Lots of discussion at Organic last week about WPP's $4.5 billion deal with Dell. Thanks in large part to the personal intervention of Sir Martin Sorrell, WPP bested IPG on a seven-month pitch worth $150 million in revenue per year. But the really eye-popping part of the deal- WPP agreed to form an entirely new, 1000-person agency to service all of Dell's marketing needs.
It's still too soon to tell whether Dell's approach will have a ripple effect
throughout the industry. But to us, there a couple of clear implications:
Clients are desperate to have a single, integrated offering
Sophisticated marketers are grappling with the multi-specialist model.
Their traditional agencies are not natural connectors, and they are not
equipped to pull all the threads together. There are few true multi-disciplinary
agencies to choose from, and Dell is using its market power to create a bespoke agency. To solve problems like Dell’s, you almost have to start from scratch, and that’s what Sir Martin is doing.
Agency models come and go
According to Ad Age, this new agency
instantly becomes a Top-30 marketing organization. But there have been a number of big bang organizational models that clients have tried over the years. At Apple, they had an in-house team in the mid-eighties, disbanded it for a number of years and then assembled a new team during the downturn. Consolidation with a single holding company was the choice for Omnicom clients Bank of America and Chrysler, although BofA's new CMO just put the media portion into review. Nike was with Wieden for decades but shook things up by adding Crispin Porter to the roster. Best-of-breed has been the defacto choice for Coke, McDonald's, and many other huge brands.
It still comes down to the talent
It's one thing to declare you are starting a best-of-breed industry, but another thing to actually staff it. From an leadership point of view, WPP is being forced to pull key executives from other parts of their business to make good on their commitment. For example, Mitch Caplan, currently CMO tasked with turning around Y&R, has been pulled to lead the transition team. And if you were a rank-and-file WPP employee, would you leave your stable multi-client agency to work for a new shop solely dedicated to Dell? And on the client side of the equation, there's no guarantee that changes to the executive leadership team at Dell won't mean another agency shake-up.
Do you think the bespoke agency model is here to stay?
Misha Cornes
(The "Dude, you're getting a Dell" campaign was done by DDB Chicago)
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Strategists & Planners
Comments (8)
"It still comes down to the talent" - well blogged. Let's just hope that this decision doesn't get vetoed by backstories of exclusive sushi dinners and rides in fancy cars, so the world can see if this works.
Posted by Peter Kim | December 10, 2007 2:26 PM
Posted on December 10, 2007 14:26
Misha
I read the Adage story too and was talking about it to a colleague this morning. We are WPP and were thinking about the 1000 man team that's being put together.
I think the exciting part of this exercise is the attempt to put together a fully integrated unit to run the Dell business. I don't know how much of this will happen, but it would be exciting to work in an agency where media planners, strategic planners, integration planners and creative people, all together under one roof.
If the experiment works there will be ripples all over, more clients may want to have teams, even special agencies set up to work like this.
Nishad
Posted by Nishad | December 10, 2007 9:40 PM
Posted on December 10, 2007 21:40
A while back, about 6 years ago, Labatt brewery orpen an agency in Toronto called grip. 6 partners, all paid $300K each, opened its doors with one client. Labatt stated they would foot the bill for 1 year until the agency could stand on its own. 3 years after opening thier doors, they won agency of the year. Labatt is still their client, and they have added several of others. Many dismissed them, but few can debate that they have become a player...
http://www.marketingmag.ca/magazine/current/agency_report/article.jsp?content=20041122_65179_65179
Posted by vito | December 11, 2007 8:17 AM
Posted on December 11, 2007 08:17
Thanks for stopping by Peter, great to see you here. Yes, the war for talent is still alive and well in advertising, particularly in interactive.
Nishad- does this mean you would be interested in taking a job at the new agency?
Vito, I thought the story was going to end with the agency going belly-up. Glad that grip is still going strong. I remember seeing an Organic pitch for Labatt's early on in the development of personas.
Posted by Registered User
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December 11, 2007 9:37 AM
Posted on December 11, 2007 09:37
I have seen this in so many different circumstances.
I saw this done for the biggest bank in australia. The media porption went on to be a great agency. But the creative/DM/PR etc collapsed as their creativity was terrible. I had a cousin work there and although she enjoyed it she stated that the agency never pushed the clients. After a number of years of struggling in the market the client realised they were too close to the agency and the creativity was lost - so they got a group of best in class and let media agency took a large part in the strategy. Which has turned out quite well
I saw a comms planning agency do it to help lead and quality control the brand and communications strategy across the million or so agencies the client had on its roster. Which I think is the best version I have seen but isnt perfect. There is often some lost ground on the creative execution across channels
I find it quite amusing as I used to work for HP and watched Dell very closely. They recently hired mother in the UK to give some life to their brand which we tried to tell HP quite a few years ago it would eventually happen. But now they are making a model which I think in a way is great for the business relations and the cost of agency, as well as elements like and direct response, data control etc. But it will loose any forward thinking and creativity for the brand.
Should be interesting to sit back and watch
Posted by Mikej | December 11, 2007 1:17 PM
Posted on December 11, 2007 13:17
Misha
Got in here late
I am not sure if I will want to work in the "Dell Agency". What I was talking about was that WPP letting media, strategy, creative, interactive all working under one roof is exciting. Maybe something good will happen from this experiment for all of us to take forward. Like the Grip thing that Vito mentions.
Posted by Nishad | December 27, 2007 7:37 PM
Posted on December 27, 2007 19:37
PS
Could you have an RSS, email comment tracker built in here so people can get alerts on stuff they have talked about.
Some sites have it already?
Posted by Nishad | December 27, 2007 7:39 PM
Posted on December 27, 2007 19:39
Thanks for the suggestion Nishad. Probably you won't see this comment :) but we are working on the upgrade.
Posted by Registered User
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December 28, 2007 1:06 PM
Posted on December 28, 2007 13:06