
Just to put this attempt to make savings into some kind of perspective, in its last audited year the COI spent £250m on thousands of campaigns promoting health, education and business among many others, across traditional and digital media.
Meanwhile, the amount of tax payers money now known to have been lost due to civil service administrative errors, resulting in the overpayment of benefits over the same period: £800m.