The future of the agency model is in the hands of the disruptrepreneurs
Eight years ago, Martin Sorrell pointed out how journalists like to pronounce things dead, even when they’re not. Sorrell was talking about the death of the advertising industry in general and the death of the holding company in particular.
Michael Moszynski of London Advertising.
Despite the media doom-mongering, there are now six global advertising brands, including Sorrell’s former home, WPP, with an increased share of the ad market worth tens of billions of dollars.
However even if they are not yet dead, I believe we have now passed peak mega ad group. Why?
Almost without exception the large holding companies have legacy infrastructure, processes and cultures that were all built before the internet while their clients have demonstrated more agility in transforming themselves.
Frustrated by agencies' slowness to respond, clients are increasingly embedding agencies internally, (for example, Oliver and Unilever), or subsuming their workload (for example, P&G).
What clients need more than ever, however, and are not getting from their agencies, is one strategy and one idea. The rest is execution. For example, clients don’t need a social media strategy but rather a communications strategy that encompasses social media (and whatever other media is relevant to the task).
Add to this the erosion of trust that has been engendered by recent digital media scandals and we have a toxic client landscape for the bigger agencies right now.
Sorrell was a visionary architect, a man who took years to create a revolutionary agency model, based on the supermarket style concept of offering clients everything they need under one roof.
The WPP model has now found its greatest challenge in shifting client demands and expectations and in addition is facing other significant challenges: reduced budgets, disruption through disintermediation, new competitors like Google in digital advertising, and consulting services like Accenture and Deloitte in the field of business transformation.
From day one my agency, London Advertising, was focused on reducing the overhead of overseas offices, offering clients a more cost-efficient model, with fewer ‘hands on the work’ to dilute the effectiveness of our ideas. According to Ipsos Mori, our advertising for Mandarin Oriental had the highest ad recall they have ever recorded and the campaign has helped the client grow over 600% since it launched.
Since we launched in 2008 we have proved our model by running work in more countries from London than WPP has offices and have achieved an average margin four times higher than the industry average while saving our clients money.
The bottom line is that the holding company model, although a good one for its shareholders and bosses, serves its own needs better than those of its clients. By their very nature marketing behemoths are complex and more akin to a shopping centre than a department store, a rag bag of corporate cultures with no common identity.
No doubt this realisation is behind the dogged determination of Publicis Groupe to talk as if it is really just one big agency with four divisions, in an attempt to show clients a common vision and purpose.
Last year, Omnicom inadvertently proved you don't need a global marketing organisation to service a global brand. 'We Are Unlimited', a 200 strong full-service agency, created by Omnicom with McDonald's as its only client, is probably the ultimate irony. Apparently, the burger giant did not need Omnicom's vast array of agencies to service its creative needs, just one agency applying 'The Cortex', a collaborative and strategic model used to build anything from a tweet to a whole marketing campaign.
What Omnicom is offering is common practice in marketing giant land, a collection of talented people working on an account, only in this instance they are calling the team an agency. So, for independent agencies like mine the business landscape in which we pitch against the giants has now changed. It's obvious that all we have to do is to prove ourselves a match for a 'horizontal' team (a thin slice of WPP) or an agency like 'We Are Unlimited'.
Interesting to note that BBH created BBH Unlimited a decade ago. So much for creativity in the creative industry.
In our favour we have all the things that clients want from a relationship and yet often find missing in their dealings with a mega agency: a centralised management team that always fields a client director and creative director empowered to make decisions, nimbleness and agility plus entrepreneurial and innovative thinking. From just one office we create ad campaigns, branding, strategy and content across all platforms, pinned to a single unifying creative idea.
Since his departure from WPP, Sorrell has been asked by countless clients “what the new agency model” will be? His vision for the agency of the future is one that is “more agile, more responsive, less layered, less bureaucratic and less heavy”, a view that conforms closely to my own company’s raison d’etre.
Ten years ago, when I started my agency it was everything that I felt would give us an advantage. It’s good to see that, at least for the world’s most famous marketing entrepreneur, my initial gut feeling still rings true a decade later.
The future of advertising still belongs to the entrepreneurs who are ready to disrupt it.
Michael Moszynski is founder and chief executive of London Advertising
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