GroupM’s media agencies seem to have lost their mojo – appearing to lose more pitches than they win and lagging Publicis and OMG – and their business model has likely been affected by greater client scrutiny.
Looks like WPP’s once-mighty GroupM media operation is going the same way as the ad holding company’s creative agencies with yet another restructuring. Now, its various media agencies, EssenceMediacom, Wavemaker, Mindshare, and MSix & Partners, are no longer in charge of their budgets, with spending being allocated on a group-wide country basis.
This makes you wonder if this is a move towards one big media agency – GroupM or WPP Media – with the various brands little more than names on the door. WPP, which is trying to strip out £100m of costs following disappointing results, now has just two big creative agencies: VML (including JWT,Y&R and Wunderman) and Ogilvy.
GroupM boss Christian Juhl, who joined when WPP bought Essence, says the move gives bosses more time to focus on efficiencies and strategy. However, it’s pretty hard to do this when you don’t control the budget.
Already, senior people seem to be leaving in droves (the quickest way for a holding company to reduce costs, of course.) GroupM North America boss Kirk McDonald is leaving and Campaign Asia reports that Mindshare chief growth officer Rohan Lightfoot, his Wavemaker counterpart Charlie Wright, Janice Hong, the chief commercial officer at Wavemaker and Dylan Choong, the chief people officer at Group M are all on their way.
The turn of the year is traditionally the time for senior departures – agencies seem to think they will slide under the radar – and doubtless there’ll be more. GroupM’s media agencies seem to have lost their mojo – appearing to lose more pitches than they win and lagging Publicis and OMG – and their business model has likely been affected by greater client scrutiny of the multifarious ways media agencies, still the largest contributor to holding company income, make their money. (When clients hire them on 0.5% commission or similarly ridiculous terms, you can see the temptation.)
WPP seems to be moving belatedly to a version of Publicis Groupe’s ‘Power of One’ model. However, Publicis boss Arthur Sadoun seems more relaxed about keeping many brands (albeit under central control) than WPP counterpart Mark Read.
There is a more fundamental issue for reading. Sir Martin Sorrell’s strategy at WPP was, essentially, to be the biggest. Big clients, he reasoned, would inevitably follow and it certainly used to work for GroupM. It was the old Saatchi strategy: number one is great, number two OK, but number three hopeless.
WPP is still the biggest regarding headcount (for now) and revenue by some measures. But its market value is less than half that of Publicis. WPP may need to get smaller to get back on track.
