After Sir Martin Sorrell: The Reckoning

Tom Doctoroff 2015.jpgTom Doctoroff is Chief Cultural Insights Officer at global brand and marketing consultancy, Prophet. Previously he was Asia-Pacific CEO at J. Walter Thompson headquartered in China and today he posted on LinkedIn his comment on the ramifications of Sir Martin Sorrell leaving WPP.

Let us spare the ad hominem attacks and schadenfreude for a man who, through grit and passion, forged an industry over three decades. Sir Martin Sorrell's swift and sad downfall is a flashing red light for the entire communications industry. His shocking professional demise is de facto proof that investors and clients have lost confidence in the ability of holding companies to generate growth for brands.

They are being "disintermediated." In-house agencies are the rage. Clients deal directly with Facebook and Google. Content is produced by brand managers. They have fallen into a vicious spiral of fee cuts and talent degradation.
Holding companies, with perhaps WPP most guilty of the ultimate marketer's sin, never clearly defined its value proposition. It remains an aggregation of hundreds of P&L centers, each reaching for its own small piece of sky. "Horizontality" -- or mini-agencies created for individual clients -- resulted in further silofication, not integrated solutions that elevate brands. In the end, Sorrell, a maestro of financial control, oversaw a portfolio of companies -- assets that, for a long spell, rewarded shareholders. But they were never "clustered" to enable the marcomm's industry calling: building brands that fuel growth by becoming important parts of consumers' lives. A proud "bean counter," did he -- and does WPP -- truly appreciate the power of ideas to forge long-term loyalty?

Marketers crave three basic things: a) strategic and creative ideas that provide conceptual and executional consistency across a shape-shifting offline and digital landscape, b) a "touchpoint" plan that exposes consumers to these ideas in a way that encourages behavioral change and, ultimately, purchase and c) cost-efficiency in reaching -- that is, "targeting" -- consumers.

WPP will need to aggressively redeploy its assets in a way that enhances its credibility as a orchestrator of these objectives. The transition will be painfully bloody. In my humble opinion, there are five structural changes -- all easier said than done -- that need to take place before communications conglomerates regain the conceptual and executional high ground.

First, although I am no investment banker, non-essential operating companies ("opcos") will need to be sold to: a) provide the cash necessary for structural experimentation and b) escape the tyranny of quarterly reporting. (Do holding companies really need to field research? Will we ever really be "makers" of, in what P&G's CMO Marc Pritchard calls "shiny objects" at the speculative edge of digital engagement?)

Second, advertising agencies must reclaim their rightful place as the "center of the solar system" or "idea conductors," not low-end producers of television commercials and print ads. Why? Because only advertising agencies -- producers of brand and creative ideas people want to engage with -- attract both creative and strategic minds who work, more or less, harmoniously to define and spread brand purpose. Media shops and PR companies have never fully demonstrated their ability to be "creative," despite massive investment. And that's because these companies' cultural centers of gravity is incompatible with advertising agencies' brand-centricism. Transaction trumps inspiration. Scale upends insight.

Unfortunately, over the past 20 years, large agencies have been denuded and demeaned. This must end. Agencies must go back to the future to become media-neutral strategists, idea generators and executors. Due to lack of financial incentives and disparagement of their skills as "legacy," mid-level agency executives have fled for sexier realms.

Third, the number of P&L's need to be drastically reduced to encourage enlightened consolidation of resources and cross-functional collaboration. The goal should not be, as it currently is, cost cutting and minimization of redundancies. High-end marketing consultancies that specialize in customer-driven business strategy should move closer to the people who execute ideas. Verbal branding experts must sit beside copy writers. Visual and branding identity pros should move closer to art directors. Quick turn-around content producers should sit in the middle of it all.

Fourth, media and PR empires must be disaggregated. Media planning and buying are different animals. Media planners belong back in the agencies, as do programming and syndication specialists, because they determine how and when consumers interact with ideas. Media buyers, including hi-tech programatic buyers ("performance marketers"), focus on efficiency and cost. A similar divided Red Sea of talent exists in PR companies. The vast majority of revenue is still generated through traditional churn-and-burn media mentions. Higher-order peer-to-peer "communications marketing" (Richard Edelman's holy mission) remains on the fringes, both financial and culturally. These latter conceptualizers must move closer to like-minded warriors who aspire to brand elevation.

Fifth, "digital" must disappear as a specialization. The world is digital. All agency talent -- across all domains -- must become fluent in creating ideas that are fundamentally platform-neutral. The platform builders are an entirely different breed. The website creators, AI and IoT experimenters and VR enthusiasts should sit within one entity. And holding companies should implement financial incentives for farmers (conceptual distillers) and cowboys (systematic thinkers) to play nicely with one another.

Of course, this massive organizational restructuring of all holding companies will be filled with landmines. Trial-and-error brick walls are inevitable. But the industry faces an existential threat. Either it fundamentally reconfigures its operating model to refocus on ideas for growth or it will be picked apart by investment scavengers. Marcomms will be under siege from 21st century barbarians at the gates.

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2 Comments

Very well put said:

Very well put

Nick said:

Er, I dunno about ad agencies claiming their spot in the centre. Although ad agencies know how to engage customers with brand messages, they don't do well at building brands from the ground up or giving them holistic direction.

I'd say the agencies that should sit in the centre -- that think deeply about brands and imagine them as business heartbeats, employer cultures and rigorous value propositions -- are the brand strategy agencies. They are the ones that really exist to "define and spread brand purpose".

I think Prophet may be one such agency, in fact.

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