Leaving The Trading Desk Model Behind, Holding Companies Embed Specialists At Agencies

At agencies, “centers of excellence” are on the outs.

Instead, holding companies are moving the specialists who once powered their analytics hubs and trading desks closer to client work by embedding them in account teams at their operating agencies.

“The idea is to infuse a data-driven philosophy and culture within agencies and support [them] not on a campaign basis, but a routine basis,” said Loren Grossman, chief strategy officer at Annalect, Omnicom’s data and analytics hub, which has employees embedded at agencies across the network.

The embedded model ups the ante for the kind of talent and skills agencies can offer clients. But it also spurs new conversations about evolving agency pricing models and threatens the relevance of individual agency brands.

The Matrix  

As the programmatic, search and social disciplines emerged, agency experts were scarce. It made sense for holding companies to group whatever talent they had into centralized service offerings. Analytics hubs and agency trading desks were born.

But as audience-based buying becomes central to all media, siloing those critical skill sets makes it unnecessarily complex for clients to navigate, said Evan Hanlon, head of strategy and platforms at GroupM.

“Asking clients to deal with our own complexity didn’t make sense when they wanted better media, more addressability, better outcomes and more simplicity,” he said.

Enter the embedded model. Publicis Groupe was the first holding company to break apart its trading desk and deploy programmatic talent across its operating agencies in 2014. Three years later, Publicis reorganized its media division into a matrix structure that designates specialists who are embedded in agency teams.

“By integrating directly into client teams, we can deliver a more upstream strategy with better outcomes and transparency,” Karyn Johnson, president of programmatic at Publicis Media, told AdExchanger via email.

GroupM kept its trading desk, Xaxis, but made a similar pivot last year with the launch of mPlatform, the data and technology stack that will underpin its network. In addition to standardizing GroupM agencies on a data platform, mPlatform deploys to its media agencies a network of 7,000 people who are experts at using the platform as well as in areas like analytics, programmatic, social and search buying.

“The only way to evolve is if they’re directly engaged with the day-to-day work,” Hanlon said.

Omnicom has built its embedded model around data and analytics hub Annalect, whose employees sit on account teams across Omnicom’s media, CRM, creative and PR agencies, Grossman said. Agencies can have from one to more than a dozen Annalect employees on client accounts. Putting them closer to the work moves data to the center of client relationships, rather than supporting clients ad hoc.

“The relationship spans beyond a campaign,” he said. “The ideal is that Annalect functions as a platform as agencies become more fluent with these offerings.”

In 2016, Omnicom won major accounts such as Procter & Gamble, AT&T and McDonald’s by creating bespoke teams that revolved around Annalect, with a mixed bag of Omnicom talent.

“It’s no surprise Annalect is part of these new models,” said Tina Allan, director of data solutions at BBDO, an Omnicom creative agency. “That’s where we’re getting our speed and scale.”

While embedded Annalect employees report only to Annalect, mPlatform and Publicis practice-area employees report to both the agency and practice-area leadership.

Pay Up

Bringing more advanced talent closer to client work opens new conversations around pricing.

Agencies typically charge on a full-time employee (FTE) basis, calculated by the number of employees assigned to an account and how many hours they work. As agencies staff their accounts with more data scientists and programmatic experts, FTEs rise.

Clients who have experimented with programmatic, CRM and data onboarding understand the complexities and associated costs, Hanlon said.

For others, it’s an education.

“There’s a learning curve in terms of who these people are, what their skill set is, how much they cost and what the size of those teams are,” Hanlon said.

Fee scoping has become so complicated that GroupM launched a special practice area to help clients understand the cost of the talent required for their accounts and the most efficient way to deploy mPlatform, which they can license as software.

“[Deploying mPlatform] requires solutions engineering, integration work and architecture,” Hanlon said. “Understanding the trade-offs requires a really specialized team.”

Clients realize that their agencies have to help them solve increasingly complex business problems, Allan said.

“Every client comes in to talk about what we know about their consumer and how we can move their business forward,” she said, “not about how it’s affecting the granularity of their scope.”

Stand Out, But Be The Same

By aiming to standardize platforms and processes across holding company networks, the embedded model calls the relevance of agency brands into question.

Historically, unique branding attracted clients and talent to individual agencies, which pitted media agencies within the same holding company against each other as competitors, rather than collaborators. But as solutions to client problems increasingly call for cross-discipline teams, would-be competitors are working closely together and beginning to look more and more alike.

The notion of working together is new, so preserving distinct cultures is key. Embedding specialists and making them integral parts of client teams eases that transition, Allan said.

“We’re doing everything together, from media to insights, performance and data,” she said. “You would not have found that two years ago.”

Clients don’t care which business cards an employee carries as long as they’re getting the solutions they’re looking for, Grossman said.

“Clients expect to receive data-driven solutions to their problems regardless of how the team is made up,” he said.

Still, agencies will have to adapt to pitching and working together while pulling from the same pool of data, insights and talent.

“We drive better efficiency and effectiveness by having a common way of operationalizing,” Hanlon said, “but we still want the agencies to have flexibility.”

This post was syndicated from Ad Exchanger.