Beginning in the 1970s, most notably when Young & Rubicam launched its "Whole Egg" approach in `72, agencies have tried to employ more of their diverse marketing services on each client's business. But rather than integrate traditional advertising, direct marketing, interactive, public relations, event marketing and other services sensibly on behalf of clients, consultants and many agency executives say the approach fell flat.
"The old integrated model just meant to translate a TV idea," said Jeff Totaro, senior VP-director of global synchronized marketing, Grey Global Group. The name is even passe. Late last year Grey changed its integration moniker from InteGREYtion to Synchronized Marketing. Y&R's "Whole Egg" approach is now rolled into a unit known as Brand Buzz.
Maurice Levy, chairman-CEO of Publicis Groupe, told attendees at the American Association of Advertising Agencies' Management Conference last month that the current integrated communications approach is flawed. "While I once admired integrated marketing, I declare today that it is faulty in practice if not in concept," Mr. Levy said, calling for agencies to take a more "holistic" approach to solving clients' marketing problems. Publicis' marketing services revenue grew by 1.5% last year. But agency holding companies, having rapidly acquired marketing services firms, want to derive ever more revenue from them. According to Advertising Age calculations, the three largest ad companies-Omnicom Group, Interpublic Group of Cos. and WPP Group-control a collective 41.9% of U.S. marketing services revenue. Individually, Omnicom's marketing services revenue grew 13.8% in 2000, Interpublic's rose 38.1% and WPP's increased 16.6%.
"It sort of regains popularity every time we have an economic squeeze," said Geoff Sands, a partner in Booz-Allen & Hamilton's media and entertainment practice. "When the economy goes south, the first thing the clients reduce is the marketing budget. So agencies are looking to figure out how to increase their share of an overall budget by saying `we're fully integrated,"' Mr. Sands said.
Agency executives argue the latest push to integrate is fueled by clients themselves. "The overwhelming majority of clients are very interested in understanding what integrated capabilities [an agency] can bring to the table," said David Beals, a consultant with agency search firm Jones Lundin Beals, Chicago.
Jim Heekin, CEO of Interpublic's McCann-Erickson WorldGroup, said 75% of the requests for proposals McCann sees today are from clients seeking total communications solutions. McCann counts 25 clients that enlist three or more of its communications disciplines; while WPP Group's Ogilvy & Mather Worldwide, New York, has 30 clients working with two or more marketing divisions. And Bob Jeffrey, president of WPP Group's J. Walter Thompson, North America, said clients in emerging ad markets such as South America are embracing integrated communications at the fastest pace.
But some industry players, agreeing with Mr. Levy, maintain agencies today still don't get it.
"I don't think we've even begun to understand the whole concept of integrated marketing," said Tom Kuczmarski, president of marketing firm Kuczmarski & Associates, Chicago. "Somehow the silos are still standing. There is very little integration within the big three to four giants."
Critics argue integration still suffers at large agencies because of internal cost structures, the instinct to favor some marketing divisions over others and the struggle to offer best-in-class services.
"Each one of these departments has its own [profit-and-loss] numbers and wants to be the hero," said Jack Trout, president of marketing strategy firm Trout & Partners, Greenwich, Conn. "Internally it becomes a big fight as to who gets the [client's] budget."
McCann's Mr. Heekin counters separate divisions within an integrated agency still need their own budgets and managers to maintain their individual expertise. At the same time, McCann and Grey, for example, motivate divisions to integrate in part by compensating management that oversees multiple disciplines. At True North's FCB Worldwide, New York, each division keeps a "shadow" profit-and-loss, but they jointly operate as one P&L, according to Brendan Ryan, CEO of FCB Worldwide.
"This is where the reality comes into real tension with the concept," Booz-Allen's Mr. Sands said. "From an economic standpoint it is hard to collapse all the services into one P&L, but I think a greater set of shared costs and services has to be the case."
Even if agencies create an internal profit structure to accommodate integration, that won't guarantee agency employees will send assignments to sibling divisions. As recently as 1997, when McCann's WorldGroup was formed, people who could work across various marketing disciplines simply did not exist, Mr. Heekin said. In the last two years, agency executives have invested in training programs to give employees proficiency in many marketing disciplines.
"We've got to do better at training people to do that, and we've got to source people into our industry who come out of a different background than traditional ad agencies," Mr. Ryan said. Added Bill Gray, co-president and managing director of Ogilvy & Mather, New York: "In the ultimate migration ... people will be interchangeable across all disciplines."
However, Jill Miller, an agency recruiter at Talent Zoo in Atlanta, noted her network has still not had a job order that includes integration as a selection criterion.
Agencies point to recent account wins as proof their version of integration works. Omnicom's DDB credits wins of Dell Computer Corp. and Philips Electronics as success stories following an integrated marketing leadership summit the agency convened last fall to hash out rules for how integration should work.
"You have to have a clear [team leader], an inclusive process, and it starts at strategy development," said Pat Dermody, president of DDB Chicago's integrated media and new ventures unit. "Then [no one person] gets handed an idea and is told to go execute."
While agencies compete against each other to master integration, their biggest opponents may be the marketing companies that stick to single tasks. "As long as there are a lot of specialized players, [integrating an agency] will be tricky," Mr. Trout said. "Specialists walk in the door and say `this is all we do and that's why we're so good at it,' which is a hell of an argument." He added: "An agency that has all marketing operations in-house will never be perceived as the best in breed."
Integrated agency heads believe clients will prefer to enlist one communications partner, as long as it is the best one. "They really value having all those channels of communication provided to them by one place if it is best in class or pretty damn close across the spectrum," said FCB's Mr. Ryan "Nobody wants mediocrity served up seamlessly."