Ad agency mergers: will it solve the real problem?

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A 150+ year old ad agency brand disappeared recently. WPP took the decision to merge
J Walter Thompson and Wunderman to form Wunderman Thompson. The need for the merger and the logic behind the branding (Wunderman first) is widely believed to be a reflection of industry compulsions. Specifically, digital. What everyone means by that is the ad industry cannot simply rely on providing creative & production services in traditional TV, print, outdoor, radio and web (if I may add that to traditional) but needs to ‘upgrade’ to a ‘digital technology + creative’ agency. But what exactly are the ‘digital + technology’ services? Are they different from what the big consulting companies offer? Before we get to that, some views on a puzzling ailment of the advertising industry: branding.

Agency, market thyself

Yes, the industry which is meant to offer expertise in brand building, create ‘desire’ among consumers has done a poor job of practicing what they preach for their own brands. For starters, the brand name itself was just an acronym of the agency founder’s names for a long time – am not saying it is a bad thing always. But when you are the zillionth ad agency to launch (even in the last century) you’d probably do things differently. The advent of technology and ‘new media’ in marketing communication made the ad agencies act like fish out of water. That’s when the gap between what they preach to customers and what they practice widened. For example, they’d practice ‘thought leadership’ content to a B2B customer but unlikely to have an active blog on their own website. In fact, even today, many ad agency do a sub-optimal job when it comes to their ‘new media’ presence – be it simple things like their website, social media feeds or publishing interesting, relevant content on their websites. Advertising industry award websites, especially in India had the 90s look & functionality until recently. The live updates and tweets of such events are mostly boring, executed listlessly. This approach is evident even in trade industry mags – some simply upload about a hundred photos of an event on their website and that’s that – as if it was Google Photos or Facebook.

In comparison, content created in-house by several enterprises (GE, Marriott, Apple and several B2B tech companies) provide great value – be it entertainment or education. I am not suggesting that all of it is great but it is better than ad agency brands who virtually do nothing in to convey that they are good at marketing themselves. Even when it comes to attracting talent, ad agencies would create work for an industry or career option (e.g. the defence forces) but haven’t done anything to market themselves to graduates.

How can we be of service?

The traditional advertising agency bundled strategy (without labelling it as such), creative, production services (print, radio, TV etc.) and media planning & buying. The following key events changed the core of the advertising business:

– separation of media specialists into separate entities
– disassociation of the CEO (sometimes even the CMO!) from the advertising process
– proliferation of specialist services (digital, social, analytics, events and so on) made the ad agency focus largely on television advertising & production

Even in such a scenario, what the ad agency could do – no one else could do. The marketing folks or any of the specialist agencies cannot write great TV scripts, even if many think they can. But the agencies failed to convey effectively to the business community that TV is still a great medium to build brands and they are best placed to deliver on that. Everyone jumped on the ‘go digital or perish’ bandwagon where everyone else, except the ad agency seemed to be competent. The ad agencies have themselves to blame for this. It led to the proliferation of digital agencies and the foray into creative services (through acquisitions) by the big consultancies.

A cursory look at the services offered by today’s digital agencies show these common services:

Services.002

 

When you dig deeper into technology driven digital agencies, these bouquet of services (especially among agencies focused on B2B enterprises) emerge:

Wunderman

Services.001

When the marketing industry is already in the ‘advertising as we know it is dead’ mindset, these seem more attractive and imperative than a 30-second TVC. I am not suggesting that these services aren’t needed but there is a ‘shiny new toy’ syndrome and FOMO at play.

The big consultancies, even with their digital offerings still engage at a higher level when compared to both the above:

Services.003

All of them speak about the coming together of ‘creative + technology’ – which seems to be the pitch for the merged entities in advertising. But when a ‘big consultancy’ refers to ‘technology’ in the context of services provided, it is more likely to be about business-process change and hence a lot more complex and ‘heavy duty’ as compared to say, SEO or programmatic advertising. It also means that such consultancies engage with enterprises at a higher level (CEO, CIO or CTO) and for a longer lock-in periods for high value projects. In such a scenario, it would be relatively easier for them to integrate a ‘digital’ offering like say, content creation, enterprise app development, or analytics and cross-sell them too. Their relationship starts at a higher level (with a CXO committed to its success) and has a deeper engagement. The big players have felt the need to up their creative quotient and bought such agencies across the globe. The big players among traditional agencies aim to compete in this domain.

The real issue: access to C-suite, people skills

As mentioned earlier, the traditional ad agency has largely lost meaningful access to the C-suite. Most of the interactions, even at the senior levels within the agency stops mostly at the CMO level. The CEO is largely disinterested with advertising but may pay heed if ROI comes into the picture – which is what the digital agencies are promising. The problem is compounded with shortening tenures of marketing honchos. In this context, I wonder if the new entities in advertising can match the C-suite access which traditional consultancies or legacy IT companies enjoy.

Another issue, as rightly pointed here: “Companies merge, people don’t. So upon announcement people won’t acquire each other’s capabilities through osmosis”. We also have a situation where many of the digital agencies may not have exposure to traditional advertising & brand building (and I say this with a lot of hesitation as I am unsure) while the traditional agencies may have talent who are all at sea with technology & new media.

Over the last few years, there is an effort to convey that marketing & advertising has completely changed and everything is different. In my view, the fundamentals of marketing & brand communication will always remain the same, only the platforms keep changing. The advent of radio or television (TV scripts were like movie scripts – only shorter!) did not shake up the industry as much as ‘digital’ has perhaps because of the intimidating nature of technology involved which makes it all new.

As technology plays an important role and the lines between traditional and ‘new media’ blur, the pressure on brands to adapt and be present everywhere (the of-repeated omni channel experience) will only increase. The integrated model of agency services seems to be the best bet agencies have to address core issues. In that context, the creation of Wunderman Thompson seems to be a logical step. The entity created with the coming together of Publicis and Sapient seems to be the model the big agencies are chasing.  It remains to be seen whether it would be bundling of creative and technology services or will the media entities merge too.

Do share your views.

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