The New Shape of Agencies

07 April 2016

It’s become common-place to criticise agencies for not changing their business model, as if this was the sort of thing anyone could do between breakfast and lunchtime.

Life is further complicated by the fact that agencies are fundamentally service businesses – which means that they are or should be structured to meet their clients’ diverse and evolving current and future needs.

Last month the US agencies’ trade body, the 4A’s held its Transformation Conference, at which both Maurice Levy from Publicis, and Wendy Clark from Omnicom’s DDB were amongst the speakers. Clark is an agency leader who has changed ‘sides’, her previous role being at The Coca-Cola Company.

Also last month we heard from WPP’s Sir Martin Sorrell at The Guardian’s Changing Media Summit.

There are some common and interesting themes emerging as the agency holding groups do indeed react to these changing times.

First, it seems that Omnicom and Publicis are (separately) on the move. The aborted merger between the two of them must have had a dramatic effect on the two organisations’ speed of evolution; after all it was only two years ago (almost to the day) that rumours started to appear that maybe this merger might not take place.

Two years isn’t long to regroup and regain any lost momentum.

The AdAge report on the 4A’s event has Publicis’ Maurice Levy making the point that: “the company will no longer be called a holding company, but a “connecting company,” because the holding company model is dead and gone”.

You can probably hear the hollow laughter from WPP, who have for many years created client teams drawn from their appropriate operating units, with varying degrees of success, but there does seem to be a subtle difference.

The WPP model seems to me to be primarily about upselling WPP’s range of services to existing clients.

The Publicis phrase, ‘connecting company’ sounds a bit more about collaborating to meet client needs, even if some of the collaborations are with non-Publicis companies.

Wendy Clark, discussing her agency’s new DDB Flex approach talked of “embed(ding) media partners and marketing partners in the process and most importantly.. embed(ding) clients up front and early.. placing high priority on collaboration with clients and other partners”.

There were two other interesting references. Both Levy (“creativity will remain indispensable”) and Clark (“putting your agenda ahead of your client’s agenda will never work”) seemed to be putting some clear blue water between themselves and WPP.

Sir Martin Sorrell has never made any secret of his preference for numbers in every shape and form over advertising creativity (yes, I know numbers can be creative too..). The financial strength of his GroupM network is crucial to the overall well-being of the holding company, and there can be no question that a part of that financial strength comes from delivering to a single-minded vision of the Group’s own agenda, almost regardless of clients.

After all, Sir Martin is greatly and rightly admired by his peers in client companies. Being in any way driven by his clients’ agendas can’t come easy.

It wasn’t really too much of a surprise when he announced that WPP was “not in the advertising business any more”, although perhaps the insertion of the word ‘only’ might have been appropriate.

One commentator Asa Bailey put it well: “The medical industry has not abandoned medicine and suddenly started rebranding doctors as computer programmers even though, like in advertising, increasingly doctors also rely on and use data and software to invent new ways to treat people”.

Collaboration and creativity aided by technology versus control and technology as an end in itself seems to be about the sum of it.