Earlier this week, WPP Group CEO Mark Read announced a significant restructuring of the agency holding company to address what Read called a need for “a simpler WPP, [a] need to invest in the future.”
His predecessor, Sir Martin Sorrell, wasn’t so sure.
In both cases, industry buzz was largely around the “loss” of legendary brands J. Walter Thompson and Young & Rubicam, but the reality is that, as CMO demands evolve, those traditionally direct and digital agencies like Wunderman and VML have been the clear heirs to role of consigliere to marketing leaders for quite some time.
In the year 2000, when then-direct marketing firm Wunderman moved into Y&R’s staid Madison Avenue headquarters, it occupied two floors of the 26 floor building. The brand agency, Y&R, inhabited the other 24.
By the time they all left, in 2013, digital and direct agencies like Wunderman and VML dominated the bulk of the space, with several former Y&R floors sitting empty. That was five years ago. Anyone who didn’t see the writing on the wall wasn’t paying attention.
It makes perfect sense that accountable advertising and communications would take the reins. CMOs, as we know from our annual CMO Spend Survey, are increasingly accountable for revenue – some 45% have sole responsibility for a P&L. They are increasingly on the hook for delivering not just branding, but business strategy, end-to-end customer experience, and product and service innovation.
The traditionally digital and direct firms (not to mention the management consultancies now dominating the agency market) were best positioned to deliver on clients’ need for data and analytics, for digital commerce platforms and expertise, and for social and mobile at scale.
Brand still matters. It matters very much. One might argue that in an increasingly intermediated commerce space, where Amazon controls so much access to customers, it matters even more. Ask Alexa to order batteries and she’ll suggest Amazon Basics batteries. Ask her to order Duracell batteries and that’s exactly what you’ll get. But the days of big brand, above-the-line advertising supporting legendary agencies like J. Walter Thompson and Young & Rubicam have been over for years.
Read clearly gets this, and while Y&RVML would be even tougher to say than VMLY&R, and Thompson Wunderman sounds even more awkward than Wunderman Thompson, one has to think there was consideration given to putting the legacy “digital” agency names first in the new nomenclature, despite Sorrell’s critique from afar.
Though the names may not be simple, WPP becomes inherently more so, and this speaks to an ongoing frustration we’ve heard from marketers – that the holding company model from a client-facing perspective has become unwieldy at best, and broken at worst. On paper it looks good, in reality, competing P&L’s and territoriality hindered holistic solutions for clients, and slowed responsiveness and agility. Simplifying the value proposition by bringing multiple disciplines together under a single agency brand makes sense. Sorrell himself unintentionally made just that case in his second-guessing of Wunderman Thompson yesterday:
“The people at JWT, if they did not have the digital talents and abilities, they should have been able to tap into those — in theory — at Wunderman.”
“In theory” hasn’t worked for today’s marketing leaders under pressure to deliver. They’ve had enough siloes to deal with internally, let alone with agency partners. WPP’s recent moves bode well for their agencies and clients in the longer term.