How Clients and Agencies Gain from Agency Consolidation

Peter Bretschger

October 7, 2015

One of the trends which has both the agency world and CMO’s staying up late at night is the move to slim down the number of agencies companies are using. Whether brands are working towards a transformation or just trying to simplify communications with agencies, there are several ways everyone can benefit from consolidating work to fewer agencies. And believe it or not, this appears to be a good thing for everyone!

Niche Agencies Expanding Service Offerings

While deep divisions in agency service offerings became factionalized from 2000 – 2010, Web development and social media agencies have broadened their services to be content developers and in many cases digital media buying firms. Public Relations firms added creative departments and decided to go into brand development and traditional advertising agencies invested in digital media development. The result has been a broader range of service offerings are being pitched by multiple niche agencies which once co-existed by staying in their respective silos.

As the agencies try to broaden their scope away from their core competencies, the nature of the business was bound to change. Microsoft recently put out an RFP for its global creative and media business. It emphasized that it wanted 80% of its business to be handled by just one or two holding companies. Clearly the tech giant wanted to create a more cohesive brand identity.

Simplifying Communications

Any marketing manager who has had to deal with multiple account managers can identify with the frustration of having to explain the same situation multiple numbers of times. Kraft Foods consolidated from 8 agencies into 4 lead shops. Each agency left in the portfolio was assigned brands, not communications elements. After two years into the spinoff, “Kraft is a more focused companies” according to their spokesman, who added that the consolidation was about “fewer, deeper relationships.” And, needless to say, there are significant cost savings in employing fewer shops.

Global vs Regional

There are many recent examples of leading global marketers consolidating their brand assignments, but at the same time many regional integrated agencies are benefitting. IMW started off this year with a major assignment from DENSO Commercial and Heavy Duty products to launch their new PowerEdge Alternators. The assignment involved brand positioning work, developing websites, videos, trade advertising, trade show design, collateral and digital display work. There was clearly an advantage in going to an integrated firm like IMW. The scope of services offered by the smaller, diversified agency could support the limited internal resources dealing with a major stress on resources. The project could be completed faster due to the concurrent creative process across multiple disciplines.

The Pressure on the Creatives.

One of the fascinating new pressures which is being placed on agencies is developing creative teams who can think both in the digital realm of websites, retargeting ads and social media as well as producing broadcast and print. Both the CMO’s and the lead agency management teams have to be clearer than ever to synthesize their unique selling message, communicating it across a variety of platforms and coordinating with sales teams that need to close the deals.

At IMW, each team member brings a unique perspective—honed by years of experience—that allows us to uncover those hidden gems of insight that pays off on the bottomline. And that’s a pretty big deal. At least that’s what “they” tell us.

Integrated Marketing