How can the ad holding companies, especially WPP, repair their fortunes? By reducing their reliance on clients for a start, by doing more of their business on their own account.
One such is so-called principal media buying, buying inventory themselves and selling it on. This is happening already but get a move on: broking is good for you!
Another is using the many millions they’re pouring into tech by devising products that have a life whether or not they’re deployed for a specific client. This is what the big consultancies like Accenture do, install software systems in clients that need them do the running and administering long after their attraction as advisers may have waned. Or Fujitsu in the UK which is still working for the Post Office long after causing the never-ending ‘no-fraud’ scandal.
This is different from that hoary old number one on the agency wish list: owning the IP in the work you produce. No sane big client is ever going to ascribe this to an agency – only governments are so foolish.
At the moment Publicis is thriving while WPP is not. WPP has been hit by a succession of major client losses, many of them going to Publicis including Pfizer, Mars and Coca-Cola media. It’s doubtful that CEO Mark Read would have survived this week’s loss of $1.7bn Mars media even had he wanted to stay on. Publicis, conversely, now employs hundreds, maybe thousands, of software engineers capable of carrying on earning even if an account departs.
WPP once owned all of research firm Kantar (formerly AGB Research) which did pretty well under former boss Eric Salama (left, who some insiders would like to see return as CEO) even though Sir Martin Sorrell’s ambition of pinching US TV ratings from Nielsen was never going to surmount opposition from the likes of Omnicom and IPG. But Bain now owns 60%, sold by WPP to reduce debt, so that won’t become WPP’s Epsilon.
But the challenge for the incoming WPP CEO is clear: use its resources – people, tech via Open X/InfoSum and global footprint – to devise an offer that means it doesn’t quake every time a big client departs. Actually the undeniably clever (and popular) Salama wouldn’t be a bad shout.
