Commentary
WPP Is The Bellwether Sign Brands Need Adland To Streamline
- by Sean Hargrave , Staff Writer, July 10, 2017
Last week, its name was across the business press for three very different reasons. A programme of consolidation saw it merge Wunderman and POSSIBLE, then we had the cyber attack before a troubling week was rounded off by a double downgrade. Exane BNP Paribas moved WPP from "outperform" to "underperform" as it shares hovered above the GBP15 mark from a start of nearer GBP20 at the beginning of the year.
The headline in The Telegraph is all about WPP but the headwinds the holding group is battling against are industry-wide.
Publicis "rebranded" Mediavest in the same week and the London rumour mill is awash with talk of what will happen at IPG if Mullen Lowe doesn't get its game face on and perform better. WPP is, of course, the huge name here in London and Sir Martin Sorrell is a figure who attracts a lot of headlines.
So, it's WPP that we're seeing commented on in the national press but it shouldn't be seen as a one-off. It has obviously listened to what the big advertisers are saying and the message is clear: we want to do more with less.
An example? I was talking to the top marketing brass at the huge drinks company, Britvic, just a couple of months ago. For any major brand several months on from the Brexit vote when inflation, caused by a weaker pound, is starting to kick in, they have to answer a whole range of tough questions. Could inflationary pressure be absorbed, could it be deflected by a cost-saving elsewhere, and could a price rise be accepted through moving a brand up to a more luxury category?
Now, they weren't talking specifically about their own experience but as a wider observation of what many brand-side clients feel.
Just imagine after having those discussions you then hold a meeting and a whole bunch of ad people show up from your agency and sister agencies who've received part of your brief. Imagine the feeling when they say it's ridiculous to have so many people billed out for the day with expensive travel costs and so next time they visit your swish London offices. The first question on their lips? When I'm making decision about labelling, packaging and merchandising efficiencies every day, do I really need all these people in such luxurious offices on my monthly retainer?
Unilever is leading the charge here and Mondelez and P&G are right up there too. Each is making a commitment to reduce its rosters, to reduce the number of people they work with at each agency, to focus around projects rather than year-round commitments reinforced by monthly retainers. Each brand wants campaigns to work longer and harder with fewer assets that are "sweated" harder.
It's prompting Adland to breathe in again. Back in the days of Mad Men, an ad agency pretty much did it all. Smart people strategised, creatives had great ideas they sketched out, copywriters wrote tag lines and planners and buyers would build campaigns. Specialists then sprang up to major in one of these areas until it got to the point where many had been bought by the holding companies but still the landscape was incredibly cluttered with smart names and initials. Now we're taking a massive step back from that. Holding companies are merging similar outfits, retiring extraneous brands and making things simpler for the brand.
That's all that's happening here. WPP has received the biggest headlines but it is, or soon will be, a process common to the other holding companies. Brands want simplicity. They want to get a better deal through interacting and paying for fewer agencies and far fewer people.
There is another debate for another time about whether this is also going to turn out to be a cull ahead of the rise of the machines, of artificial intelligence empowering computers to do the work of many Mad Men. For now, though, it's about getting a better deal and a simpler life. When brands are having to seriously tighten their belts to deal with Brexit inflationary pressures, it's not surprising they would expect the same from their Adland partners.
Sean Hargrave is MediaPost's London Editor. You can reach him at seanhargrave@btinternet.com.
This is the standard plaint against agencies, made by "clients" who have litle or no appreciation of what an agency actually does----or could do----regarding marketing expertise, brand positioning, creative, research and media. Most agencies---and/or agency conglomerates---have a relatively small number of "experts" who work on all accounts and are called in, not to pad the agencies' fees but to deal with special problems that those who work every day on the accounts can't handle. Indeed, this expertise is gained by working on all types of accounts, rather than brown nosing the same few clients day after day. Does anyone really believe that account managment at a large agency complex is really inviting lots of basically useless people to important client meetings because these folk' salaries need to be amortized? Not likely, certianly not with the client's generally ignorant bean counters challenging every item on their bill, asking who is Fred Zilch or who is Mary Doe? Most likely Zilch and Doe were the ones that came up with the much needed idea or solution because of their broader knowledge than Jim Nix and Henry Blah who the client knows and who stick their brown noses you know where every day.Maybe it's time for advertisers to start downsizing ---and set an example for their agencies.
All this yet again supports the trend towards in-house agencies we're seeing, particularly in the United States. What goes around comes around.
Robert, I agree with you about more advertisers considering in-house media buying, especially for digital, but I should also note that most of these buys are for sales promotional purposes which are traditionally hanndled by specialist shops or in-house anyway. When it comes to branding campaigns in traditional media, where the vast majority of dollars are spent, I doubt that we will see much in-house activity as this would be very difficult to orchestrate staffing and skills-wise, quite expensive ( now, in addition to inducing good people to jump ship and join the client team, you have to buy the media audience surveys ) and finally, you must cope with sellers who are aware of all of the action, not just your buying specs or goals, meaning that you may not get very good pricing or terms.