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Hold­ing groups and me­dia agency brands are fight­ing for their place in a chang­ing mar­ket

The me­dia in­dus­try is bat­tling to reinvent it­self in re­sponse to a chang­ing mar­ket, Gideon Spanier writes

Ev­ery­one in the mar­ket­ing in­dus­try agrees that the me­dia agency busi­ness is go­ing through dra­matic change. Scott Hage­dorn, global chief ex­ec­u­tive of Hearts & Science, reck­ons the last big shift was about 15 years ago, when the in­ter­net and dig­i­tal me­dia first went main­stream.

Sir Martin Sor­rell, chief ex­ec­u­tive of WPP, says it is the big­gest change since me­dia de­part­ments sep­a­rated from cre­ative shops two decades ago.

But whether it has been 15 years, 20 years or more, the sense that agen­cies are fac­ing a “big bang” mo­ment was a hot topic at this year’s Cannes Lions.

“No-one is sit­ting around com­fort­ably right now,” ac­cord­ing to Tim Cas­tree, MEC’S global chief ex­ec­u­tive, who is merg­ing the WPP agency with sis­ter shop Maxus to cre­ate a new com­pany. “It is a very con­tested time in our in­dus­try,” he adds, mean­ing there are lots of new en­trants and chal­lengers.

The global me­dia agency net­works, which have be­come the profit engine of the big ad­ver­tis­ing groups, face the big­gest dis­rup­tion.

Me­dia shops over­took cre­ative agen­cies in fi­nan­cial im­por­tance dur­ing the past decade, thanks to their buy­ing power and scale. But now those strengths have been blunted by the rise of Google, Face­book and other tech plat­forms such as Snapchat, which own first-party data and al­low brands to buy ads di­rectly – with­out the need to use agen­cies.

Sor­rell says clients are driv­ing change across the agency mar­ket­place be­cause they want sim­pli­fi­ca­tion and in­te­gra­tion, with me­dia, data, cre­ative, CRM and other dis­ci­plines work­ing to­gether.

“WPP has al­ways been mar­ket-driven,” he says. “When we formed Mind­share [in 1997], it was be­cause clients wanted it. What hap­pened was that the mar­ket moved in such a way that J Wal­ter Thomp­son and Ogilvy’s me­dia de­part­ments weren’t suf­fi­cient to win busi­ness. You had in­de­pen­dents like Chris Ingram, the Gross broth­ers in France and West­ern Ini­tia­tive with Den­nis Holt and Michael Kas­san [run­ning me­dia agen­cies].”

And now, 20 years later, the mar­ket is mov­ing again. “The mar­ket is shift­ing so quickly be­cause of tech­nol­ogy and other things,” Sor­rell con­tin­ues. “A nd what you have to do – whether you call it sim­pli­fi­ca­tion or in­te­gra­tion or hor­i­zon­tal­ity or what­ever – you have to pro­vide the best struc­ture for that mar­ket move.”

Bring­ing me­dia and data to­gether

For Sor­rell, bring­ing me­dia and data to­gether is part of a new holy grail and that’s partly the ra­tio­nale for merg­ing MEC and Maxus to cre­ate a new en­tity, backed by a group-wide data hub known as [m]plat­form. Sor­rell also wants to build dig­i­tal agency Essence into a fourth global me­dia net­work along­side Me­di­a­com, Mind­share and the new MEC/ Maxus busi­ness.

Daryl Lee, global chief ex­ec­u­tive of UM, talks in sim­i­lar fash­ion about “re-ar­chi­tect­ing me­dia around data” in­stead of around in­sight, as it pre­vi­ously did.

All the me­dia net­works have been in­vest­ing in data ca­pa­bil­ity. Om­ni­com has de­vel­oped a data plat­form, An­nalect, and launched Hearts & Science, which has leapfrogged Essence by unit­ing data, CRM, ecom­merce and me­dia. Mean­while, Dentsu Aegis Net­work has bought Merkle, a dig­i­tal CRM busi­ness, and is bring­ing its data plat­form, M1, into the heart of the com­pany for its agen­cies to ac­cess. Con­tent cre­ation and or­ches­tra­tion

Cre­at­ing con­tent that can be per­son­alised for con­sumers and dis­trib­uted in real time is an­other boom area. MEC gen­er­ates 5% of rev­enues from con­tent and Cas­tree wants that to rise to 20% by 2020.

“More and more me­dia agen­cies are get­ting in­volved in con­tent,” Mainardo de Nardis, global chief ex­ec­u­tive of OMD, the most-awarded me­dia agency net­work at Cannes Lions this year, says.

He ar­gues that me­dia shops have the edge over cre­ative agen­cies be­cause they un­der­stand how the me­dia ecosys­tem works and can tai­lor con­tent for screens of ev­ery size. “Only the me­dia agency and the client can see all the or­ches­tra­tion – we see all the slices [of the me­dia plan],” de Nardis ex­plains. “Clients want to know where the story starts and where it ends, how you pri­ori­tise, how you se­quence it, how you or­ches­trate the story.”

Mean­while, UM runs UM Stu­dios to make con­tent at scale and speed on be­half of brands. That’s “not what cre­ative agen­cies are built to do”, Lee says: “They’re built to cre­ate long, beau­ti­ful cre­ative pieces that stand the test of time.” That still mat­ters, but clients also want agile, fast-turn­around con­tent to drive per­for­mance mar­ket­ing, he adds.


Get­ting me­dia and other dis­ci­plines such as cre­ative, dig­i­tal or PR to work to­gether for a brand is be­com­ing more im­por­tant. Re­cent ac­count wins such as Wal­greens Boots Al­liance and Bri­tish Air­ways for WPP, and Asda and Proc­ter & Gam­ble in the UK for Publi­cis Groupe, show that brands are in­creas­ingly look­ing to a hold­ing com­pany to pro­vide a sim­pli­fied, one-stop solution rather than hav­ing to cor­ral lots of agen­cies.

“The best solution that I think the clients want is the best peo­ple work­ing on their busi­ness,” Sor­rell says. “Those peo­ple could come from mul­ti­ple brands [within WPP]. My view is stronger to­day than it has ever been that mov­ing to one or­gan­i­sa­tion is the right end po­si­tion. The only ques­tion is how quickly you do it and how you do it.”

The rise of con­sult­ing

The en­trance of con­sul­tants and com­put­ing giants such as Ac­cen­ture, Deloitte, Or­a­cle and IBM into mar­ket­ing ser­vices may be lim­ited for now but noone could miss their pres­ence at Cannes. De­mand from clients for strate­gic ad­vice and “up­stream” think­ing about how to cope with dig­i­tal dis­rup­tion and trans­for­ma­tion in a con­nected world is real.

Publi­cis Groupe used its con­sult­ing arm, Publi­cis. Sapi­ent, to sup­port Star­com on its suc­cess­ful re­ten­tion of P&G in the UK. WPP’S Wun­der­man is push­ing into con­sult­ing and Om­ni­com is ex­pected to beef up its ca­pa­bil­i­ties.

Agen­cies need these new skills in a world where they say rev­enues mat­ter more than me­dia billings.

Di­lut­ing the agency brands?

The dilemma fac­ing agency groups is where the bal­ance of power rests be­tween the hold­ing com­pany and the agency brands. The way Om­ni­com killed M2M last year and WPP dropped Maxus and MEC sug­gests that agen­cies are be­com­ing less im­por­tant. Publi­cis Groupe has also dumped the Op­ti­me­dia brand and ques­tions per­sist about Me­di­avest, al­though the group has said it re­mains com­mit­ted to its fourth global me­dia net­work.

Sor­rell thinks agency brands mat­ter to staff but may be less im­por­tant to clients. WPP’S re­cent de­ci­sions to merge [email protected] into Mind­share and con­sul­tancy group Sal­mon into Wun­der­man says a lot about how the agency land­scape is chang­ing. It’s not just me­dia shops that are af­fected.

Cannes Lions: tech plat­forms such as Snapchat had a strong pres­ence at the fes­ti­val this year

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