Re-bundling Anyone?

In researching my new book on marketing, I’ve interviewed the heads of major industry associations, the top executive recruiters specializing in CMO searches, and advertising veterans on both the agency and client side.  They all agree that marketing has never been more challenging.  Media has fragmented, consumers have unprecedented control over their sources of entertainment and information, and technology is undermining the business models of old. No one knows where it’s all going. None of that is too surprising.  I would have heard the same thing five or even ten years ago.  Though perhaps with less panic in their voices.

But what may be different now is a pervasive belief that intellectual capital in marketing has moved from agency to client.  Clients have always been in charge.  After all, they pay the bills.  But most of them leaned on their agencies for insight and counsel.  Apparently those days are gone.

Some blame the rise of agency holding companies with their relentless focus on cutting costs and boosting earnings. Some blame the shortsightedness of clients who treat agencies like vendors of just another commodity.

They’re probably both right.  Both developments conspired to wring slack time out of the advertising process.  But it was in that slack time that Big Ideas took seed, germinated and blossomed.  “It’s hard to identify more than a handful of really breakthrough brand campaigns today,” one highly placed marketing executive told me.  “They’re all transaction oriented. Creativity has become focused on the short-term.”

I wonder if that’s not what lay behind yesterday’s announcement that Dell and WPP have agreed to build a new kind of agency to serve the computer maker’s global marketing needs. The new agency’s staff of more than 1,000 will handle marketing functions from creative, to media planning, to customer relationship management, and public relations. Only media-buying duties will be handled separately, so Dell can capitalize on the economies of scale that come from working with a buyer that handles many large media budgets.

This follows reports that Publicis is about to restructure itself into profit and loss centers by client brand.  The executive who Publicis believes best understands the brand will lead each client account.  Everyone else – whether an account manager at Saatchi, a creative director at Leo Burnett, or a media planner at Starcom – will report to that person.   As Ad Age reported last week, Proctor & Gamble is taking the same “re-bundling” approach on some of its brands at all four agency holding companies.

Maybe what depleted agency intellectual capital was the disaggregation of its capabilities into separate P&L centers focused not on clients, but on the agency’s own bottom line. Maybe re-bundling those capabilities around client brands will allow agencies to regain the critical mass they need to become expert in their own business again.