Here We Go Again: Surely This Time Holding Company Integration Will Work

(MENAFN- PRovoke) While this one comes in at a relatively concise (for me) 2,500 words, here are some of the key points, for those not inclined to read the whole thing:

This kind of integration has been attempted over and over again, and calling the results mixed would be generous in the extreme. For public relations agencies, it almost always results in a diminished role, diminished capabilities, and ultimately diminished performance. In the WPP universe there are“creative” agencies and then there are“PR” agencies, a separate genus presumably because of their inability to offer anything creative. Imagine working for a PR agency that deferred to a sister ad agency as the "creative agency." Can you conceive anything more discouraging? Every attempt at agency-side integration so far has subordinated corporate affairs to marketing. Would WPP have expected FGS Global (which it sold to KKR) to be absorbed into this new WPP Creative structure? The business model will surely lead to the prioritization of the big budget integrated marketing campaigns over the relatively small fees derived from corporate reputation, The solution that delivers optimum results for the holding company is not necessarily the solution that delivers optimum results for the client. If an integrated agency was led by public relations professionals, or more accurately guided by public relations thinking, I believe it would deliver far greater value to clients. A truly integrated agency would assign equal value to all stakeholder groups. Clients can choose an integrated approach to marketing and communications whether they work with one agency (or holding company) or a dozen. If you want the best-if you believe this stuff is mission critical-then you need specific agencies for specific tasks in specific markets.

A month ago, WPP reported declining revenues, profits and margins for 2025-including, but stretching far beyond, its public relations operations. Revenues were down 8.1% on a reported basis, continuing a decline that has prompted speculation about the group's future.

At the same time, new CEO Cindy Rose announced her“Elevate 28” strategy (you can tell it's good, because it rhymes!). The holding company is restructuring to become a single company with four core pillars: WPP Media, WPP Creative, WPP Production, and WPP Enterprise Solutions-the latter delivering“AI-driven transformation, customer experience, and commerce.”

If the market was excited by this“new” strategy, there's little sign so far. The Financial Times reported last week that WPP's share price has fallen by a third since the start of the year and shares are trading at a 17-year low.

The market is, I believe, entirely correct to regard this strategy with skepticism. I understand the desire to consolidate media buying, which is pretty much a volume business at this point, and I get the desire to offer“enterprise solutions,” which sounds like a more future-focused service than“advertising” or“PR.”

It's the part about the“formation of a unified operating model for our iconic agency brands across Creative, PR and Design” that I find troubling. Because this is, with all respect to Yogi Berra, is“déjà vu all over again.”

This kind of integration has been attempted over and over again, and calling the results mixed would be generous in the extreme. Even within the WPP portfolio I can think of Young & Rubicon under Ed Ney introducing“the whole egg” in the early 80s; a decade later, Ogilvy went with“orchestration” and“360-degree stewardship" under Shelly Lazarus. Most recently, Ogilvy gave it another try, with John Seifert eschewing the catchy names and talking instead about the agency's "re-founding."

Usually launched with great fanfare, all of those attempts at“cross-selling” or“one-stop shopping” faded away with nothing like the same level of attention. Because integration-at least as it is conceived by holding companies and advertising agencies-is fundamentally flawed. It is, nearly always, an idea launched in service of the agency, not the client.

And for public relations agencies, it almost always results in a diminished role, diminished capabilities, and ultimately diminished performance.

And if we divide the public relations business into two broad categories-corporate (reputation, public affairs, employee communications, investor relations) and consumer (marketing, anything that builds brands and drives sales)-both are likely to suffer in an integrated environment.

A PR agency's consumer capabilities suffer because PR is relegated to a support role, adding an earned component after the advertising agency has determined the strategy and delivered the paid element. And its corporate capabilities suffer because the people in charge of the integrated offer come from an advertising-marketing background and don't give the same weight to the needs other stakeholder groups.

The Language We Use Matters

The words people use matter, especially the words the people in charge use. It reveals their thinking, their expectations, and what they value. So note the language in WPP's statement, in which the new WPP Creative is described as“a unified operating model for our iconic agency brands across Creative, PR and Design.”

The past decade has seen advertising agencies rebrand themselves as“creative agencies” (with, it must be said, relatively little pushback from other creative disciplines, including PR) and what we're seeing here is the logical endpoint of that spin: in the WPP universe there are“creative” agencies and then there are“PR” agencies, a separate genus presumably because of their inability to offer anything creative.

To a certain extent, this is simply about differing definitions of“creative.” I would argue that true creativity is defined by elegant problem solving, which means that the agency that comes up with the most appropriate strategy for solving a client's issue is the true creative agency, regardless of whether it uses a single tool (advertising) or an entire toolkit (PR).

But even if you accept the ad agency/holding company definition of“creative,” which appears to revolve around a specific kind of output, I would make the case that a discipline defined by a single kind of output (advertising) has less right to claim the name than a discipline than can pivot as necessary from earned media to digital and social channels to experiential events to, yes, the occasional ad.

But in the“Creative, PR and Design” formulation, the signal being sent to employees could not be clearer.“We know who the real problem solvers are. The rest of you don't need to worry your pretty little heads about creativity, because that's the role of the ad guys. You just think about how you're going to PR it.”

Unused Muscles Atrophy

The insidious impact of this language, and the ad-centric approach that has characterized every previous attempt at“integration” should be obvious.

Advertising and public relations and digital marketing agencies are both creative businesses and people businesses. People are attracted to each of these businesses because they offer the opportunity to think and implement creatively, to see great ideas turned into great policies, great content, great experiences, great campaigns.

But if all of the creative thinking is done by an agency that sees itself as the exclusive keeper of the creative flame and other disciplines are responsible for implementation only, how are they to attract the best and the brightest?

Imagine working for a PR agency that deferred to a sister ad agency as the "creative agency." Can you conceive anything more disheartening, more discouraging? Creative muscles that are never flexed will surely atrophy. Wouldn't you-as a matter of self-respect and self-preservation-soon start looking for a career change, or at least an agency change?

And if you were the client of an agency that just sits around waiting for other people to give it their creative ideas to implement, wouldn't you wonder why the fees were so high? Surely the big bucks should be reserved for the big brains solving your problems, not the arms and legs running around implementing their solutions?

Meanwhile, Corporate Affairs Becomes an Afterthought

Every attempt at agency-side integration to this point has subordinated public relations to advertising. That's bad enough. But every attempt at agency-side integration so far has subordinated corporate affairs-employee communications, issues management, public affairs and more-to marketing. That's worse.

As a thought experiment, it is interesting to think about how an FGS Global (a corporate affairs specialist previously owned by WPP and now a KKR company ) would have figured into this new strategy. Would Rose have expected it be absorbed into the new WPP Creative structure? I doubt it. And I am even more skeptical that anyone at FGS would have acquiesced.

(As an aside, it's worth noting that KKR valued FGS, a business with revenues just over $500 million, at $1.7 billion. The current market cap of WPP, a business with revenues of $18 billion, is just over $3.2 billion. Just saying.)

Placing FGS under the control of WPP's advertising (sorry, creative) businesses would have been such an extreme case of the tail being asked to wag the dog, it would strike anyone with an understanding of both businesses as absurd. WPP's flagship PR agency Burson has a very different business portfolio, but it does have significant corporate capabilities, with deep expertise in public affairs, crisis and issues and corporate reputation. Indeed, a few weeks before the Elevate 28 initiative, Burson introduced its intriguing new“reputation economy” product.

There is no reason, of course, why Burson should not continue to offer a full suite of corporate capabilities. I am sure they will. And I'm sure the current agency leadership-much of which has corporate communications in its background-will remain committed to that side of the business.

But the business model will surely lead to the prioritization of the big budget integrated marketing campaigns over the relatively small fees derived from corporate reputation building, employee communications, public affairs, and capital market communications. Those things are valuable to the client, obviously, but not quite as valuable in helping the holding company hit its quarterly revenue targets.

The Economic Model Makes True Integration Impossible

This gets to the heart of the problem from the client perspective, that the business model of the holding companies means that the solution that delivers optimum results for the holding company is not necessarily the solution that delivers optimum results for the client.

Even if the PR agency in an integrated environment does get to contribute the occasional creative idea, it is difficult to believe that the economic model won't influence the ultimate“integrated” solution.

Consider (merely hypothetically, of course) the possibility that the solution to a particular client problem is not a big budget ad campaign. Perhaps the client is facing a crisis of trust, and bombarding the audience with messages paid for by the company itself is not the most compelling way to change minds.

Under normal circumstances, the PR agency might pitch the client on an earned-first campaign relying on third-party testimony. It might even suggest that paid messaging would be counterproductive. But is it in a position to do that if it is part of a group that derives 80% or more of its revenues from paid advertising (and the accompanying media buys)? How many times will it be permitted to tell the client to choose the less costly approach if the integrated agency has revenue targets to hit?

Or consider a situation in which a company is seeing market share decline and comes to the holding company for an ad campaign to raise its profile and perhaps even come up with a whole new brand promise.

But perhaps a closer look at the company's challenges reveals that the real reason for its difficulties is that customer service has declined. In which case, the best solution again is not a big-budget ad campaign but a far less expensive (or lucrative, if you are on the other side of the table) employee communications initiative designed to let those on the front lines feel valued and provide them with better answers to customer inquiries.

(Perhaps an even better solution would be to offer higher salaries to attract better people or better motivate existing employees, but let's stick to the real world for now.)

How many holding companies will suggest the latter approach-not much there for the production department, or for the media buyers-even if they know it's the right approach? I mean, of course it would be smart to do so in terms of the long-term client relationship, but look at the share price and think about the next quarterly earnings release and maybe the long-term has to take a back seat.

One Agency-Side Integration Approach Might Work

There is one way for agency-side“integration” to work-though to the best of my knowledge it has never been attempted, at least at scale, and so this is purely hypothetical. If an integrated agency was led by public relations professionals, or more accurately guided by public relations thinking, I believe it would deliver far greater value to clients, for two reasons.

First, it would be truly integrated, by which I mean that it would assign equal value to all stakeholder groups and be equipped to solve a far wider range of business problems. It would integrate communications with consumers, shareholders, communities, employees, and political audiences, understanding the overlap between corporate reputation and brand value and better balancing short-term sales impact with long-term relationship building.

And second, it would be genuinely channel neutral. Advertising-led integration has a natural bias in favor of, well, advertising. It necessarily favors paid solutions thanks to both its business model and the background of its practitioners. Long ago, Burson-Marsteller ran a marketing campaign reminding clients of Maslow's observation that“If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail."

Public relations thinking, on the other hand, has a complete toolkit at its disposal. To build relationships with different stakeholders, it is willing-and able-to deploy a wide range of tools: paid, earned, owned and shared media are used as appropriate; traditional media, digital and social platforms, events and other experiential channels can be selected based on their efficacy in meeting the client challenge.

But this requires a consultative approach, subordinating the ad agency's favorite tool to a business problem-solving process. That is almost impossible in the holding company, ad agency model.

But Really, Integration Is the Client's Job

There's a second solution to the integration question, and this one may be even better: let the client do it.

Integration, after all, should be a mechanism for getting people on the same page, making sure that all of your communications with all of your stakeholders are coordinated and complementary, across all channels: paid, earned, shared and owned. Clients can choose an integrated approach to marketing and communications whether they work with one agency (or holding company) or a dozen.

What's wrong with the idea that a client-a CMO, a CCO, a brand manager-should listen to the best ideas presented by a variety of different agencies (advertising, digital, PR and more) and choose the best idea? What's wrong with the idea that the client should choose the right balance of disciplines and channels to ensure that the resulting message is communicated most effectively to all the important audiences?

The answer, I suspect, is some mix of cost and convenience. Clients are convinced that working with a single agency is going to be more cost-effective-though I have seen little evidence to support this notion.

Less arguably, working with a single agency is more convenient. A single agency relationship is obviously easier to manage than multiple vendors. And a lot of difficult choices will be take off your hands when you use a single agency-even if the resulting answers are designed to benefit a holding company rather than your business.

Perhaps the client's job will be so much easier that it's worth sacrificing quality and control for convenience and cost-saving.

But make no mistake: it requires compromising on quality. Because the truth is that no holding company is the best at everything. Far less, the best at everything in every market. If you want the best-if you believe this stuff is mission critical and that there is a real difference between adequate and brilliant-then you need specific agencies for specific tasks in specific markets.

And you need independent thinking.

True Orchestration

Let us return, finally, to Ogilvy's long-ago metaphor of orchestration, and ask a series of questions that might help the client put him or herself in the proper role for ultimate performance.

Is there a reason that orchestras have conductors?

What would happen if you turned that responsibility over to the pianist? Would the orchestra make better music?

What would happen if the orchestra charged audiences 10 times as much for pianists to play, compared to ticket prices for oboists or piccolo players?

Would the orchestra choose to play more piano pieces than those featuring the oboe or the piccolo?

Would oboists and piccolo players be happy with this arrangement?

Most importantly, would the orchestra make better music and sell more tickets?

And finally, to step outside of the orchestra analogy, think about your role as a CCO or CMO: Would you rather be a conductor or a spectator? And which do you think your management would value more?

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