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Pritchard serves notice on the holding company model

READ TIME: 2-3 MINS

Like a seasoned prize fighter, Marc Pritchard always seems to land big shots with perfect timing. Only days before Sir Martin Sorrell fell on his sword, Pritchard was calling time on the agency holding company model by outlining not one but three organisational experiments: “People First”, “Fixed and Flow” and (less imaginatively) “Media”.

Pritchard may have developed his own lexicon, but he is on pretty safe and well-trodden ground here. MediaSense’s Media2020 study found advertisers actively pursuing three alternative agency models: Hub and spoke, on-site and in-house. So “Fixed and Flow” combines a lead agency hub with specialist capability; “People First” brings talent on-site from key agency partners; and his plan for “Media”, although less developed, is to bring more and more capabilities in-house.

What’s unique about his latest move is that Pritchard is riding three horses. This is no mean feat, and so wisely he is at pains to stress the importance of remaining plugged into holding company resources and has put his arm around his agency leaders to manage these new entities. By assuming the role of integrator, P&G will have its work cut out to instil rules of engagement, ways of working, purpose and culture. Building teams and running operations is a full-time endeavour and will determine the success or failure of each experiment, so Pritchard has been politically astute in asking his agency CEO to take the helm.

But of course, P&G is by no means the only advertiser challenging its agency model right now. Deutsche Telekom recently dissected its core media needs and re-assigned them by bringing more planning in-house, consolidating marketing analytics and media buying with specialists, and owning its programmatic media capability. In the UK, O2 has created a planning consortium from leading experts across different agency holding companies. A recent survey carried out by The C3 Partnership reported that no less than 60% of global brands are dissatisfied with their current agency model. At MediaSense we are helping 40% of our client base to review their agency model this year.

All of these remodelling programmes stem from brands needing to control the core competencies which drive marketing performance:

Strategy and Planning: the requirement to own customer insight and understand the customer journey

Measurement and Analytics: the ownership and management of customer data sets to optimise marketing performance

Content Development: the personalisation of messages and the curation of multiple variants at speed powered by technology

More and more clients are taking on the role of integrator in one or more of these three core areas, and this means taking tasks back from agencies or bringing specialists skills into the brand organisation. In a world where brands need control and where technology is their facilitator, many clients are actively asking what they now need their creative and media agencies to do.

Agency holding groups anticipated this question some time ago, and have moved swiftly to offer more agile and less siloed solutions. The Power of One, Horizontality and the Village, to name but a few, are all examples of integrated holding company propositions. But whilst these alternatives can offer more integrated and agile services, they do not overcome the big issue of control and they do not come cheap.

Of course, cost savings are another driver. Pritchard sees unnecessary duplication across his agency roster in account management and account planning functions. By streamlining operations and transferring more responsibilities to his own marketing teams, P&G could benefit from productivity improvements and acquire new skills by in-housing programmatic optimisation, paid social and search.

But the success of Pritchard’s new agency models will be judged on whether they deliver on Speed, Talent, Savings and Quality. Rarely, if ever, are all four achievable and it will be interesting to see where compromises are made, particularly in the media space where he does not yet appear to have a cheerleader.

Does anyone have Irwin Gotlieb’s phone number?

 

The full ‘Media2020: Refresh’ report is available at: www.media-sense.com/media2020

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