Talk to any of the major agency holding companies, and they will tell you they have two priorities: Asia, and digital. Through takeovers, start-ups and management changes, they are throwing resources at the region; and as clients move more budget into digital, the challenge for the holding companies is to develop the capabilities to service their needs.
For the first time, this emerging digital landscape has been captured in a family tree, published here. These tables reveal who owns what and where, showing the different skills and geographic spread of the holding groups - though with so much interest in the region, it is bound to change again soon as the holding companies jockey for position.
As the chart shows, WPP is currently ahead of its rivals in terms of sheer numbers - it has more agencies in more locations. It also arguably has greater diversity of digital holdings, having picked up extensive search capability through the purchase last year of 24/7 Real Media.
WPP benefited from the strength of direct shop OgilvyOne, which managed to expand into digital and take many of its blue-chip clients with it. It has added to this with an aggressive acquisition policy; recent takeovers include Agenda and Blue. Indeed, rivals suggest it has thrown money at digital shops to build scale without necessarily thinking about a coherent expansion strategy. For example, Blue sits independently within the loose WPP Digital grouping, whereas Agenda has been bolted on to Wunderman to boost its digital capability.
Naturally, that is not a criticism accepted by WPP. Mark Read, CEO of WPP Digital, insists that the holding group's assets are "not particularly fragmented". He argues that the long-term strategy is to boost digital capability across its traditional agency networks. "But at the same time there are very strong digital firms we want to bring in to work with our agencies."
Omnicom too has been buying, though not on the same scale. That's not always for want of trying - it was one of the companies interested in picking up Agenda. However, according to Greg Paull, principal at agency assessment consultancy R3 Asia-Pacific, it has failed to keep pace with WPP. "Omnicom has pockets of excellence, but it is not as consistent across the map as WPP."
To accelerate digital growth, Suhaila Suhimi-Waldner, East Coast director of digital from OMD in the US, was recently seconded to Asia to investigate how best to upgrade Omnicom's digital media offering. The group also promoted Jason Kuperman to the role of vice-president for digital development in Asia-Pacific. In this role he is responsible for sourcing digital talent, spreading knowledge and spotting acquisitions. "I can't say we're really there yet, otherwise I wouldn't have anything to do," he says. "We're not behind our rivals, but we're not ahead either.
Michael Birkin, Asia-Pacific chairman and chief executive of Omnicom, admits he has "made fewer acquisitions than I had envisioned", but insists the group is moving in the right direction. His focus is on organic growth within Omnicom's existing networks, such as Tequila and TBWA. "I'd like to be WPP's scale, but wouldn't want the number of bits and pieces."
He warns that takeovers can be messy, with clashing internal cultures, people issues and the existing political structure of a holding company to take into consideration. "I'd rather do it organically - it's easier to manage," he says.
Publicis Groupe's acquisition of CCG may be a case in point. Since the takeover, several senior managers have left, and questions have been raised over the future direction of the agency. Yet sources close to the company insist further acquisitions by Digitas in Asia are in the pipeline; for an agency that needs to gain a footprint quickly, there may be little alternative.
Interpublic, which has been hindered by global financial issues, has focused on building digital within its existing agency networks, though that may be about to change. It recently hired Mark Cripps as regional digital director for McCann WorldGroup, with a brief to make its operations more digitally focused. He says the group is planning an "aggressive acquisition plan, with negotiations already ongoing in key Asian markets."
Building a presence
Of the other major networks, Aegis has built some digital presence by buying local shops to include in its Isobar network. Havas, meanwhile, has the smallest digital presence in the region of the big Western holding companies, but is looking for a regional director ahead of expansion. It steers clear of acquisitions, preferring to start up offices in markets or to partner with local firms. "We feel that it builds deeper relationships," says Don Epperson, chief executive of Havas Digital. "Big acquisitions come with big risks."
As for home-grown operators, there seems little prospect for the time being of a Chinese or Indian agency group emerging to take on the Western giants. However, Japan's Dentsu is, not for the first time, eyeing opportunities in China. It operates through a labyrinthine structure of joint ventures (it has been known to create joint ventures with its own joint ventures). This month it launches Digit Ones, a joint venture with Focus Media, to establish a digital presence in China. It is also looking at expansion in search and mobile.
Most holding company executives agree the end goal is a structure where digital is built in to all agencies, be they advertising, media or anything else. That may happen one day. But for the time being, Asia's digital landscape remains an inconsistent patchwork of specialists and traditional shops with digital capabilities (usually from a direct marketing background).
And with the sector still evolving, there's still plenty to play for. "In the digital space nobody is more than half a chapter ahead of anyone else," says Birkin. "You can't afford to spend a lot of money in one area only to lose out elsewhere."
