The gospel according to Martin and John

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The age of the advertising agency as the dominant and defining force within holding companies is over.

John Wren and Martin Sorrell may not agree on much, particularly when it comes to management philosophies. But they essentially agreed on that when the chief executives of the world's largest marketing-services companies made history on Friday the 13th by sharing a stage for the first time last week.

"We do not believe there is an inalienable or God-given right for advertising agencies to rule the roost," said WPP Chief Executive Mr. Sorrell. "Life has changed."

The executives were joined onstage by David Bell, the former CEO and current co-chairman of Interpublic Group of Cos. at a discussion in front of some 900 people that was sponsored by the Detroit AdCraft Club (and moderated by Advertising Age Editor Scott Donaton).

Mr. Wren said he is reorganizing Omnicom Group in a way that will create three holding companies within his holding company-each offering a broad range of integrated services but anchored by his global network brands: BBDO Worldwide, DDB and TBWA Worldwide.

That remark was perhaps the most newsworthy in a panel marked by agreement and only gentle jabs among the rivals. Yet the differences in the styles of Mr. Wren and Mr. Sorrell were evident in their subtly nuanced answers to certain questions, particularly those pertaining to their definition of the roles of a holding company.

Mr. Wren is a hands-off manager who believes Omnicom's role is largely a financial and talent one while Mr. Sorrell is an active manager who refers to WPP as a "parent company" and views holding companies as something akin to modern full-service agencies.

"We've all gotten there differently," said Mr. Wren, who attributed the companies' differences to their histories and the "personalities of their leadership."

Mr. Wren said that once his reorganization is complete, clients seeking a holding company solution would be able to choose from among his three offerings, while Mr. Sorrell said WPP was best positioned to link together assets to suit clients' needs.

None of the three executives protested when asked whether global agency networks are the most troubled segment of a rapidly changing industry, where media services companies are more involved in strategy, creative boutiques are stealing accounts and digital technologies have reduced the effectiveness of traditional media.

"There's overcapacity in our industry," Mr. Sorrell said. Mr. Wren agreed, but not surprisingly said none of his agencies would go under.

"Big global agencies that have embraced change will continue to perform strongly, and those that do not will struggle," Mr. Bell said.

The top three holding companies all derive less than half their revenue from advertising, and other marketing services such as public relations, digital media, direct marketing and branded entertainment are growing at a quicker pace.

Mr. Sorrell said WPP gets some of its best ideas these days from its smaller business units such as branding agencies Landor, Fitch and Enterprise. He said marketers are seeking out those disciplines that are the most measurable and can best prove return on investment.


Mr. Bell said that the "lead engagement agencies" in Interpublic's stable are not necessarily creative agencies, citing as an example Draft Worldwide, which took the lead on the holding company's European Nokia win earlier this year.

On the issue of agency compensation, the executives said they're experimenting with various models and expected a system to evolve that will more closely tie pay to performance. But Mr. Sorrell stopped short of endorsing a recent proposal from Andy Berlin, CEO of WPP-owned Berlin Cameron/Red Cell, for agencies to share ownership of ideas, saying such a model might work best at a smaller agency.

All three executives said midsize companies will feel the tightest squeeze from the industry changes, although they also predicted that many of the small independent boutiques making headlines these days-such as Mother and Strawberry Frog, which Mr. Wren jokingly referred to as Strawberry Mother-will eventually sell themselves to holding companies.

"The world doesn't need another advertising agency," Mr. Wren said.

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