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Agencies, the Push by Management the Requirements of an Industry in Dire Need of New, Better Consulting, Growing Independent Firms, Etc.) Industry Update A summary of newsworthy client/agency relationship developments and relevant marketing or agency management trends from the past month. Volume 31 Executive Summary—Monthly Recap TALENT: securing the right talent and resources Holding companies are on the defensive. They’ve experienced poor stock performance as a result of disappointing revenue and negative organic Restructuring and consolidation are behind many new recent growth, which in turn results from intense competition announcements, impacting talent still too scarce to meet (the rise of in-house agencies, the push by management the requirements of an industry in dire need of new, better consulting, growing independent firms, etc.). ways to mature. Yet, it remains a highly dynamic industry with There is greater financial pressure from clients big names leading the pack. Alex Bogusky is back to CP+B, experimenting with ZBB to right-size marketing budgets Antonio Lucio leaves HP and goes on to save Facebook as and industry trends like GRDP which caused spend to its new CMO, and Sr. Martin Sorrell is still making headlines soften. A new report by Forrester, “Agency Holding rebuilding his empire brick by brick. Companies Need A Brave New Business Model,” says, • Publicis Groupe’s Publicis Communications hub “Agencies need a new business model that puts the restructured the production departments at three of its client at the center, elevates new services, and blends New York-based creative agencies in an effort to streamline creative entrepreneurialism with new executional its efforts, reduce operating costs, and drive efficiencies to prowess.” Agency holding companies must embrace better serve clients like P&G. The group recently formed a new operating model to address the CMO’s growth a dedicated unit called PG One dedicated to P&G. Clients agenda, which continues to pose a threat to their like P&G are looking to agency partnerships to embrace business. After all, in-house agencies continue to more efficient ways to produce work and reduce waste. gain momentum. Advertisers with in-house agencies increased to 64% from 42% a decade ago, according • Chinese technology and ecommerce giant Alibaba Group to a recent study. Are consulting firms still crashing the formed a global partnership agreement with Bollore Group advertising party? They sure are. The marketplace is also to join forces in cloud services, digital transformation, increasingly welcoming of smaller, nimbler agencies, mobility, AI, and content delivery, among other areas. as some brands are moving away from large retained “agency of record” relationships in favor of more fluid • MDC Partners laid off several corporate executives as the agency rosters and more accountable agency holding company undergoes a reorganization as a practices like deliverables-first models. result of disappointing first quarter results. It’s a brave new world indeed. • Per the In-House Agency Forum and Forrester, the penetration of in-house agencies has increased by 52% in Bruno Gralpois the past decade and the size of in-house agency teams is Co-Founder & Principal growing as well, yet they are struggling to adequately staff Agency Mania Solutions to meet growing business demands. Brand and business acumen now rank as the top benefits, followed by cost efficiencies and time savings. Newsworthy reports and recent developments • S4 Capital (Mr. Sorrell’s new firm) acquired MediaMonks, At AMS, we approach the agency management discipline as four distinct but complementary practice areas—Talent, a marketing firm offering new media solutions combining Work, Financials, and Performance and Value—which is data, content, and technology for $352 million. Clients how we’ve organized industry developments to follow. include Amazon, Johnson & Johnson and Netflix. Table of Contents • HP Chief Marketing Officer Antonio Lucio is leaving HP to Talent ............................................................................... page 1 become Facebook’s CMO. Antonio’s reputation and efforts Work ................................................................................. page 5 to push diversity and brand emotional connections will be Keeping up with the fast-paced advertising assets to his new employer. Brand reputation and crisis production community ................................................ page 6 management have been areas of focus for Facebook in Financials ........................................................................ page 7 recent months. Performance and Value .............................................. page 9 Agency Mania: don’t panic, it’s a good thing ........ page 10 Agency Reviews and Roster Changes .................... page 11 • Omnicom Group launched Omni, its people-based precision • Dentsu Inc (parent of Dentsu Aegis Network) announced marketing and insights platform, designed to identify and that it’s considering a restructuring, becoming a pure define personalized consumer experiences at scale across holding company by 2020 in order to support its fast- creative, media, CRM, and more. Per the agency, “At the growth objectives and to address client requirements. core of Omni is the industry’s most robust people-based identity graph-a database of connected consumers built • WPP-owned Wunderman acquired commerce experience from all significant identity authorities including Neustar, agency Gorilla Group, which employs 370 people across LiveRamp, and Experian, among several others.” the US, Canada, Poland, and Ukraine. Gorilla Group is now part of Wunderman Commerce. • Alex Bogusky, an original founder of CP+B, is returning to lead the agency as co-founder, chief creative engineer. • Beauty giant Revlon decided to replace its global Bogusky will oversee creative direction, innovation, agency of record WPP Grey with an in-house shop called strategy, and talent. The Red House. The agency had worked with Revlon for only a year. The in-house team is an internal center of • Omnicom Precision Marketing Group (OPMG), the digital excellence focused on content creation, as well as driving and customer relationship management (CRM) specialist cost efficiency. group within Omnicom Group Inc. acquired a majority stake in Credera, a full-service provider of management • Omnicom’s sparks & honey, a leader in cultural and technology consulting services. intelligence, strategy and consulting, is diversifying its offering, expanding its Human Intelligence practice that • A newly launched agency, TBD, is challenging the uses social sciences and primary research methods to status quo with a “collection of minds, experiences, predict cultural shifts and connect those predictions and perspectives to close the gap between innovation with deep human insights. The agency launched a tech and impact,” offering strategy and insights, creative platform called Q, which synthesizes everything the communications, and experience design. TBD is part of agency learns about the culture (they refer to it as “cultural hasan & partners group and thenetworkone, the world’s signals”), helping advertisers figure out how to incorporate leading independent agency network. these trends into their overall marketing and content mix as close to real time as possible. • Over the past five years, Spotify has built a robust in- house creative team of now over 90 people, 35 to 40 of • Various boutique agencies and consultants in New whom are working on creative. The in-house team also York and the UK joined forces to form a new entity manages strategy, social impact, and production. The called Together Group. The London-based group offers brand does most of its work in-house but use agencies ecommerce and digital experience services with an initial where they need help or don’t have the skillset. focus on purpose-driven and digital transformation efforts for fashion, beauty and hospitality brands. • Per Forrester, “WPP media agencies should operate as a single GroupM,” and the 100 creative agencies “should • LEGO built a robust in-house capability in creative, media, consolidate within the seven global networks of AKQA, and data analytics. The in-house agency is now producing Grey, JWT, Ogilvy, VML, Wunderman, and Y&R.” Forrester the vast majority of its creative internally. Primary benefits is offering advice to simplify the holding company offering: include integration, speed, efficiency and effectiveness “WPP must dissolve its brands to meet the CMO’s need gains, and alignment with the rest of the marketing team. for simplicity, accountability and scale. This requires restructuring nearly 400 companies into just dozens.” • Agencies are now aggressively going after the consulting space. Grey Group formed a new global unit called • Agencies continue to look for outside talent. WPP-owned Grey Consulting focused on business and brand design, Burson Cohn & Wolfe (BCW) announced the acquisition of innovation, and digital transformation issues, drawing from HZ, an independent, integrated creative shop to augment existing strategic and technology resources across the globe. its capabilities. 2/14 See how stronger relationships contribute to better marketing. Contact us at www.agencymania.com. If others in your organization are interested in receiving this Industry Update, please let them know that they can sign up on our site at www.agencymania.com/subscribe.html. If you have any comments or would like to update or change your contact information, please contact us at [email protected]. • Dentsu Aegis Network acquired Sydney-based
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