For Giant Clients, Dedicated Agency Becomes Model Du Jour Again
It's been three years since the collapse of Enfatico, the ill-fated agency structure built to service Dell. But despite the failure of that venture and some others before it, a host of global marketers -- including Bank of America, Pepsi, MillerCoors, General Motors and Sprint -- are all turning to the concept.
So why are dedicated shops the model du jour? Marketing experts conclude the moves are largely driven by an emphasis on cost-cutting and efficiency at large organizations. Rather than a lengthy roster of agency partners, the feeling of many CMOs is that a singular point of contact for all, or at least a bulk, of a company's marketing needs is easier than working across disparate agencies.
"Client organizations are running very lean and have little tolerance for inefficiency among their agencies, especially if they do not work well together," said Lorraine Lockhart, founder and president of The Rojek Consulting Group, a 22 -year-old search consultancy serving the Fortune 500, nonprofits and others on the sourcing of agencies. "To the extent there is some structure that creates tighter alignment across the internal teams and external agency groups with better clarification of who does what, this is a good thing."
Former ad exec Steve Blamer, who now heads consultancy The Blamer Partnership, is a lot more cynical about the motivations for the single-client teams that are cropping up around adland. "The answer isn't about talent, resources, or anything besides compensation," he said. "Everyone is under tremendous stress to reduce cost, and you can cut a deal with a holding company that 's cheaper and it's just that simple."
He added: "This move back is all under the camouflage of integration and a coordinated effort. Bullshit. It's about money. And by the way, the holding companies are more than willing to cut fees by consolidating all their business in one location."
The pros and cons of such a structure have been debated in marketing circles for years. Ad Age has in the past weighed the benefits of having a seamless solution -- the most notable success of which is WPP's Team Detroit for Ford -- with the ability to attract talent to devote all of their time working on one client's business.
"Creative people join an agency to work on lots of different things, to work on different kinds of business," said Mr. Blamer. "When assigned to a team, creative people feel stifled and locked in."
Ms. Lockhart, too, noted that marketers aren't placing the utmost importance on having the best talent work on their accounts. "I don't think clients articulate the desire to get the best talent any more -- today they seek breadth and depth of talent that can come from numerous places, to produce highly actionable communication programs at affordable prices."
But marketers are pushing ahead, confident that any of the downsides outweigh the benefits to their organizations.
The biggest benefactor of the trend has been the largest holding company in the world, WPP. With its Ford model lauded for creating a seamless partnership between the automaker and marketing agency, WPP has had success pitching the concept to other marketers. And so it's launched Team Mazda, Team Lincoln and, most recently, teams for MillerCoors and Bank of America.
Meanwhile, Pepsi, which has drastically trimmed its roster of agencies by realigning around its Omnicom Group relationship, is consolidating the bulk of that work within an entity built to service Pepsi's global marketing needs. Earlier this week, Brad Jakeman, president-global enjoyment and chief creative officer, told Ad Age he's working on creating a "unique agency model" with Omnicom that would let Pepsi "get the best of both the TBWA talent and the BBDO talent without having to run two separate agency structures."
At least one marketer -- Kraft Foods -- is firm that it won't go the dedicated-agency route. The company has instead shown a preference for cherry-picking agency partners, showing a particular interest in smaller shops.
"Price isn't about how many agencies you have; it's about who you're working with and how you're collaborating to get great work done together efficiently," said Debra Giampoli, director of global strategic agency relations at Kraft Foods. "What matters to us is matching each of our businesses with the agency that best fits its needs and presents us with great creative work and strategic approach. We look at what our each of our partners can bring to the table to deepen our connection with our consumers."