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What’s on the minds of the holding company bosses as 2017 hoves into view?

These (elderly) boys, for such they mostly are, never turn off, or so we’re told.

So how are they passing the hours between Christmas and the New Year. What’s on their minds?

Sir Martin Sorrell – WPP

Three issues may be exercising SMS.

1/ Why have my media agencies suddenly stopped winning big media reviews? We’re the biggest aren’t we?

2/ What will the Us Department of Justice’s probe into production quotes produce? This is on the mind of all of them of course but the WPP boss maybe most of all. After all WPP is the biggest.

3/ Given that much holding company growth comes from acquisitions, WTF am I going to buy next?

John Wren – Omnicom

1/ What are we going to do with those limeys at adam&eveDDB in London? Give them their own network on top of all that money?

Maurice Levy – Publicis

1/Do I really want to step down. Will it be après moi, le déluge? Maybe the board will change my mind for me?

2/WTF am I going to buy? Time’s running out…

Michael Roth – Interpublic

1/Is someone going to try to buy us?

Tadashi Ishii – Dentsu

WTF am I going to do next? Ishii has just resigned in the wake of the overbilling scandal and the death of an employee from overwork, accepting responsibility for the company’s “excessive” work culture.

Jerry Buhlmann – Dentsu Aegis Network

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Do I really want to work in Japan? Would they have me?

Yannick Bolloré – Havas

WTF is dad (Vivendi boss and all-round tycoon Vincent) going to do next?

Scott Kauffman – MDC

Why won’t anyone buy us? It would only take $500m or so. Is that you Martin/Maurice/John? What about China? Get me China….

So there you have it. And HNY to them (and you).

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

3 comments

  1. Stephen,
    Your questions for the Holding Company CEOs are good ones.
    They fall under the heading “how am I going to maintain my revenue and profit margin growth” in the face of all that is going on in the industry.
    The trends are not good ones:
    1. Procurement continues to drive down creative agency fees.
    2. At the same time, Marketing continues to drive up growth in creative Scope of Work workloads, continuously experimenting with social and digital media.
    3. Creative agencies have to stretch their very junior staffs to crank out more and more work per head. This is having an adverse impact on morale, retention, recruitment and creative quality.
    4. The media agencies now are under attack over “transparency” issues (rebates that generated profits), click fraud, and other related issues.
    5. The media agency issues will surely have a knock-on effect on media agency fees and profits, which will put even more pressure on creative agency performance.
    6. Holding Companies will seek acquisitions in areas not impacted by these trends — in research, measurement, consulting, etc., but if all of them go after the same types of companies, acquisition prices will rise.
    7. All of the Holding Companies are seeking “holding company relationships” to develop exclusive arrangements with clients. The competition for these types of relationships is having an adverse impact on average industry fee levels.
    In sum, there is a lot of negative pressure on Holding Company growth and profitability. The more that the Holding Companies squeeze their portfolio agencies for reduced costs and increased margins, the faster the decline in agency capabilities.
    So there’s a trade-off between short-term profit performance (desirable for the older executives) and long-term strategic viability (the obvious concern for younger executives like Arthur Sadoun).
    My assessment is that there will be continued strategic deterioration that will be masked by good short-term performance. Net, Holding Company performance will be weaker than generally perceived.
    One day, of course, the strategic chickens will finally come home to roost, and one of the many Holding Companies will suffer a major performance shortfall that will surprise many industry optimists — but this won’t be as early as 2017.
    For more on this, see “Madison Avenue Manslaughter” (Amazon), which describes the overall trends and the difficulties agency executives have in addressing the problems.

  2. Speaking of acquisitions, Interesting that more than 60% of the thousands of companies the Poisoned Dwarf has bought, no longer exist. The supermarket basket company (Wire and Plastic Products) that he acquired to start his evil empire is still going strong churning out wire and plastic shelving and trolleys. I wonder when was the last time he visited it?

  3. 2017 from my POV. What if?

    1. The holding companies said ‘no’ to procurement and increased their prices?
    2. They stopped pitching for free? And/or lowering their prices to get the business?
    3. They stopped thinking Facebook was the answer to every client problem?
    4. They got back to the business of solving client challenges, rather than churning the work.
    5. They listened to their people. About all things and not just how to reduce costs and increase productivity.
    6. Told clients that programmatic was/is bullshit.
    7. Realised transparency is good business practice.
    8. Didn’t use diversity (gender or race or other) as a box ticking exercise / percentage game and embraced it as a good thing.
    9. They encouraged clients to be brave and take risks with the work.
    10. Gave all their awards budget to charity.

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