Legacy ad groups are look­ing small in a dig­i­tal world

Campaign UK - - NEWS - GIDEON SPANIER Head of me­dia [email protected]­mar­ket.com @gideon­spanier

The best ru­mour at Cannes Lions was that Ac­cen­ture and WPP have been talk­ing about a merger.

“No, you’re way off,” Sir Martin Sor­rell, the WPP chief ex­ec­u­tive, said when I put that to him.

As for sug­ges­tions that Sor­rell made an ap­proach to Ac­cen­ture, he replied: “Rub­bish.”

But the fact that there is even gossip about a pos­si­ble tie-up or part­ner­ship says a lot about how rapidly the me­dia and ad­ver­tis­ing land­scape is chang­ing.

All the big six ad groups – WPP is the largest – sud­denly look small in a rapidly evolv­ing global mar­ket­place. Some of the con­sult­ing and soft­ware gi­ants that are en­ter­ing mar­ket­ing ser­vices are dou­ble or tre­ble the size of a WPP, Om­ni­com or Pub­li­cis Groupe. And Google owner Al­pha­bet, Face­book and Ama­zon are ten to 20 times big­ger.

A merger or sale could look at­trac­tive for an ad group in a sec­tor that faces in­tense struc­tural pres­sures as brands grap­ple with tech­no­log­i­cal dis­rup­tion, de­mand greater trans­parency, take data and dig­i­tal ser­vices in-house, and deal di­rectly with dig­i­tal me­dia own­ers. In this con­text, Havas’ merger with Vivendi could be seen as much as a sign of weak­ness as a sweet deal for the Bol­loré fam­ily.

Sor­rell is candid enough to ad­mit that WPP, a hold­ing com­pany cre­ated by him, must change.

In two re­cent con­ver­sa­tions with Cam­paign, he had a clear mes­sage: the mar­ket is chang­ing quickly, mar­keters want sim­pli­fi­ca­tion and in­te­gra­tion, and WPP needs to move to “one or­gan­i­sa­tion” when deal­ing with clients: “The only ques­tion is how quickly you do it and how you do it.”

He looks ad­mir­ingly at Gold­man Sachs and Mckin­sey and thinks WPP can learn from their sim­pler propo­si­tion for clients.

How­ever, it is eas­ier said than done. In a telling ad­mis­sion at the WPP an­nual gen­eral meet­ing, fi­nance di­rec­tor Paul Richard­son said in a re­sponse to a ques­tion from a share­holder that it is dif­fi­cult to pub­lish WPP’S an­nual ac­counts ear­lier in the year be­cause the group has hun­dreds of sub­sidiaries.

The ad hold­ing groups have been built on ac­qui­si­tions. Culling some of the agency brands makes fi­nan­cial sense and might not bother some clients. Om­ni­com, Pub­li­cis Groupe and Havas have been do­ing some­thing sim­i­lar by prun­ing the num­ber of agen­cies they op­er­ate. How­ever, the danger is that un­der­min­ing the in­di­vid­ual agency brands will alien­ate staff and di­lute the cul­ture of these busi­nesses.

No won­der the mood at Cannes was anx­ious. Run­ning a hold­ing com­pany just got tougher.

“Sor­rell looks ad­mir­ingly at Gold­man Sachs and Mckin­sey and thinks WPP can learn from their sim­pler propo­si­tion”

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