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Mark Pritchard, Proctor & Gamble’s CMO has asked Publicis, WPP and Omnicom to create a hybrid consumer agency to service a portion of his North American business. The collaboration, he hopes, will yield better creative and better economics. (Insert silent giggle here.) When the boss asks for something and is willing to pay for something, you do it. Mr. Pritchard is the boss and the biggest ad spender in the neighborhood.

As proof of concept, he points to the wonderful anti-advertising Tide Detergent campaign aired during the last Super Bowl. But there’s a massive problem with the logic. Ad people are very ethnocentric. Very egocentric. Did I mention competitive? Especially creative people.  Leonardo da Vinci let some talented interns mix the paints and sketch on some canvases, but he wasn’t collaborating.

Every time someone trots out this hybrid agency idea or the idea to have a totally dedicated brand shop, it’s failed.  As Faris says, “ideas are recombinant.” Egos aren’t.

This dedicated agency model may save money, it may make a couple of goods ads, but it won’t attract the best people and certainly won’t foster the best creative. Ring around the agency.

Peace.

 

 

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ITT announced yesterday that it will split into three companies.  Sara Lee is considering splitting into two companies. And as you know, I believe Google will split into 3 companies in the next 5 years.  All this makes me wonder what’s in store for the big public ad agency holding companies?  What will IPG, WPP, Omnicom and Publicis look like in a decade or two?

The drivers of divestiture are usually varied margin and profitability spans.  In the case of ITT, the military business is not as profitable as the water pump business.  In agency holding companies, I wonder if there are discreet businesses with differing margins? 

Our business has changed much in the past 5 years thanks to the computer and digital marketing.  Analysis and reports, once the provenance of humans are now much more automated.  Translating the big selling idea across platform was always the heavy lifting, but today many media forms are converging. Content is still where the money and margin is in marketing.

If I were a betting person, I’d suggest a bifurcation of creative and analytics. Move the analytics companies nearer the energy plants so the computer farms are cheaper and run the creative companies in urban centers closer to all the stimuli. Patsy Cline? Fast forward. Peace!

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Keshin…To Go.

Eric Keshin was groomed to take over McCann-Erickson.  A rising star at the company for years, he was one of John Dooner’s chosen ones. Eric ran the AT&T Business business while in his twenties and the agency powers knew enough to step out of his way. He was a quite a force of nature.

Eric built his career being decisive — never wavering when asked a question. He loved McCann…bled “Truth Well Told” blue.  And the haters who never worked there or worked in the creative dept. and could find a way to criticize a child’s finger painting, well, they will have their say. Go ahead, snark away– but McCann rocked the ad world for a number of years and Eric Keshole (as I affectionately used to call him on the softball field) was the orchestra’s key instrument.

“He’s big, he’s blue…”

I was an account manager under Eric on AT&T and Lucent. He hired me. He fired me. Both deserved. But I left McCann a much better ad guy and marketer — one who knew how to analyze business problems, when to conduct research, how to read consumers and truly listen to the market.  I also learned how to question authority and clients. And I learned to love my brands… at McCann.

If this seems almost obituary-like, it’s not. Eric will land somewhere. Just as Jim Heekin did. And when he lands it will be with a thud. A thud of money. Eric has changed markets with his decisions. Eric is no problem solver – anyone can do that. He’s an opportunity creator. I know it killed him to leave McCann. As his power waned, so waned IPG’s stock. He’s no Frenchman and though WPP would be smart to grab him, smart money is on Miles Nadal and MDC Partners.  And the gloves will be off. Peace! Or not.

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Twitter and Skype just made executive moves at the top in efforts to take their fast growing, oft used businesses in the direction of profitability.  Both companies are moving past their infancy. The venture partners helping drive the strategy of these two exciting, brilliant tech companies are pushing for stronger, more “grown up” management.

This makes me think about digital marketing shops — other businesses coming out of the infancy stage.  Do big holding companies like IPG, WPP, Omnicom and MDC Partners cut digital companies more slack than traditional marketing companies? My bet is they do.   The young, filled-with-promise always get the benefit of the doubt. Plus, I’m guessing the financial people at the holding companies don’t quite know how to manage profitability of digital clients just yet.  Because digital is the fastest growing sector in marketing, profit blemishes are being masked.

Digital business people grouse that they don’t get a seat at the big person table when it comes to planning. Often, the “idea” is already cooked when the didge shops are brought in — the big expensive thinking complete.  What is left is the digital translation, a degree of digital creativity and execution… much of which can be performed by lower cost worker bees. If this thesis is correct, then the per capita payroll of a digital shop is lower than that of a full-service ad shop. This is why the profit margins are lower, why digital shops don’t scale past new business, and why they are not getting a seat at the big table. This will change, but will probably lag the pace of change at companies like Twitter and Skype. Peace!

PS.  RGA does not fit into this mold. They have strong highly paid talent throughout. They are the exception.

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MDC Partners is a marketing services holding company with a brand strategy.  That’s right, they have an idea. IPG doesn’t, though back in the day one might have assigned them “entrepreneurship.” WPP, Publicis, and Omnicom don’t have ideas, though perhaps at one point Omnicom might have owned “creative.”  At holding companies the powers that be feel brand strategies are not really needed.

MDC Partners owns talent. “Where great talent lives” is their idea. For some, that might be a platitude or poesy but for Miles Nadal, CEO, it’s a real strategy.  As a practice, MDC does not own a majority stake in its companies, it owns 49%.  This insures that great talent will stick around.  Their hands-off approach also insures that the talent stays great.  Though I only know Mr. Nadal through his actions and deeds his focus is solely on the leaders he hires, not their output.  Any person who has been around this business knows managing people is easier than managing work output.  Talent is what drives great marketing.  The talent to see what sells, the talent to package it, and the talent to promote it has driven the business since soap suds.  Never mind if that talent is traditional, digital, mobile or whatever’s next. (What could possibly be next?)

 MDC Partners stock grew last year while every other holding company’s tanked. Campaigns come and go and talent comes and goes, but in the marketing world “talent” is a powerful idea. Peace!

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Advertising ain’t what is used to was (a little Southernism I made up). Creation of big selling ideas by highly paid creatives and marketing people, broadcast to millions via TV, radio and print was the ad business.  Today, thanks to technology, the ad business is undergoing a diffusion like never before. Digital agencies, though not yet offered a seat at the big table, are new and important players.  Google is the most profitable advertising agency in the world and Facebook is hot on their trail.  And when I say “mobile advertising” does any one company come to mind?  That one is going to be huge…but it’s still to play out.

Buy or Build?

Big traditional ad agencies clearly see the need to offer digital, social and mobile but are asking themselves “Do we buy or build?” Right now they’re doing both: hiring someone smart in each discipline and using them to select cottage industry players who are truly immersed.  Better than last year, which was all “Go out and get me a subservient chicken.”  Or “Find me those nerds who built the US Weekly Facebook poll.”

I’ve long thought that mid-size agencies were poised to win in this diffuse advertising world, but now I’m not so sure. True, they can more quickly parlay a powerful branding idea into a market-moving integrated campaign but the model may not be extensible.

Bud Cadell is right when he says the old ad agency model is broken. It will take open minds, forward thinking, experience, software, an understanding of brand building, and lots of money to fix the process. I’m of the mind that the successful model is more likely to come out of MDC Partners than WPP.  It will be fun to watch though. Peace!

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Ad Age reported this week that WPP’s Martin Sorrell may be negotiating to buy Avenue A/Razorfish from Microsoft.  As part of the deal, WPP will offer up its ad serving (read software) business to lessen the sting for Microsoft, which way overpaid for Avenue A.   
 
Having been in advertising and software, I can tell you that this will be a good move for both parties. Software and advertising are two uniquely different businesses. Microsoft people are different from advertising people, digital though they may be. Writing software code is algorithmic. Writing selling prose is orgiastic. The latter practice is left brain, dealing with emotion and inspiration. Coders rely on themselves for answers. Sellers rely on consumers. Culturally, Microsoft and Avenue A never had a chance. 
 
Mr. Ballmer, get our of the digital ad business as fast as you can. Mr. Sorrell, get out of the ad serving business even faster. You’ll both sleep better.
 

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WPP is putting up some big pounds in pursuit of global marketing research firm Taylor Nelson Sofres (TNS). Martin Sorrell’s group is in a bidding war with GfK. Though Taylor Nelson seems to be going strong today with a high stock price, I am of the mind that technology and the Internet will start to crimp the style of these global market research companies. I know, I know, it’s not just about data collection and distribution. You have to do something smart with it. Value-add, as T.N.S. likes to say. Though, with all that I hear, read and see today, marketers are becoming more facile with data collection tools and I’m thinking that a good deal of market research will be handled in-house 3-5 years from now. 
 
Some smart marketing nerds are going to provide an open source tool that will let users tap into a variety of sales measurement, analytic and prediction schema. Mr. Sorrell, buy the company, if you must, but mine it for the best data and software people and get out in front of this. Peace!
 

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