On the surface, it appeared to be a good idea: aligning multiple agencies within a single holding company, for the purpose of better roster integration and collaboration. Along With the fragmentation of media, more and more agencies had been added to clients’ rosters, thereby taxing their ability to manage it.
However, advertisers soon discovered an ugly reality. Agencies, even within the same holding company, “silo” their profits on separate P&Ls, since the business model of holding companies treats disparate agency brands as distinct financial units. This is not a recipe for collaboration.
Neither does consolidation in one conglomerate offer economies of scale. It often results in duplication, since unnecessary layers are added.
To get around these issues, some holding companies create a dedicated, single-client multi-disciplinary team with a unified P&L. This approach has been met with various degrees of success. WPP established one such agency for Dell but that unit actually failed to produce even a single ad before it was eventually fired. WPP also lost a significant portion of its dedicated Ford account. Omnicom established a dedicated unit for McDonald’s, and lost the business in just two years.
Advertisers are becoming indifferent to the concept. Research firm COMvergence conducted a survey about the make-up of pitches within a 24-month time frame, in 2019 and 2020. It involved participation from U.S. creative and/or…