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.
Which makes you wonder if this 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 is designed to give bosses more time to focus on efficiencies and strategy. Although 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 it’s likely that their business model has 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 perhaps, to a version of Publicis Groupe’s ‘Power of One’ model although Publicis boss Arthur Sadoun seems more relaxed about keeping lots of brands (albeit under central control) than WPP counterpart Mark Read.
There is a more fundamental issue for Read. Sir Martin Sorrell’s strategy at WPP was, essentially, to be 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 in terms of 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.