Several global media reviews have prepared the way for blue chip brands to place all their eggs into one basket. In many cases this year, that has meant one holding group or media agency brand managing several markets, where previously they might have enlisted various agencies across a region.
Take the example of Google. The tech giant consolidated its entire multibillion-dollar global media account into WPP’s Essence; it had previously worked with it for digital media and programmatic, but had been using Omnicom Media Group for offline media buying.
Then there’s Coca-Cola, which placed most of its marketing support (media and creative) into WPP.
The trend is not new, but appears to be gaining momentum with large multinationals.
But is this move to consolidate with single global agency groups a sign of things to come, or just a transitory phase?
Campaign asked agency leaders and new business consultants why global companies are consolidating and what this means for them.
Jenny Biggam, founder, the7stars
There are several different client and pitch behaviours that we are observing as we (hopefully) move forward from the pandemic and lockdowns. The volume of new-business pitches overall is certainly increasing, and every agency is choosing with care which pitches to take part in and which ones to decline. Many clients delayed their pitch processes during lockdown, preferring to meet agencies IRL rather than appoint a new partner over Zoom—and these delayed pitches are adding to the overall volume of new-business activity.
Equally, many agencies and clients cemented their relationships in the virtual world. Clients have needed more support than ever from their agencies during the past two years and the agencies that were able to step up and deliver are reaping the rewards now. The best agencies have used the pandemic as a reset opportunity, creating new structures, adding new services, and hiring new skillsets. As the best agencies emerge stronger than ever, it's natural for some loyal clients to consolidate their business relationship with their existing agency partners.
Paul Phillips, MD, AAR Group
The super-tanker global brands are on a neverending journey of bedding in, working with or exiting their media agency arrangements. Every year, depending on the governance lifecycle, there will be businesses that dock their accounts in a pitch port for what is never less than six months, and often much longer, before setting on their way with an evolved or completely new set of media agency partners. And if you want to know what’s likely to come to market in 2022, I suggest looking at the brands that haven’t reviewed since between 2017 and 2019, as three to five years appears to be the predominant review cycle.
Sasha Schmitz, MD data and digital media EMEA, MediaMonks
Yes. The writing is on the wall. Brands are starting to understand the need to collapse organisational silos in their marketing teams and agency landscape, since the consumer demands a seamless customer experience across screens. We don’t want to be followed around by a product that we just bought, so this means that tactics and channel strategy need to come together. Technology (for example CTV) and advanced data and measurement are bridging the offline and online worlds, so as synergies become key advantages, it makes less and less sense to engage multiple agencies that are not connecting strategies across channels or markets and that are siloing a brand’s data.
This momentum around consolidation is also extending beyond just media into efforts to de-silo media, data and content practices. Forward-looking brands are seeing the value in having a flywheel approach to data-driven customer journey strategy, informing media planning, informing content production, and then measuring it all for continuous optimisation.
David Indo, chief executive, ID Comms Advisory
Consolidation will be a big trend in new-business reviews for the next year or two because holding companies and networks have become much better at providing seductive, data and tech-enabled, operational solutions to complex client demands and internal dynamics.
The ease of dealing with a one-stop shop solution remains compelling to those large advertisers that can justify such efforts.
For those big-spending advertisers that also want to continue to maximise their ability to secure hard savings and cost reductions from an ever-diminishing offline budgets, consolidation offers the easiest and most effective way to access immediate pricing improvements.
The bottom line is that consolidation delivers on the very attractive prizes of ease of management, cheaper media and often reduced fees.
Andrew Mortimer, MD, The Aperto Partnership
What The Aperto Partnership is seeing is that as our clients’ business models are becoming complex, so are their requirements from their agency operating models. This may drive consolidation when there’s a greater need for more central control over media value, performance, data or technology, but equally can drive a desire to partner more specialist agencies.
We have seen some holding group "one stop shop" integrated models for media and creative challenged, as clients move back to selecting individual agencies and building hybrid teams.
The rise of nextgen digital specialists, whose capabilities closely align with ecommerce businesses and can offer global scale, is also a serious threat for traditional media agencies and holding groups, which have been investing heavily in their digital offerings.