Ogilvy & Mather's Single P&L Move Will Lead The Way In Transparency

And so it begins. The consolidation that is likely to be a major feature of the next couple of years is being visited upon Ogilvy & Mather. Work is now underway to put its multiple brands into one company name, which will see its Ogilvy One and Ogilvy PR, for example, all under the same corporate roof. The move is kicking off in New York before being implemented across the globe.

Now we will have to see if this is consolidation in the economic sense of the word, meaning that head count is lowered. That might be what's happening here, but I think the driving force seems to be more about the very sensible move to align agencies under one roof for two main benefits. To begin with, operating under one name and overall command structure fits in perfectly with what many of us are seeing the more enlightened brands wanting from agency relationships. Secondly, a single P&L is a great way of fostering better transparency -- which, again, more advanced agencies are starting to move across to.

So the name change is a secondary issue. The main point is that Ogilvy & Mather has seen the need to better align its agencies under one roof so they can provide tailored services across marketing, advertising, pr and communications. This chimes perfectly with what digital transformation consultants have been telling me recently. Digital marketers realise that change must be implemented throughout an organisation, and this often requires agencies in various disciplines to be orchestrated far better. As often as not, it requires agencies to either work together in a more coordinated way or for one agency to be held back from repeating similar work to another. When under one roof, that must surely be easier to achieve?

However, the real point here is the single P&L accounting. This way, there is just one client account and each agency is working for the shared client through a single accountancy structure. Of course, it can't defend against any suspicion of the big agencies empire building and using underhanded tactics to ensure that sister agencies are put in a preferential position to win additional work. However, if everything's answerable to the same, single P&L there's at least visibility if one part of the organisation has overspent. Crucially, if one part of the organisation goes over budget, it's effectively robbing Peter to pay Paul.

A single P&L has been held up to me by many top advertising executives as the best means to ensure that clients are served by all sides in their agency arrangements because there's less of a bun fight for extra budget. By going through the same accounting structure, agencies can be far better aligned about taking the occasional one for the team and carrying out less work, or spending less, so budget can be used where it's most needed for a project elsewhere within the agency structure. 

So this may have nothing to do with consolidation in the getting smaller sense of the word -- we'll have to see if there are job announcements resulting from the move. What it most definitely does mean, though, is a move to orientate large agency structures around clients. Instead of multiple sister agencies all vying for more budget and a greater say in how the client relationship goes, realignment and working from a single P&L makes a lot of common sense.

I honestly don't think Ogilvy & Mather will be the only holding company-owned business to go down the single P&L route and to consider agency realignment under a single brand name. It's something the smaller agencies have been talking up as a major difference between them and the likes of, in this case, WPP.

As the transparency debate shows no sign of dissipating, a single P&L just makes too much sense not to be repeated throughout division of the big holding companies. 

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