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How to benefit from consolidation among agency holding companies

An era of customization

Increasingly, marketing organizations for large brands are engaging agency holding companies in a new ways. For example, the company creates a customized “agency” from the resources of various specialist agencies owned by the holding company. Examples of this in practice include:

  • Interpublic Group recently created a cross-agency group to win Harley-Davidson’s global and regional creative, media, and digital business.

  • AT&T consolidated its creative, digital, and media accounts with Omnicom, forming one dedicated team.

  • Omnicom is also creating a new agency dedicated exclusively to its McDonald’s U.S. creative account.

Before proceeding, it’s important to know both the benefits and the potential drawbacks, and whether agency consolidation is a fit for your company. In our Spend Trends research, we take a closer look.

What's my upside?

Success in such arrangements usually requires the client to have a clear definition of strategy, requirements, and deliverables, as well as a strong, centralized organization to drive the strategy.

Ideally, the client has the following:

  • A dedicated agency management team.

  • A large enough investment to warrant creation of a customized team approach.

  • A willingness to make a multi-year commitment to the holding company to allow enough time for benefits of the new arrangement to materialize.

Potential benefits include:

  • A single point of contact between the client and agency.

  • Agency coordination across client business units.

  • Brand consistency and integration across markets and channels.

  • Standardized processes and output.

  • Tailoring to an organization’s culture and requirements.

  • Program elimination and reduction of duplicate work.

Also, note that agency models are not “one-size-fits-all.” Rather, there are several considerations that can impact which model is right for each client.

How about drawbacks?

One potential downside: fewer choices.

You can limit your range of options for the skills and services offered by agencies within the holding company itself.

Also, this model does not guarantee a good cultural fit between the mix of agencies and the client.

When a holding company builds a customized agency to service a single client, sustainability could become an issue, as agency creative staff might grow restless working on a single client exclusively.

Also, when a holding company forms a team from a confederation of agency specialists within the holding company, the individual agencies often retain individual profit and loss responsibilities.

This poses the risk of in-fighting among agencies to grab as much of the client’s total fee as they can.

Your next steps

As a marketer, you should evaluate your agency rosters at least once a year to ensure their scope and requirements are aligned with the agencies’ core competencies and strengths.

This can provide opportunities to eliminate any agencies that are providing services not aligned to those strengths.

You should also examine their internal structures and processes and determine if they are optimized to meet their organization’s stated short- and long-term goals.

Furthermore, assess all agency models to determine whether they’re best aligned to meet those goals, and if not, whether another option, such as a consolidated holding company approach would be a better fit.

You might find this new approach will help streamline agency rosters; better align scope and requirements with agencies’ core capabilities and strengths; and better integrate marketing efforts across regions, channels, and even brands.



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