Commentary: Raising questions about agency-stockholder relations
“There are no such things as hostile takeovers,” Sir Martin Sorrell quipped as he opened his candid fireside chat at a recent advertising industry conference. Listening to Sorrell recount the genesis of what would become the world’s largest agency and the challenges new and old facing holding companies was enthralling. But hearing his vision for S4 Capital, his view of our world, and why he is building something so fundamentally different struck me to my core.
Hours earlier, NBCUniversal’s Linda Yaccarino laid out her company’s deep commitment to change. She declared boldly their willingness to tear it all down and rebuild it in the pursuit to democratize their offerings and redefine attribution and measurement. And they weren’t alone. The conference was two days of challenging thought leaders and bold ideas.
But we are still broken. The largest and most influential agencies of our time are continuing to deeply struggle. We’ve been in a sea of headlines declaring the death of our industry for nearly a decade. Many believe the investor-owned agency model is failing. Digital began its disruptive revolution nearly 20 years ago.
What struck me, and I can’t seem to shake, is Why haven’t we fixed it? And one echoing question remained. Can holding companies and their agencies serve both their investors and their clients?
Investor-owned agencies blossomed with the promise of below-the-line efficiency, networked collaboration, and full-service support. They exploded with acquisition after acquisition purchasing brilliant teams, powerful clients, and huge strategic advantages. Still, investors demanded more.
They faced massive shifts in media, technology, and consumer behaviors. So, they acquired a new generation of trend changing agencies, and rebuilt themselves. Still, investors demanded more.
Today investor-owned agencies face even more challenges. Yet for most, the investor’s drumbeat demand of short-term gain is crippling their ability to evolve and to win.
The promise of global resources and unification dissolved into the paralyzing constraint of a new master that trumps all, the quarterly report.
Looking back since their rise in the late 1980s to today, it is the agencies with their independence that have reshaped the world. They’ve changed the way we think, dream, bill and pitch. They’ve transformed the geography, face and culture of advertising.
It’s might be time to stop asking what is wrong with the traditional model and start asking what’s wrong with our ownership. And at least from my seat in so many talks of late, one thing is clear – it’s the indies who are moving fastest and meeting client needs most effectively. Not because they’re so fundamentally different, but, in my view, because they aren’t held hostage by stockholder demands.
Chris Denny co-founded The Engine is Red in 2008. He leads the Engine team—developing inspired brand strategies, campaigns, and interactive experiences for national and regional clients.