Peter Reid of MSQ: people, process but maybe not Publicis are crucial to holding group success

‘What’s going wrong at Publicis Groupe?’ is not a headline Arthur Sadoun and co would have enjoyed seeing splashed across the front page of this very site earlier in the week.

But this wasn’t the only publication asking questions about the future of the Publicis business, A surprise 2.7% decrease in Q3 revenue and a share price plummeting to its lowest level in more than seven years is going to do that.

As the MAA article pointed out, if you’re looking for reasons for Publicis’ problems, you’d be spoilt for choice.

Some issues appear to be unique to the group itself. But I believe many are indicative of the struggles that the largest holding companies are facing due to the unfortunate circumstances they’ve got themselves in.

At one point, these networks were the reason that the industry was moving forward. Their proactive thinking reorganised the world of marketing communications as we know it.

But in the last four years, the collective value of the three biggest holding companies alone has declined by $25 billion. There’s little doubt that these monolithic networks are now well behind the curve when it comes to offering the agility and thinking that clients really want. They’ve become so big and so complex that they’ve failed to react to the way that the whole industry has changed.

The struggles increase

Of course, Publicis will argue that they’re solving that complexity issue through the much-hyped ‘Power of One.’ But for me, this solution still poses more questions than answers. I’d question how the Power of One proposition lines up to the practicalities. Do the people working within each Publicis agency buy into the approach? Are there occasions – too many to be palatable – where the shift causes more harm than good?

Implementing a proposition like the ‘Power of One’ isn’t just a handy way to sell to clients. It’s a fundamental shift in culture, an approach that affects every single member of staff. It only works if you create an environment where people believe in it, want to collaborate and are incentivised to do so.

You can’t wait three weeks for people from different agencies to find a slot in their diary to get together to discuss a brief. You can’t run a process where the benefits to one of your agencies feels to staff like it’s coming at the detriment of another. Anecdotal evidence – and the results so far – suggests that these issues within the group are a long way from being resolved.

For Publicis’ biggest rival, a newfound ‘simplicity’ has been attempted through mergers. One year into his new role, WPP CEO Mark Read has arguably done all that he could have done on that front – other than a radical transformation or break-up of the Group, something which he’s never had a remit to consider.

But whilst there were certain inevitabilities about the Ogilvy, VMLY&R and Wunderman Thompson ‘consolidations,’ they provided salutary lessons on the difficulty of executing such moves. Being able to retain the ‘chosen talent’ is ultimately what drives success or failure, and VMLY&R in particular felt like a hasty and brutally handled takeover – rather than a merger – which sets a poor tone from day one.

Different solutions

The difficulties faced by the biggest networks naturally open the door for a slew of competitors looking to help clients solve problems in more dynamic ways. But this is by no means just an essay blindly stating that smaller, creative-led groups have a simple task to take advantage either.

For one thing, some of the larger players have made some smart moves when responding to changing demands and environments. Havas’ Village in Kings Cross, for instance, appears to be a more successful example of bringing a disparate group of agencies together all under one roof, one with culture and collaborative people in mind from the start. It’s certainly been able to attract talent because of it, with new CCO Vicki Maguire attributing the culture in place as the reason for her to move from WPP’s Grey to another network shop.

Meanwhile some of the smaller groups are still facing identity crises of their own. MDC and Engine have both experienced significant growing pains in their attempts to carve out an integrated group persona – though it will be interesting to see how Engine now develops under the able stewardship of Jim Moffatt.

So whilst these attempts at shoehorning agencies together has so far produced mixed results – and will no doubt continue to do so as clients (and the agencies themselves) get their heads around the offerings – I believe there’s a better way.

I believe that individual agency brands can continue to have significant power. Clients are actually looking for specialism as much as ever – either in their own right or as part of a joined-up multi-disciplinary solution – where everyone is working to the same strategic and creative blueprint.

And it’s those groups that can continue to offer this, while ensuring their role is no longer to act as a holding company but instead as an agile, integrating force across these capabilities, that will continue to stand out.

For instance it’s particularly telling that it was The&Partnership, which has long embodied this strategy, that apparently saved the day for WPP in the Centrica review, despite lacking the scale of other parts of WPP.

And whilst it’s perhaps less of a household name here, Kyu is one to keep an eye on, having driven much of Hakuhodo’s recent growth through a clear strategy of acquiring distinctive agency capabilities and then building collaboration across them.

It’s what we’re doing at MSQ too – and, we understand, what attracted our recent investors. Because if you’re hiring expert talent that’s plugged in to specialist offerings who have a genuine desire – and, crucially, the financial incentive – to collaborate, you really are in a position to offer something truly client-centric.

Get that model right, then success will come down to people, process and politics. Or, if you’re smart, a lack of politics and a process driven by people.

Which brings us back to the big networks. There are clearly intentions to tackle some of the challenges around those ‘3Ps’ mentioned above. But the question is whether the approaches those networks take and the progress they can make will ever happen quickly and effectively enough to avoid yet more downbeat trade press headlines and worse.

Peter Reid is CEO of MSQ Partners.

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