As consolidation continues among the holding companies, it won’t always mean failings for the agency brands that don’t survive but it says a lot about the confidence in the brand that remains.
So Wunderman remains, and while even its own holding company puts out a stark warning for difficult times to come in the industry, the agency’s global CEO Mark Read sees the path ahead as nothing other than opportunity.
This confidence in the agency’s digital ability is perhaps one reason why Read has been named this year's Digital Individual of the Year at The Drum's Dadi Awards, the second time in three years.
“It’s either a threat or an opportunity. I like people to think of it only as a threat if you do nothing about it; it’s an opportunity if you use that to grow and expand into new services. We are really trying to take that into what we do. So, for a client, we will direct them to look at e-commerce now but move them away from something that they were doing before,” he explains.
Being in the sweet spot of the digital pain points of brands helps, adds Read, noting that some of the wider industry concerns about shrinking budgets may not apply to those in certain corners of the industry.
“Wunderman, in a sense, is in a good place. Generally for what we do, clients want more of - digital marketing, social, email and e-commerce. We are seeing growing demand for what we do across the board. I think that a number of companies that are challenged, particularly packaged goods companies, but we tend not to work with a lot of them historically. For us, they are actually a growth opportunity in e-commerce and it’s a growth opportunity for them to think about CRM, as it’s not really something they’ve done before. In a funny way, we are in a good place, but that’s not to say there aren’t challenges as clients are always scrutinising budgets. It’s tough out there but we feel good about the future,” he says.
Wunderman is having to adapt to these opportunities and the changes seen by bringing in Possible and Salmon, though at very early stages, signal more change ahead, particularly in its expertise around e-commerce.
“E-commerce can be very seductive to clients and also very dangerous. The reality is that, in most markets, 100% of growth is coming from e-commerce, so to grow your business, you have to be on e-commerce. What we help clients to understand is how. In particular, for brands looking to use Amazon, the problem is that Amazon starts to own the customer relationship. Not just the data but the customer relationship. If a customer goes to Amazon to buy a product, it knows what those customers are buying and we need to help brands think through the long-term implications of that. Yes you can drive sales in the short run but if you are giving Amazon insights into your best customers, in the long run that may not be the best thing to do,” he explains.
For Read, the Amazon acquisition of Whole Foods and its increasing foray into fresh food and grocery has been a key event in helping marketers to wake up to this reality.
“I think that’s why getting into Whole Foods and that category has raised a lot of alarm bells with a lot of clients around how to engage with Amazon. I think clients have to engage with them but they have to think through what the right way of doing that is. They need to balance it with their own strategy of going direct to customers, so they have options in that negotiation and they are not dependant on Amazon for distribution,” he argues.
With high-profile moves making headlines, it’s understandably pushed e-commerce up the priority list for brands, though Read says it’s not a new phenomena.
“It is ultimately a way of us connecting marketing and sales to be much closer together, and in a way they never were before. Often marketing and sales were seen as being separate things and now we see them bring the two closer together. E-commerce is the major catalyst to that; it makes marketing more performance-driven and forces brands to consider how they are really driving sales through platforms at the same time,” adds read.
From an agency perspective, with its widened pool of talent and expertise in the ecommerce space, Wunderman is perhaps understandably confident. However, the need to change isn’t just being driven by client needs now, as increased competition from technology business and consulting firms continues.
These factors don’t escape Read, as he says that while the Salmon and Possible moves are partly down to consolidation, a response to clients wanting greater simplicity. He adds that it’s also about this increased challenge from newer players: “Part of what we are trying to do is simplify how we are organised within WPP, another part is that we’ve got new competitors that come from the technology and consulting practices. For Wunderman, having more scale helps us be competitive against those businesses. We have strong technology relationships with the likes of Adobe, Sitecore,Marketo and Salesforce, so I think that helps and drives where we are going.”
Being a friend to the technology behemoths is also a source of confidence for Read, where others are seeing them as a threat, as brands consider in-housing certain tasks by using technology.
“Some things get in-housed and some things get out-housed,” he waves off, “I’d say that the value agencies can bring is, firstly, an understanding of the tech but also how to use that within marketing programmes. It’s all well and good implementing technology but you have to operationalise it.”
The Wunderman path to future-proofing the agency may be partly WPP-down consolidation and partly smartly predicting the importance of e-commerce, but speaking to Read leaves you with a rare sense of confidence, a welcome feeling amid otherwise gloomy outlooks.