Inside The New Agency Holding Company Playbook

Here’s how they’re doing it.

Collaboration is key

Traditionally, agencies win clients, while holding companies support them with resources and clout. But as clients demand integrated solutions, holding companies must now force otherwise competitive agencies to collaborate.

New networks avoid internal competition by operating as a single company with different disciplines, rather than a group of autonomous agencies. The&Partnership, born in the UK, saw an opportunity to launch in North America in 2013 as a cross-discipline network.

“I didn’t feel there was any need to explain we have five agency brands,” said Bailey, who previously worked at IPG and Omnicom. “That was too complicated for clients.”

While agencies within The&Partnership can pitch their own business, operating as one brand allows them to easily deliver integrated services. Under this model, the group has quadrupled in size over the past two years and won Dow Jones and Toyota as clients.

“The client’s agenda is first, not the agendas of companies forced to work together,” Bailey said. “You get to solutions faster, and clients have one throat to choke.”

Engine Group, which counts Liberty Mutual and Netflix as clients, launched in July as a roll-up of three agencies. Engine operates across four practice areas – content, distribution, insights and technology – which can either win business on their own or share accounts.

Dissolving its agency brands was tough, but competing interests became a barrier to servicing clients effectively, said North American CEO Rick Eiserman, an ex-WPP agency exec.

“Clients don’t want to hear about the 16 companies you own,” he said. “They want to have a conversation around solving their business problems.”

Local Planet launched in 2016 to bring independent agencies international scale and cross-discipline capabilities. Agencies own equity in the global network, as well as regional joint ventures where they team up to service international clients. The group has 51 agencies with Horizon Media as its largest shareholder. Clients include Berkshire Hathaway and FC Barcelona.

“We don’t have to pull talent from one subsidiary to another,” said global CEO Martyn Rattle. “It’s not a case of putting together a jigsaw puzzle.”

And at Stagwell Group, launched in 2015 by Mark Penn, a former Microsoft chief strategy officer and Burston Marsteller CEO, agencies are organized by subject matter expertise and can be “put together to serve clients in a more nimble and cost-effective way,” Penn said.

Stagwell has raised $250 million and counts AT&T and Mastercard as clients. As the group grows, it will have just one or two companies in major disciplines to minimize intra-agency competition.

“These are the values we’ve apprised from day one,” Penn said. “It’s not something we invited 30 years later.”

Collaboration works better when networks share a bottom line. Holding companies have a tough time getting agencies to collaborate because they operate on separate P&Ls, which encourages competition.

But The&Partnership and Local Planet operate on single P&L’s while Engine group runs its P&Ls regionally. And while Stagwell’s agencies operates independently, the group has measures in place to encourage them to work together.

Two months ago, for example, it launched a team to facilitate collaboration across the network, which has already brought in over $1 million in new business, Penn said. Stagwell also offers financial incentives for its agencies to refer each other clients, and brings together agency CEOs on a regular basis – both things that rarely, if ever, happened at the legacy holding companies.

“We’ve been able to show benefits to individual companies through larger cooperation,” Penn  said. “They can reach up and get larger accounts.”

Digital DNA

Holding companies had to build technology and train talent to use it. New networks are doing that from the ground up.

In other words: “If you could start in the age of Taylor Swift instead of disco, you get the advantage of investing in technology,” Penn said.

Before relaunching as a single brand, Engine’s agencies worked off a proprietary data platform, Engine Connect, which combines survey and media exchange data to drive insights, planning, distribution and creative consistently across the network. Similarly, The&Partnership uses GroupM’s [m]Platform to ensure that campaigns are based on consistent data.

“That connects the businesses,” Eiserman said. “It’s the starting point for everything we do.”

As it grows, Local Planet is partnering with tech and data providers for its agencies to use. And while Stagwell will also focus on partnerships, it also recently acqui-hired 100 engineers in Canada to build tech that facilitates better internal processes.

“The firms need to have their process supported by strong, sometimes original technology,” Penn said.

In addition to being digital-first, new agency networks are embracing non-traditional agency working models to attract different types of talent. The&Partnership, for example, co-locates its employees on site with certain clients to execute faster on performance-driven work.

“We’re able to get talent that’s interested in working in a client environment but is still being connected to an agency,” Bailey said.

And to ensure talent is well rounded, Local Planet rotates talent at different agencies around the world so that employees can learn new skills and experience different agency cultures.

Death of the hold co?

Despite new competition, most agency execs agree that traditional holding companies still have value in the investments they’ve made in technology and data – and aren’t going away any time soon.

The&Partnership wouldn’t be as successful without the backing of WPP, Bailey said.

“GroupM has invested hundreds of millions of dollars in technology, data and infrastructure that we benefit from,” he said. “Holding companies have done a tremendous job in making the right investments in those areas.”

At the same time, The&Partnership’s majority independence is “absolutely critical” to success.

“The ability to take up one area and not have to worry about the rest of what comes with that, because we’re not existing within their traditional structure, is really powerful,” Bailey said.

This post was syndicated from Ad Exchanger.