Commentary

Agency Holding Company Model Is Broken -- And Fix Is Unclear

It’s CES week, meaning that all that’s happening will stay in Vegas. Yes, you are attending a ton of meetings and presentations, and perhaps even find time to walk the floor and get dazzled with all the latest shiny objects. 

But little, if anything, will make it into your marketing plans for this year or next. That’s the sad truth for many events, but especially one whose focus is on tech, hardware and software.

CES has become, according to some, Cannes-in-the-dessert for marketing. And judging by the number of marketing- and advertising-related panels, keynotes, parties and marketing celebrities, this may well be true.

One such celebrity was Sir Martin Sorrell, who took to the stage with the leadership of his two acquisitions, MediaMonks and MightyHive. He once again took aim at the agency holding model of yesteryear, which is both understandable and perhaps a little ironic.

It is ironic because he pioneered — and, until his departure — defended the agency holding company as the founder and chairman of WPP. But no sooner had he left than he banged the drum of “faster, better and cheaper” as the DNA for his S4Capital. He has uttered some pretty damning digs at WPP since his departure, and he indirectly did the same from the CES stage.

"The holding company structure has become too fragmented  — and in a world where clients want faster, better, cheaper executions, they want the holding company to act as one,” he said.

 I agree with this assessment with the exception of the very last part: that clients want the holding company to “act as one.”

In my profession, I get to work with many senior marketing and marketing procurement leaders on the client side. They are very clear about the need for “better, faster, cheaper.” But I rarely hear them say anything about wanting their agency holding companies to act as one. 

What they DO talk about is the need for integration across the whole marketing ecosystem. They want that ecosystem to function as one. The truth is, the ecosystem rarely comprises services from just one agency holding company, nor can an agency holding company offer such services across the full range of the clients’ marketing ecosystem requirements.

The reality, and the frustration for marketers, is that this ecosystem is typically fragmented across a range of agencies, service providers and consultants, as well as internal partners and service providers. 

Sadly, the solution for marketers is not to empower an agency holding company, whether it’s  called WPP or S4C. The answer is that the marketers will have to do the hard graft of structuring and organizing the fragmented mess — er, ecosystem — they are operating with, and to develop a way of working that allows for them to “act as one.”

This may include realigning the agency structure they are working with to better reflect marketers’ needs and evolved in-house capabilities. But it could just as easily involve the launching or ditching of those in-house capabilities (we have witnessed both over the course of 2018, and this trend will likely continue).

And while I am on my soapbox: “better, faster, cheaper” is certainly relevant, but in my opinion lacks a much-needed longer-term marketing ambition, which should probably include words like “relevant” and “engaging.” Without those words, the danger is that you are only describing an efficiency play, without much emphasis on effectiveness.

1 comment about "Agency Holding Company Model Is Broken -- And Fix Is Unclear".
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  1. Ed Papazian from Media Dynamics Inc, January 11, 2019 at 3:17 p.m.

    Maarten, some good points and,I suspect that you realize that the reason why a "solution" is not clearly in sight is the fact that the agency holding company model is no more broken then the client version which also features a conglomeration of divergent entities and, internally, a woeful lack of integration. In my experience, which goes way back to the beginnings of agency holding companies and before that, agencies invariably respond to client needs---when these are clearly defined and make sense.

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