Even before his longtime rivals Maurice Levy and John Wren publicly announced they were merging their companies, Publicis Groupe and Omnicom Group, Martin Sorrell was plotting his next move.
The chief executive of WPP sent a flurry of code-red notes commanding senior agency leaders to do a "conflict analysis" to identify any accounts the merger could render vulnerable. Execs were instructed to quickly formulate plans to position WPP as the best alternative for clients worried about conflicts.
Mr. Sorrell says he's not interested in competing by gobbling up an ad conglomerate like Interpublic, Havas or MDC. Rather, he plans to pick off accounts while Messrs. Levy and Wren spend the next several months figuring out how to fuse their operations into a single ad beast with a $35 billion market cap.
To do that, he'll lean on his well-worn "agency team" concept. The pitch: Why have an off-the-rack suit from Men's Wearhouse when you can buy a bespoke three-piece from Savile Row?
HEAD OF THE LEAGUE
From a revenue perspective, it's tough to dispute the success of that tactic. In 2010, the company attributed $2 billion of its $14 billion in overall revenue, or about 14%, to such teams. WPP claims that figure ballooned to $7 billion in 2012 -- more than 40% of the holding company's $17 billion in revenue.
Over the past 18 months, a sluggish period for new business, the team approach helped WPP reel in lucrative accounts including GlaxoSmithKline, Samsung, Bank of America, Chinese telecom Huawei and luxury fashion brand Chanel. The teams range in size and structure; some are merely partnerships between a couple of WPP shops, but others are amalgamations of staff from numerous agencies, with their own offices, websites and monikers like Hudson Rouge, for Lincoln; Cavalry, for MillerCoors; and Red Fuse, for Colgate. WPP says there are now more than 30 of these teams.
The acceleration of the team approach is no coincidence. WPP has over the past few years grown more proactive with its model; it doesn't wait for business to come its way. It spots and approaches big clients with sketches for what a potential team could look like.
Mr. Sorrell serves as the undisputed head of the league, but he's got a lineup of big-time coaches, too. Among them, Satish Korde, president-CEO of Team Detroit -- the shop built in 2006 for Ford that's widely regarded as the most successful example of the dedicated agency model. Previously, Mr. Korde was a global client director at WPP charged with replicating such teams for many of its largest clients, including Allianz, Shell and Kimberly-Clark. There's also George Rogers, director of global business development at WPP and former head of Team Detroit. Together, they're scheduling client meetings and dialing-for-dollars any prospects who'll listen.
"Most of our competitors at that time pooh-poohed the idea of putting together teams," said Mr. Sorrell in an interview. He said that he's never shied from being hands-on with clients and rearranging WPP's resources in order to win business, while his competitors have preferred to step back and let the agencies handle bringing in accounts.
Mr. Sorrell uses a jargony term to describe the team concept: "horizontality." Whatever you call it, custom-crafted agencies will be critical to WPP's positioning in the days ahead, and form the backbone of discussions with potential clients.
Single-client agency structures are a controversial topic in adland, with critics pointing out that the best talent, creatives especially, prefer to work on a range of accounts, not just one client. Plus, siphoning off staffers into a new unit can be a major distraction to shops.
The question is what happens as the proliferation continues. Is there such a thing as too many agency teams? Could we reach a tipping point where the approach threatens the most storied brands on Madison Avenue?
One CMO, who requested anonymity so as to avoid disparaging the shops currently working on his account, said he thinks that in five years agency networks like BBDO, McCann, Y&R and Saatchi & Saatchi will matter less. "The agency model is really dead. I don't need all these different agencies working for me. I don't want it to be about [agency brands]. I just need less overhead and more efficiency."
It's this sort of mentality that's most worrisome to some agency folks, particularly within WPP's walls.
While the team model is touted as a boon to their parent company, numerous staffers at shops like Ogilvy & Mather, JWT and Grey fear the value of their agencies' rich heritage and unique philosophies is fading. Said one senior agency insider: "If it continues to go down this path, and clients go directly to [Mr. Sorrell] for solutions rather than the heads of agencies, it's absolutely going to start tarnishing the brands."
Mr. Sorrell's take? Get over it.
He likens the debate over teams to adland's reaction some years back when it unbundled media from creative. Agencies argued they wanted to keep media-buying and planning in house rather than see it spun off into a specialty shop.
"The market moved and clients wanted specialization in media ... not media subservient to full-service creative," said Mr. Sorrell. "We at WPP only reacted to a change in the marketplace and what's happening with teams is in my view exactly the same." He added: Execs inside WPP and out who don't grasp the need to service that demand "need to get their heads examined."
Industry observers aren't ready to ring the death knell for agency brands just yet, but note that an upsurge in teams -- particularly if WPP's competitors ramp up similar strategies -- could bring about major change.
"There's going to be continued interest in exploring these models because client resources are getting stretched more than ever, so managing multiple agencies is harder," said David Beals, president of advertising consultancy R3:JLB. "We'll definitely continue to see more experimentation."
The holding company pitch, or "superpitch," was popularized about a decade ago. Previously, only big multinationals used them, but now they're held by midsize marketers and sometimes a single marketing discipline, as opposed to an integrated account. For example, a couple of years ago, Italian confectioner Ferrero Rocher held a holding-company pitch, and more recently, J.P. Morgan called one for only its digital-marketing business.
The most cynical view of why teams interest marketers is that some clients have become lazy. Observers say many CMOs would outsource the cherry-picking of best-in-class shops, and have a comprehensive marketing solution presented to them. In a world where new digital, mobile and other types of shops are constantly cropping up, observers say some CMOs aren't well educated when it comes to the agency landscape.
Another reason could simply be that CMOs are spread too thin.
"A lot depends on the clients' organizational structure," said Mr. Beals. "Smaller marketers that have less staff may benefit more from it than the larger companies that have enough bandwidth to have someone managing multiple agencies."
The team model is favored by client procurement departments, too, which get more of a say during reviews these days. The thinking is they can squeeze more efficiency out of agencies and have more leverage negotiating fees when buying a volume of services from a holding company. Still, WPP has so far managed to expand its overall operating margin while relying on the team approach, from 13.2% in 2010 to 14.8% in 2012.
Said Mr. Sorrell: "There are clients who don't want [teams]. They want to do the coordination function, whereas with a team the agency does the coordination function. But in a world where finance and procurement are becoming more powerful, the trend is that the clients spend more time looking at their supply chain."
History is littered with examples of failed teams, the most prominent being the 2009 collapse of Enfatico, an agency WPP built for Dell. It proved to be too ambitious, attempting to scale up to 1,000 staffers in a year, and the marketers who championed the idea left Dell before Enfatico was up and running. It was quickly folded into WPP's Y&R.
"It's not to say that when you make an omelet you don't break some eggs," said Mr. Sorrell.
One of the pitfalls WPP claims to have overcome is earning buy-in for the team concept beyond the marketing suite, from the very top of companies. (In the case of Bank of America's pitch, CEO Brian Moynihan was on board.)
"What is a necessity is that the CEO believes in the model and gives the CMO the authority to get it done," said Mr. Sorrell.
WPP has been by far the most aggressive in promoting the team approach, but it's hardly alone and other agency-holding companies are showing increased interest.
Less than a year ago, Interpublic Group of Cos. built a unit to serve MasterCard under McCann, and in May, Interpublic won a holding-company review for Zurich Insurance. It was also a team pitch -- with Interpublic CEO Michael Roth taking part in client presentations -- that convinced General Motors to hand all Cadillac brand marketing to Interpublic.
MDC Partners seems eager to dabble, too. Last month, it hired an analytics guru to sit at the holding company level to be tapped for new-business pitches. "While the majority of pitches are individual-agency-led, MDC will continue to provide that synergistic approach when an integrated solution is best for the client," CEO Miles Nadal said at the time.
Mr. Sorrell says they can try, but competitors can't beat his team machine. Besides having executives like Messrs. Rogers and Korde, he also claims he's worked out the kinks.
"We have always believed in the power of bringing resources together," he said. "The most difficult thing in an organization is to get everyone inside the company to understand strategic and cultural change. We are an industry where turf, territory and ego historically was important. But with the evolution from mad men to maths men, as we call it, it means increasingly looking for ways to integrate."
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