Why Holding Companies Will Struggle To Become The ‘Agency Of The Future’

agency-of-the-futureTimes Square was abuzz this week with talk of the elusive “agency of the future.”

“Agencies will need to be far more empathic, far nimbler and more agile,” said Paul Gunning, CEO of DDB Chicago, on Tuesday at Advertising Week in New York City. “The holding company getting rid of silos is the foundation of these models.”

The “agency of the future” will have integrated teams across creative and media. For holding companies, the challenge lies in breaking down established silos and redefining the relationships between agencies in their networks to achieve integration.

Omnicom’s pitch to build a full-service agency for McDonald’s is just one example of how holding companies are trying to bust institutional walls.

WPP is taking a more acquisitive approach. GroupM owns a majority stake in m/SIX, the media arm of a joint full-service venture with creative holding company The&Partnership. The offer gives GroupM a full-service offer backed by its investor’s media-buying prowess.

“We have the opportunity to tap into GroupM, but we’re operating as an integrated creative and media operation,” said president Ilana Nolte. “I think it helps.”

But it will take a larger cultural shift to break holding-company silos across the board, as agencies under the same parent traditionally view each other as competitors.

“We’re going to have to totally rethink the way we work together,” said Andrew Bruce, CEO of Publicis Communications North America.

While mammoth holding companies slowly pivot, independent shops are more quickly and easily experimenting with integrated models.

Tying Media To Creative

Clients want consistent messaging in their campaigns. To execute in today’s multichannel and multiplatform ecosystem, media and creative need to be on the same team.

Operating within a single profit-and-loss (P&L) statement is one of the simplest ways to break down the silo between media and creative, said Peter Nicholson, chief creative officer of independent agency Periscope.

Liz Ross, Periscope’s CEO, agreed.

“You cannot have separate P&Ls and have an integrated approach,” she said.

Publicis Groupe underwent a major restructure last year that put agencies of the same discipline under a single P&L. But that still hasn’t eliminated the wall between media and creative.

At Periscope, creatives are part of the media-buying process to ensure the message fits the medium throughout the campaign. It also gives creatives a say on media formats, so they don’t combine messages with formats that don’t quite fit.

“The creative people are as aware of what we’re buying when we’re buying it as the media team,” Ross said.

Media and creative also operate better together when they work in the same room. At a holding company, teams usually work on different floors. Media and creative agencies may also work in different buildings altogether.

At independent agency VaynerMedia, teams are organized into separate disciplines but sit together on the same open floorplan.

“It’s so refreshing to have the media closer to the creative” said James Orsini, chief operating officer at VaynerMedia. “It’s a more fluid approach to getting things done.”

Integration between creative and media also makes it easier to optimize campaigns on the fly. When VaynerMedia noticed users were dropping off a client’s digital video after three seconds, it turned around a new opening scene without extra cost to the client.

“When it’s all one company and the analytics team is observing it in a test-and-optimize context, we can correct ourselves with a small change,” Orsini said. “It’s the difference between success and failure.”

Floating Models

Some holding companies have been successful in creating dedicated client teams, such as WPP’s GTB for Ford. But uprooting employees from their agency to work on a new team can lead to cultural friction. WPP’s Enfatico notoriously fell apart when it tried to shuffle Dell’s 800 or so agencies under one roof.

It’s much easier to create dedicated client teams if an organization has no silos. Taking on a floating model, where all employees shift around to different accounts periodically, Periscope doesn’t assign teams until after diving deep into the clients’ business, identifying strategic needs and setting KPIs to solve them.

“We try to create a team that can strategically understand that client’s business really well,” Nicholson said.

To have that flexibility, Periscope leaves wiggle room to take on new business.

“We don’t try to run everyone at 100% on their hours,” Nicholson said. “Most [holding company] agencies love them at 120%. We try to not do that so we can keep that flexibility.”

VaynerMedia doesn’t shift teams around clients, but it allows employees to move between teams and pick up new skills along the way.

“We have some media people who have become great account people,” Orsini said. “We have great account people who have become very valuable to us in the video production management chain.”

While these agencies are testing innovative models, they don’t have the same scale as holding companies to support massive accounts. The current holding-company structure will have to evolve to help major brands take advantage of leading-edge marketing.

Update: m/SIX is part of a joint venture with The&Partnership, a UK-based holding company.  

1 Comment

  1. Exciting times, and the future's even brighter for smart & engaging marketing - raising the question, where's the data competence within the leading-edge agency.

    Reply

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