Inside holding companies’ bespoke agencies—and whether client conflicts still matter

From Team Starbucks to MiltonONE, a number of new “agencies” have joined the industry ranks in 2024. And that’s not including whatever entity seems likely to emerge from Kimberly-Clark Co.’s imminent global creative and media review. These bespoke solutions for major clients started to grow in popularity nearly six years ago, when Ad Age first examined how such models impact the agency brands that are swallowed within them. Much has changed since then, but custom teams continue to be a sought-after proposition for marketers that see these dedicated shops as ways to reduce complexity and lower costs. “Marketers want their unfair share of talent,” said Greg Paull, principal at consultancy R3. “They want dedicated teams that are completely embedded in their business and immersed in their categories.” Ad Age spoke with a range of industry insiders, including current and former holding company executives that were granted anonymity to speak freely, to dissect how these bespoke agencies work, how conflict-free they truly are, and whether or not client exclusivity still matters. Agency Review Tracker Stay up to date with the latest account reviews Click here How these shops work Client-specific shops come in various different shapes and sizes, as they’re designed around brands’ various needs. Some have their own P&L, for example, while others take employees from a range of existing agencies to work on the business. Publicis Groupe introduced a single-country P&L model in 2016, allowing everyone in the group to profit from a single piece of business. Coca-Cola Co., meanwhile, works with a bespoke WPP agency called Open X, defined as an “open-source” network. That allows the soda maker to pull resources and talent from agencies such as Grey and VML depending on the assignment, said Islam ElDessouky, global VP of creative strategy and content at Coca-Cola, at Ad Age’s Business of Brands conference in September. “We stop in the middle and see if it’s going well. If it’s not going well, then maybe we can shift gears a little bit,” ElDessouky said. “And that’s easier when you are in an open-source model versus when you are working with a specific agency.” Bespoke agencies are often led by a global client lead (GCL), employed typically by the holding company rather than an agency brand. The GCL is responsible for managing the complexity inherent of custom units. This role, which is essentially the CEO of the respective business, is “in charge of managing the P&L infighting that happens behind the scenes, because all of that revenue gets divvied up across those agencies,” said one former holding company executive speaking on the condition of anonymity. “You really have to figure out how you're going to distribute the resources in the team after it's won.” Tech platforms, such as WPP’s Open and Omnicom’s Omni, are also essential to managing bespoke teams, which often span multiple countries. Open, which is used by clients including Ford Motor Co., gives the respective leadership team “visibility” to manage the team and “monitor and manage effectively from a central position,” said Neil Stewart, CEO of WPP Open. Read: Inside WPP’s technology hub, Open Ad Age Tech Power List 2025 We’re looking for top digital innovators from agencies, brands, platforms, ad tech companies and tech startups Enter here Addressing conflicts Client-dedicated offerings also help agencies avoid conflict, which can be defined at three levels: holding company, agency and talent. Executives told Ad Age there are numerous ways of walling off these bespoke agencies from competitive accounts—from data firewalls to physically separating the offices employees work in. Sometimes these client-dedicated offerings will include agencies that only plug in for projects or specific assignments, and these shops have more flexibility in terms of working with other brands in the category, one holding company executive said. Omnicom works with a spate of automotive brands, including Mercedes-Benz and Nissan, the former of which is handled by a bespoke agency called Team X. These teams are put together and managed by MSAs and client-specific lists, said Omnicom Chief Client Officer Andrea Lennon. While Omnicom’s network is often large enough to find employees with comparable experience, the holding company does sometimes pull staffers from bespoke agencies to pitch for competitors’ business, but that first requires transparency, Lennon told Ad Age. “No one wins if you’re secretive about it,” she said. “That’s absolutely a conversation we will have and get approved with a client first.” Despite a number of executives—including those speaking anonymously—insisting that bespoke agencies are conflict-free, holding companies are often still anxious about how clients might perceive new relationships within the category. “I still don’t really want [our agencies] talking about that fact,” the holding company executive said. “I don’t want to have to manage the fallout that could potentially come from an announcement.” One consultant, who formerly worked agency-side and pitched for global accounts with multiple shops, said that holding companies are too intertwined to truly avoid conflicts. “Everybody talks about, ‘Hey, we’re so connected,’” this person said. “How can you claim that as a strength of the agency, but then be so quick to turn it off, saying, ‘No, we’ve got no conflict. We don’t have any cross-communication with the other offices.’” Become an All Access subscriber Get access to exclusive resources including Leading National Advertisers, World’s Largest Advertisers, Agency Report, Agency Review Tracker and TV Pricing Report. Click here How much does conflict matter? But that might be a moot subject: Conflict and exclusivity don’t carry as much weight for many brands anymore, according to multiple executives and analysts. That shift can be partly attributed to consultancies such as Deloitte and Accenture—which work with a broad range of competing brands—marching further into the marketing services business, according to Jay Pattisall, VP and principal analyst at Forrester. Today, these bespoke “solutions are more about bringing together and uniting the elements of the marketing mix that need to be integrated,” Pattisall said. “What may have started as conflict resolution or a strategy for retention or winning global business has turned into a way to deliver customers the types of experiences they want, and take away management headaches.” Many marketers are now opting for flexible rosters of agencies instead of consolidating under one holding company—a model that also “changes” how brands view conflict, said Daryl Lee, global CEO of Interpublic Group of Cos.’ McCann Worldgroup. “[The client is] working with multiple people, and so [the agency] should be working with multiple people,” Lee said. Industries such as consumer packaged goods and financial services often still draw a hard line on conflicts, but many executives said it’s more so about specific brands, especially those with an overt competitor. When Coke was a few months away from wrapping a massive agency review in 2021, the soda maker asked finalists WPP and Publicis to resign all their PepsiCo clients in order to move forward with the process, according to a person familiar with the matter. Coke could not be reached for comment. Publicis and Open X declined to comment. It’s unrealistic for brands to expect absolute exclusivity nowadays because they don’t pay the premium they used to for such guarantees, said Justin Billingsley, chief growth officer at Monks and former global chief marketing officer at Publicis. “When you were the AOR and you were charging 17.65% markup, then absolutely, we’re dating, we’re married. No one’s going to distract me,” said Billingsley. But as that markup dropped as low as 7%, he added, it became necessary for agencies to “date other people.” The case for and against client-dedicated agencies Bespoke agencies are often put together when the client’s fee exceeds $10 million, according to R3’s Paull and the former holding company executive. Putting together these dedicated client offerings is expensive for holding companies, but there’s an expectation that the relationship is stickier, thus opening up growth opportunities. “The thing that is an agency’s friend is duration,” said Billingsley, who at Publicis built massive bespoke agencies such as Publicis Emil, a custom unit for Mercedes-Benz. With these types of partnerships, “you have more of a certainty of what next year looks like.” NextGen Marketing Summit Join us for a crash course on Gen Z, DTC marketing and the creator economy Register today Forming a bespoke team also gives agencies “the opportunity to walk the halls of the client and pick up briefs that you wouldn’t have otherwise gotten,” he added. But not everyone is marching ahead with single-client units. McCann Worldgroup recently moved away from such bespoke setups, simplifying its offerings with four brands—McCann, MRM, Craft and FutureBrand, which specialize in areas including design and brand architecture. The network dissolved its dedicated GM shop, Commonwealth/McCann, after losing significant business with the automaker in June—a move that followed the March closure of its 215 McCann unit, which had been focused on Xbox. Client-dedicated offerings can rob agencies and employees of “diversity of experience” and “diversity of opportunity,” McCann Worldgroup’s Lee told Ad Age in September. “What clients don’t need is an outsourced in-house agency. They don’t need that from us, because we know they will build their own in-house agency,” Lee said at the time. Clients don’t want agencies that “think like them,” he added. While McCann will no longer build single-client agencies, the network will continue to create custom creative teams for brands if necessary. To that end, the network recently promoted Emiliano González De Pietri to global creative partner, global brands, a role that will see him work on “gathering the best teams” for clients the company said in a press release announcing the appointment. Lee said that holding companies fixating on bespoke agencies diminishes agency brands, which will hurt recruitment efforts and the industry at large. “If we can’t protect our own brands, how do we credibly convince clients that we can protect theirs?” he said.

Inside holding companies’ bespoke agencies—and whether client conflicts still matter

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