Bundling And Unbundling: Consumers Vs. Advertising Industry

All sorts of news was vying for attention this past week.

Accenture evolved its marketing services offering further, buying top UK creative agency Karmarama.

And as a further proof point that the relationship between media agencies and media owners is really warped, The Daily Mail in the UK disclosed that for the second year in a row it set money aside to pay agency holding companies a volume bonus independent from clients’ volume deals (almost $27 million in 2016).

And P&G shared at its analyst day last week how it has cut its agency roster from a generous 6,000 to a mere 3,000 agencies worldwide over the last three years.

So what are we to make of all this?

I think the most interesting ideas that relate to all of the above probably came from WPP. It also held an investors' day, at which it shared its vision of the communications industry going forward — which can be summed up as “cross selling.” 



The holding company argues, rightly so, that if you look at all the service offerings across WPP, there basically isn’t an advertiser need it cannot fulfill. From the response of some of the analysts in attendance at the analysts’ day, this seems to be a convincing proposition. But I have some reservations.

First of all, the idea that one group can offer all of the services needed is as old as Don Draper. When I started my career at J. Walter Thompson way back when, JWT offered media planning and buying, creative strategy and development, production across all media, print services, research as well as direct marketing services (especially important for dealers at Ford, a key client).

Today, JWT is of course part of WPP, and it offers creative strategy and development. All that other stuff you need for an integrated campaign you now buy from WPP’s Kantar, Group M, Millward Brown, Xaxis, Exchange Lab, and a whole host of other service providers.

Yes, they are all under one roof, but not really. WPP will argue that it provides the roof, and that more and more of its clients are bundling services under that one roof. Team Ford is an example that brings together a variety of service providers from the WPP family needed to deliver an integrated campaign across all relevant touch points.

Of course WPP isn’t alone in this approach. Arch rival Omnicom follows the same strategy. Its most recent success is the dedicated agency We Are Unlimited for McDonald’s, bringing together (among others) DDB, Alma, OMD and a bunch of other bits and pieces.

Here’s the thing, though. Consumers are unbundling their consumption at a pretty fast rate. Cable companies are struggling to sell more services, because of unbundling and cord cutting. Mobile phone companies are unbundling their traditionally contract-driven offering. Where we used to buy all our groceries from the supermarket, we now unbundle those purchases to include the likes of Amazon, Dollar Shave Club, PetCo, etc.

So were agency holding companies ahead of the curve when they unbundled initially, and are now rebundling? Or are they behind on the unbundling trend — and is there a future where advertisers unbundle at the expense of holding companies?

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