David Droga’s ascent to the top of Accenture Interactive. A changing of the guard at Ogilvy. Dentsu’s years-long restructure. An ugly backlash following the JWT tribunal case. If you’re looking for a headline that defines the year in advertising, you’d be spoiled for choice. But here, we consider the underlying threads that tie together the biggest agency stories of the year – from power shifts away from agencies and towards staff and clients, to the holding companies diversifying their data offerings, to the hungry challenger groups looking to expand at their cost.
Staff power balance shifts – perhaps forever
Advertising is a people business. It’s why, in every quarterly earnings call, network CEOs were so eager to thank their people – not just for putting up with the pandemic, but for sticking with them while they did it. One of the biggest stories of the year has been the grand movement out of the ad industry towards industries with better pay and conditions, such as tech. In the summer, that trend forced a talent crunch as agencies tried to staff-up once more, forcing big and small companies to compete on salaries and perks.
While small agencies such as Here Be Dragons sought to retain junior employees with schemes like backing their side hustles and paying for art gallery passes, networks such as Publicis began offering employees the chance to work abroad for six weeks a year (a policy announced with a lavish trip through cinematic history). Meanwhile, agency staff in the UK have looked to organize a more collective approach to the industry’s working woes, forming the first trade union for the ad business.
Challenger agency groups gain taste for acquisition
The last year has seen plenty of activity on the M&A front. Many of the most interesting buys have come from the agency groups looking to challenge the dominance of the big six, such as Stagwell, S4, MSQ and Dept.
The latter acquired digital marketing agency Feed just last week and launched its own NFT practice in November; in four years it has gone from a staff of 100 to 2,000. When we interviewed Dimi Albers, Dept’s chief exec a couple of weeks ago, he explained how it hoped to keep its collegiate culture alive as it expanded.
British group MSQ Partners has also seen significant expansion through acquisitions this year, as it became biggest indie in the UK and simultaneously set its sights on the States. And Stagwell Group’s founder Mark Penn looked to declare his intentions to compete more fiercely with incumbents with a showy market closing ceremony at the Nasdaq in New York.
”We aim to dislodge some of that $60bn that’s sitting over there in the majors, because they’re the people that most clients love to hate,” he told us in our September interview. ”The marketplace is ripe for this kind of opportunity.”
S4 Capital continues hot streak
While the rising tide of digital media spend lifted just about every boat going, Sir Martin Sorrell’s S4 Capital has had a particularly strong year. It acquired a string of new agencies and bolstered its presence in the rapidly growing Latin American markets; unveiled its tech services offering; and debuted a major, company-wide rebrand.
That move brought Media.Monks, the network’s original acquisition, right to the fore while promoting a ’modular’ framework for each of its sister agencies, allowing them to promote their place within the network while keeping their entrepreneurial spirits going – or in plain English, having their cake and eating it. Green Square’s Tony Walford delved into the details of Sorrell’s S4 evolution for us in August. And at the same time, it posted enviable growth figures, revising its own profit predictions upwards twice while doubling its client base.
Holding companies deepen data investments
For most of the holding companies, data, digital transformation and digital media were the major drivers of growth this year. In November, our in-depth look at the performance of Merkle, Omni, Acxiom and Epsilon revealed their importance to their holding company parents, which are increasingly promoting the way these data units glue the rest of their products and services together.
WPP sought to deepen its data capabilities with the launch of Choreograph, which combined the data units of Wunderman Thompson and VML Y&R, and Dentsu’s acquisition of LiveArea aimed to boost its abilities in data and e-commerce. According to Dentsu International global boss Wendy Clark, it’s part of a strategy to ”go deeper into those capabilities and filling gaps”.
Brands consolidate media accounts
On the client side, the most coherent trend was the raft of account consolidations in autumn, especially in media. Just Eat, carmaker Mercedes Benz and pharmaceutical titan Bayer all concluded agency reviews worth hundreds of millions of dollars by concentrating their agency partnerships with a single company. Lucinda Peniston-Baines, owner and managing partner at marketing consultancy The Observatory International, told us the trend was ”certainly one of the consistent themes” across the last couple of years.
Though accelerated by the pandemic – clients are said to have less patience for managing sprawling agency relationships – it’s a trend likely to continue. Tristan Rice of SI Partners told us that media was merely the first stop on the route.
In-housing adds up for brands
Meanwhile, brands emerging from the economic hit of the pandemic began beefing up their in-housing operations. As Wongdoody chief exec Ben Weiner wrote back in September, the argument for or against in-housing is “over“.
And according to Lego’s Miguel Vera, in-housing reflects a more modern sensibility regarding marketing. ”In-house agencies are born as much out of budget efficiencies and reducing overheads as the need to think differently about where and how we reach people,” he wrote.
Frito-Lay’s in-house agency, for example, has grown from a minor design team into an internal business that produces Super Bowl spots. Chris Bellinger, head of that outfit, said it was looking to poach staff from right across the industry. ”Your ideas will see the light of day. You’re not leaving the environment of a creative agency – the only difference is you’ll be working internally. And we’re gonna do it quicker and get more opportunities to take bites of the apple.”
In Britain, both Boots and Tesco launched their own in-house media operations; the former created its own agency, dubbed Boots Media Group. As John McCarthy reported late last month, both retailers seek to leverage their loyalty card schemes to sell advertising to other brands.