Forrester is out with a new report that gets better and better by the page.
The first half does a nice job of laying out the ad industry’s issues, such as competition from consultancies and in-house agencies and the expanding role of CMOs, which Forrester surmises has put the CMO/agency relationship at risk.
It offers a number of suggestions for holding companies to distinguish their offerings and make them more appealing to marketers.
But the most intriguing advice goes to WPP: “WPP must dissolve its brands to meet the CMO’s need for simplicity, accountability and scale. This requires restructuring nearly 400 companies into just dozens.”
As an example, Forrester says, WPP media agencies should “operate as a single GroupM” and the 100 creative agencies should consolidate within the seven global networks of AKQA, Grey, JWT, Ogilvy, VML, Wunderman and Y&R.
“Stop packaging capabilities into pseudo-agency brands,” the report advises.
Well, Mark Read, looks like you have your work cut out for you if you get the CEO job — as many believe you will — and take any stock at all in this report.
If WPP doesn’t take Forrester’s advice? The company will be “forcibly taken over by someone who will.”
Of all the holding companies, Forrester asserts, “WPP has the most burning platform for change … the economic opportunity facing WPP is too massive for a private-equity group to ignore. In classic Wall Street style, where the goal is unlocking value, an investor like Blackstone or Bain will swoop in and restructure the agency before spinning out the high-value assets to the highest bidders.”
Well, that’s certainly a strong POV.
The report predicts that AT&T “will acquire major holding company assets” or maybe even the whole ball of wax.
A potential candidate is Havas Group, now owned by Vivendi. “Because Vivendi owns Havas Group, it would appear the least likely candidate for a media conglomerate purchase. However, it would be easier for a provider to assimilate Havas’ culture given its history with Vivendi’s music, gaming and entertainment business.”
Oh, and if you’re wondering what the report has to say about MDC Partners -- which many believe is in play -- yes, there’s a prediction that some of the agencies in the group, like 72andSunny and Anomaly, “will become fully independent agencies competing head-to-head with iconic independents like Wieden+Kennedy and The Richards Group.”
There is advice for all the major holding companies and clients, as well.
If you're interested, reach out to Forrester. It will supply you with a copy — although not for free as it has a business to run. And here are a couple of links to additional commentary on the report by its authors, Jay Pattisall and Ted Schadler.
Update: On second thought, Forrester has opted to provide complimentary copies of the report in exchange for a little bit of personal data, like your name and few other details. Access it here.