Leo Who?
Ogilvy What?
Leo Who?
Ogilvy What?
Agency brands risk losing relevance as holding companies assemble bespoke teams
By E.J. Schultz
Illustration by Tam Nguyen
Published on June 12, 2018
Agency brands risk losing relevance as holding companies assemble bespoke teams
By E.J. Schultz. Illustration by Tam Nguyen. Published on June 12, 2018.

When Campbell Soup Co. named Publicis Groupe the winner of a massive agency review for digital, creative and media, the press release contained a smorgasbord of buzzwords that have come to typify holding company-level pitches. Publicis will provide an "entire suite of marketing services and provide more accountability and flexibility than traditional marketing models," its March 13 announcement said. And by consolidating with Publicis, Campbell will "ensure all areas of spend are maximized." But one detail went unmentioned: which Publicis agencies will actually do the work.

The omission symbolizes a new threat to individual agencies, whose brand identities and culture risk erosion as more clients demand customized, bespoke solutions fusing multiple agencies. Often, big marketers bypass individual agencies and send RFPs straight to holding company executives, who pluck talent from a range of individual shops. It results in creations like Team Energy, the name WPP gave to its BP account squad after winning the business in May and throwing in talent from an array of shops, including VML, Ogilvy, Mindshare and Grey.

"I think it very severely puts the individual agency brands at risk," says Joanne Davis, founder of agency search firm Joanne Davis Consulting. "You want your mother to know where you are working. Your mother would know Ogilvy, but if you worked at Team Energy, what's Team Energy?"

Agencies continue to push their own branding and identities, of course. JWT goes "where others only dare," according to its website, while Saatchi & Saatchi has an "unshakeable spirit and unbeatable attitude." Starcom is the "Human Experience Company." Zenith is "The ROI Agency."

But the more that talent is mixed and mashed together in these customized, single-client units, individual agency differentiation seems less important, no matter the glitzy branding. "It does chip away at the [individual agency] brand, because they have to dedicate resources from the parent brand to the bespoke brand. It's a transfer of power," says Dick Roth, chairman of agency search consultancy Roth Ryan Hayes.

Agency leaders maintain their brand names still matter, even when they are operating in the shadows. "Clients want to be able to go to their board and say they are working with a Leo Burnett, and they are the third-most-recognized creative agency in the world," says Leo Burnett North America CEO Andrew Swinand. His shop is part of the Campbell team, handling creative—a fact he did not easily divulge in an interview. "I don't want or need that press. But Campbell's knows who I am," he says. "We agreed with Campbell's that we want this to be about the Groupe."

Streamlining and simplifying

Such groupthink is not entirely new, of course. Former WPP CEO Martin Sorrell helped popularize the model with creations like Team Detroit for Ford, established in 2006 and later rebranded as Global Team Blue; and Red Fuse, which was established for Colgate-Palmolive in 2012. But the trend is accelerating as more big clients demand their own custom shops. They see them as a way to reduce complexity and lower agency costs.

Holding companies have no choice: Respond or lose business. Consider ad giant Procter & Gamble, which has brought more work in-house partly because Chief Brand Officer Marc Pritchard loathes dealing with a complicated web of agency relationships. In a speech to an industry group this year, he said marketers had outsourced too much work to agencies, turning brand managers into project managers. "We need fewer project managers and more brand entrepreneurs," he said.

"Simplifying the offering is a very desirable thing," says Brian Wieser, who covers the ad industry for Pivotal Research. He points to the yearly charts produced by the Ad Age Datacenter that attempt to bring order to the sprawling agency industry by lumping dozens of individual agencies with their holding company owners. "The very fact that we need those maps is probably problematic," he says.

By contrast, consultancies like Deloitte and Accenture, which have crept into the marketing services business, largely go to market with a single brand. Ultimately, it might make sense for agency companies to streamline their holdings. But "it's easier, I expect, for the holding groups to offer up 'team' solutions than it is for them to actually grasp the nettle and drastically rationalize their own agency brands and reduce their complexity," says Tom Denford, co-founder of media consultancy ID Comms.

Still, some agency leaders are coming to terms with the need to simplify. WPP's Ogilvy has consolidated various offerings like OgilvyOne, which handles customer relationship management, and Ogilvy Public Relations under one P&L as they go to market under one common name, Ogilvy. "We had fragmented our brand," Ogilvy Worldwide CEO John Seifert said on a recent edition of the Ad Age "Ad Lib" podcast. "We had created too many extensions of our brand that had lost clarity and focus of what we stood for as a total company."

In some cases, Ogilvy's name is being swallowed in WPP's multiagency creations, like BP's customized Team Energy. Asked if he was concerned about being subsumed, Seifert said: "At the end of the day, most clients still want to know, where did that talent come from? Who are those people? How well were they trained?"

Demand for client-dedicated shops is coming on a seemingly monthly basis. "With the macro marketplace demands of growth, efficiency and speed, it makes sense that brand marketers are looking for partners that are specifically set up around the way their business works," says Wendy Clark, global CEO of DDB Worldwide. Clark was instrumental in the formation of We Are Unlimited, which Omnicom established in late 2016 to handle the McDonald's account. Volkswagen Global CMO Jochen Sengpiehl recently cited the McDonald's creation when describing what the automaker is looking for in an agency review that it began in April. He even suggested merging talent from one holding company with agency talent from outside that holding company, with everyone sitting together at a single office hub.

'All in one'

Publicis, meanwhile, has notched several recent client wins using the new "Power of One" model pushed by CEO Arthur Sadoun, now one year into the job. In February, Publicis won Mercedes-Benz in about 40 countries and created a special entity called Publicis Emil (named after automotive pioneer Emil Jellinek) to handle it. A month later, Marriott selected a Publicis team branded Marriott One Media, which includes SapientRazorfish and Spark Foundry. In May, Macy's parked its mammoth media account at a dedicated team that includes Digitas and Spark Foundry.

Up until three years ago, the mantra ... was 'vive la différence.' ... [But] for clients who are increasingly looking for integrated solutions, it became quite difficult to navigate."
Tim Jones, Publicis Media Americas

Publicis often gives these single-client entities their own P&L. As of March, they accounted for one-third of the company's revenue. The goal by 2020 is to grow that to 50 percent, Publicis said in March. For smaller markets, Publicis created Publicis One, which further lessens individual agency distinctions by putting them under what it describes as a single "operational backbone."

"Up until three years ago, the mantra of the Groupe was 'vive la différence,' where we really celebrated the differences in our [agency] brands," says Tim Jones, CEO of Publicis Media Americas, the umbrella group for the companies' media agencies. Those differences were rooted in how most holding groups grew up: by acquiring disparate shops. But "for clients who are increasingly looking for integrated solutions, it became quite difficult to navigate," he says.

In the U.S., Publicis has consolidated office spaces by housing multiple agencies under one roof in an initiative known internally as "All in One." In Chicago, for instance, Leo Burnett, Starcom, MSL and Digitas all operate from an office tower on Wacker Drive.

Publicis is also tearing down virtual agency walls with its new AI tool, Marcel. It is plugged as a way to build a "borderless, frictionless" workforce by allowing staffers to connect with anyone at the 80,000-employee company when seeking answers for client demands. Asked what that could do to individual agency brands, Publicis Groupe Chief Creative Officer Nick Law used a soccer analogy: "There are times when you're playing for your club team, and then there are times when you're playing for your country. And that's sort of understood agency by agency and there's already examples of people toggling between those two states."

Andrew Bruce, CEO for Publicis Communications North America, which houses the group's creative shops, says the company's individual shops still have opportunities to shine. He pointed to the media attention Saatchi & Saatchi got for its work for Tide in the Super Bowl, even though it's part of an integrated multiagency team for P&G. "The world knows loud and clear the work that Saatchi & Saatchi did on Tide," he says.

Even as Publicis creates more bespoke teams, a WPP leader recently expressed second thoughts about building single-client accounts, long known as "horizontality" under Sorrell, who departed in April. "You won't hear that word being used anymore," WPP Chairman Roberto Quarta told the Wall Street Journal last week, suggesting that management teams told him the approach was not working because agency leaders were not being incentivized to share the same goals. Yet WPP is moving forward with a bespoke team created in March for Johnson & Johnson, which merges talent from agencies including JWT, VML and Geometry. In the Journal interview, Quatra hinted that WPP's new attempt at streamlining could involve merging underperforming shops with healthier ones.

"Both the clients and the holding companies are struggling for a model that works and they don't have one yet," says Roth, the search consultant.

Plug and play

Interpublic favors what it calls an "open architecture" approach characterized by a "plug and play" mentality. "Our approach when it's appropriate is to focus on the needs of the client and bring in the best we have, whether it's within the agency itself or within IPG or, candidly, even if its a third party," says Interpublic CEO Michael Roth. But "instead of just collapsing all of our agencies the way Publicis has done recently ... we feel that it's better to maintain the culture of the various brands," he adds. "When you create special-purpose organizations to focus on one client, the tendency is to not to view that as a career path, because if, God forbid, you lose that client, you lose your job."

Still, just like Publicis, Interpublic has some client-dedicated entities, like J3, which was created to handle media for Johnson & Johnson. J3 is housed inside IPG's Mediabrands media agency group, rather than being a standalone shop.

McCann WorldGroup, IPG's largest agency network, has several client-dedicated units, including McCann XBC for Mastercard, Commonwealth/McCann for General Motors and Graphene for Chile-based Latam Airlines. But McCann WorldGroup CEO Harris Diamond says, "We have a very high threshold before I'll do this." It only makes sense when clients require a large breadth of services covering multiple geographies, he says. "Some clients go to market very localized, very regionalized. You don't want to build a superstructure that doesn't resemble who they are."

Client-customized agencies are not foolproof. There have been failures, like Enfatico, the dedicated shop WPP built for Dell in 2008 that allowed the marketer to shrink its bloated roster of some 800 agencies worldwide. But Enfatico was folded into Y&R 16 months later. Critics blamed the fact that it was built around a sole client, making it unsustainable. (WPP's Global Team Blue, long considered a success, is under new pressure this year as Ford launches a global review.)

Jets vs. Sharks

Casey Burnett, managing partner of the Burnett Collective, which runs agency searches, says holding companies have gotten better at building dedicated teams after "a lot of trial and error." One new trend is that clients are handpicking the people they want on the team, meaning it becomes less about the agency name and more about the individuals. "I'm much more concerned about the name on my staffing sheet than I am on the door that I walk into," Burnett says. P&G has created a "best talent" model for North American Fabric Care that frees the marketer's brands to pick talent from Publicis Groupe, WPP and Omnicom shops. That's in the spirit of Pritchard's favored approach of building agency teams that span holding-company lines as well as agency brands.

One downside of the Voltron-like multiagency teams is the turf battle that occurs when individual shops try to grab more work, boosting their own bottom lines. "Revenue-grabbing and land-grabbing within a shared team absolutely does happen in the business, but it's something that with the newer teams, newer models are being explored that limit that behavior," says Jon Cook, global CEO of WPP's VML. For instance, when WPP assembled J&J's Neighborhood, it spelled out in advance how revenue would be distributed. "From the beginning, every one of the agencies involved had a voice in how the compensation was going to work, and it was all pre-budgeted," Cook says.

VML also puts safeguards in place to ensure that their employees don't lose their VML identity, even when on a bespoke team at a dedicated office space. For instance, employees are encouraged to attend VML-only meetings and spend time at VML offices, Cook says. "On one hand, I'm a huge believer and practitioner of being part of extremely integrated and well-organized integrated and cohesive teams," he says. But "I do think it's important in our industry for the individual brands and their cultures to not go away. I think they are critical and I think they are one of the biggest reasons that people love working in this industry."

Contributing: Megan Graham and Jack Neff

Web production by Chen Wu.