Cannes 2010

At Cannes, J&J Sketches New Model for Agencies

Perkins Envisions Digital Shops in Lead, Holding Companies Going Private

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CANNES, France (AdAge.com) -- Johnson & Johnson is within weeks of finishing a global review of its digital roster, which could bring a major role for a group of winners likely to include R/GA.

Brian Perkins
Brian Perkins Credit: Francois Durand
During a presentation at the Cannes Lions International Advertising Festival here today, Brian Perkins, the chief marketer at J&J, repeatedly sang the praises of the Interpublic Group of Cos. shop and said digital shops are likely to assume more of a leadership role in the future.

Mr. Perkins, VP-corporate affairs at J&J, appeared alongside Michael Roth, chairman-CEO of Interpublic, in a Cannes seminar hosted by PriceWaterhouseCoopers, and he also floated the idea of taking Interpublic and other holding companies private -- an idea he said he'd already discussed with Mr. Roth privately.

In the process of visiting digital agencies globally during the review, Mr. Perkins said he was surprised when he inquired about the nature of client relationships to find "how few major [agencies of record] there were on the digital side."

He added, "I probably shouldn't be that surprised, because when I look at our shops, we do a lot of project-based assignments. I think, as a client, we have to look at that."

Dinosaurs
Over the course of the presentation, Mr. Perkins repeatedly praised prior presentations by R/GA Chairman-CEO Bob Greenberg and Exec VP-Chief Creative Officer Nick Law. In a brief interview afterward, Mr. Perkins said J&J is likely to conclude picking its global digital roster in the next few weeks and that it "wouldn't be going out on a limb" to assume R/GA will be among the winners, based on his comments.

Specifically, Mr. Perkins referred to a 2006 Cannes presentation in which Mr. Greenberg compared the traditional agency model to dinosaurs.

"I think it's inevitable that the great digital agencies are going to gravitate to more brand stewardship and, dare I say, start developing more television advertising."

Michael Roth
Michael Roth Credit: Francois Durand
Mr. Perkins said J&J will still need TV for the foreseeable future and that traditional agencies are also developing more digital capability -- a trend he would like to see more of, along with more re-bundling of media with creative capabilities.

Later, when asked what he might do if he were to swap jobs with Mr. Roth, Mr. Perkins revisited the theme of re-bundling more of the services, such as media, that have been fragmented among specialty shops within holding companies in recent decades.

Mr. Perkins praised Mr. Roth's work at Interpublic since 2006. "He inherited quite a challenge," Mr. Perkins said. "He restored confidence and trust and accountability at a time that corporation needed it. ... He's helped grow R/GA and Martin [Agency] and took an early position in Facebook when no one knew what Facebook was."

But Mr. Perkins said, "I'd look seriously ... and it's not just an IPG thing, I'd look at taking the holding company private."

Investing in labor
Access to capital markets has been considered important by the agency world, he said, "but I think I'd argue ... it's a labor-intensive business, not a capital-intensive business."

The question, he said, is whether an agency or holding company "could service clients better without the tyranny of [London financial center] the City or Wall Street."

Mr. Perkins said he'd also look at investing more heavily in two areas of talent -- creative and analytics.

In a broader forecast of the global advertising market that opened the presentation, Marcel Fenez, global entertainment and media leader of PwC, predicted the U.S. advertising market will stabilize at 2009 spending levels through 2011, as marketers put more of their money in nontraditional communications. And while growth will return in 2012, he said spending in 2014 still won't recover to 2007 levels.

It's a largely similar story in other major markets, by PwC's forecast, except for China, where spending will continue growing briskly. Mr. Fenez predicted China will pass Japan to become the world's No. 2 ad market by 2015.

While digital will continue taking a bigger slice of the media pie -- from 15% now to 21% by 2014 -- Mr. Fenez said, somewhat counterintuitively, that TV's share will also continue to grow modestly to 37% in 2014 from 35% now, with all other media giving up share to both.

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