Big guys should stop holding, start managing sibling shops

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When Ford Motor Co.'s Jaguar earlier this year shifted its global account to WPP Group's Y&R Advertising from WPP's Ogilvy & Mather Worldwide and J. Walter Thompson, a senior executive at one of the losing agencies suggested colleagues go out of their way to help their Y&R sibling with the transition.

The colleagues' reaction: Are you kidding?

Wrong answer. But it is a typical, parochial answer for agencies that still can't get past sibling rivalry to see the greater good.

The problem-or opportunity-is at the top of agency holding companies. It's time for agency companies to take a category management approach to agency and marketing services brands, marshaling whatever resources the company has to serve the client.

Agency companies should manage agencies the way Procter & Gamble Co. manages soap. For years, P&G's Tide competed directly against Cheer. While the detergents had specific attributes and targets, a market share point was a market share point-whether Tide stole it from Cheer or from Lever Bros.' Wisk.

In the '80s, P&G moved to category management, putting an executive in charge of detergents, for example, to maximize market share. Tide and Cheer each kept their brand managers, who fought vigorously to build their products. But above them, a gatekeeper managed budgets and rationalized strategies with an eye to improve P&G's overall detergent business.

I hesitated to use P&G to make my pitch for agencies: P&G has been floundering for years, struggling through restructuring after restructuring. Critics say part of the problem is in its move to category management: P&G has lost its edge, the theory goes, in part because it no longer empowers brand managers to do whatever it takes to grow brands. But I still believe category management intuitively makes sense in a world where a handful of companies rule categories-whether the category is soap or ad agencies.

The problem in ad agencies is one of heritage and structure. Ad agencies grew up as independent fiefdoms; over time they have become part of loose federations called holding companies that act more as financial plays than managers.

The game is changing. Global clients increasingly are hiring global agency companies-Ford Motor Co. with WPP, Coca-Cola Co. with Interpublic Group of Cos. Agency companies, having clear cut the agency forest through acquisition, now must figure out how to grow what they own.

The opportunity is for agency companies to stop holding and start managing. This makes sense whether pitching new business, serving existing clients or saving existing clients.

When someone else's major client goes into review, the agency company should coordinate strategy, drawing on ad agency and marketing services resources to make the strongest pitch.

But the biggest opportunity is in serving existing clients. WPP now has most of Ford-at JWT, Ogilvy and Y&R. WPP should do whatever it takes to build Ford's brands and sell its cars. Intra-agency squabbles do not serve the client.

If a client is in danger of bolting, the agency company has the opportunity, and obligation to shareholders, to do what it takes to save the business-including convincing the client to move to a more suitable sibling agency to stave off a review. If a client wants to shift from brand ads to sales promotion, the agency company should be there to lead a seamless transition from one unit to another.

There is a clear danger in borrowing from P&G's category management: Agencies could lose their creativity and competitive edge if they're constrained by a corporate gatekeeper. But I believe Interpublic's John Dooner, Omnicom Group's John Wren, WPP's Martin Sorrell and their top agency chiefs are capable of nurturing creativity and managing the business.

It bothers me to see infighting and lack of cooperation among an agency company's holdings. That's a waste of resources that does not best serve the two most important constituencies, clients and shareholders. As a category, agency companies should manage to do more.

Scott Donaton's column returns in the July 23 Advertising Age.

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