The new 'mad men' in town

Wunderman Thompson is the new game in town. The global merger between the world’s oldest agency — J Walter Thompson — and a relatively newbie, a digital network, made headlines, even though the rumour mills had predicted the event for the past few months.

It wasn’t just the branding — placing the Wunderman brand ahead of JWT — but also the choice of the CEO that made it clear what the WPP CEO Mark Reed had in mind; it also signalled an important shift in the world of marketing communications and services.

The merger raises several questions. At one level, putting creative, strategic, technological and data capabilities together into a composite bundle isn’t rocket science. In the new world, that makes eminent sense. But the eternal question is whether clients are willing to throw in not just the slices of the pizza — but the whole thing. Dislodging existing relationships or indeed persuading clients to consolidate their spends in a one-stop shop is a leap of faith that’s not always realistic.
 

At WPP, Martin Sorrell spent much of his long career trying to do exactly that, hoping that buying up a string of storied brands in the communications space — JWT, Ogilvy, Grey, Y&R — would allow him to maintain a lock over the biggest spenders, but also hoard the best talent. He even went a long distance to drive his customer-centric approach, building exclusive global hubs to manage important client business. One of the most important wins was pulling off a Team Detroit inside WPP, where he could service the Ford business, by drawing upon the best talent from all his agencies across the world. Similar arrangements were fashioned for Unilever, P&G, J&J, Kimberly Clark and a few others, though not often with the same degree of success. And in early October this year, weeks before the merger, WPP saw a significant part of the Ford business slip away.

As marketing services started to become more and more specialised, it invited new players to the party. Shopper marketing, event management, sales promotions, loyalty and customer relationship management, content management…the sheer explosion in choice made the task of integration a challenge not just for the clients but also for the full-service agencies. In many cases, Sorrell again relied on strategic acquisitions to build new capabilities, since the mother ship, immersed in its own advertising-led model, wasn’t always nimble enough to create a flotilla on its own.

Especially in the last five years, the ensuing digital disruption created its own set of challenges, perhaps the most formidable ever in WPP’s history. For one, Facebook and Google had access to customer data that was granular and personalised, which WPP’s research or its media agencies simply did not. Clients saw great value in this because it allowed them to precisely target customer groups in ways that they could never have done earlier. Within no time, digital spends in the US overtook TV and print, and stand at almost 40 per cent today. And between Facebook and Google, they controlled the sweepstakes. And worryingly, many clients such as Vodafone were open to the idea of dealing directly with the social media giants, cutting out any middlemen from the picture. And even consultancies such as Accenture and Deloitte are increasingly muscling into the marketing services space with end-to-end tech-led solutions. 

Markets such as India may still lag behind the US. But it is a matter of time before the same scenario plays itself out in India too. But keeping the teams here future ready is a challenge that is nothing short of Herculean because people get so deeply embedded in the ingrained culture and ways of working that it is hard for them to shift gears and remain agile.

The most important question: How do you define the new Holy Grail? For long, the traditional ad agencies prided themselves on their ability to bring the voice of the customer into the business. But soon, the clients realised that they need to take charge of that agenda themselves. Listening posts, immersions, customer voice packets every morning drove this change process inside firms. Design thinkers and innovation specialists worked hard to build greater empathy among clients. So now how could the agency differentiate its offering beyond just slickly produced creative ad campaigns? 

Falling margins are an obvious result of losing the position of primacy with clients. As fragmentation in marketing services became more and more pronounced, clients were ever-ready to shop around for better and cheaper services.

All isn’t lost though. There is still an opportunity for the likes of Wunderman Thompson to evolve a new code. By itself data isn’t enough of a differentiator. There is an opportunity to marry the world of data analytics and the new tools of behavioural sciences. Clients are willing to pay heed to a new science that brings the world of data and insights together. Some call it sense-making. Others describe it as a blend between the fuzzy and the techie. Earlier this year, Fractal Analytics acquired Final Mile, which calls itself behavioural architects. Final Mile was founded by Biju Dominic, a former ad professional and focussed on solving complex challenges facing businesses and even social enterprises. Much of the demand is centred in the US. But it may not be long before global clients in India start asking for such marriages. But can Wunderman Thompson refashion itself in the new world? Or will it be a bridge too far?

The writer is co-founder, Founding Fuel