Agency Holding Companies Organizational Structure “Out of Style”, Reports WSJ

Around this time last year, WPP Chief Executive Martin Sorrell, shown above, addressed more than 100 top executives from his company’s ad agencies at a senior leadership meeting, reports the Wall Street Journal, which added, that Sorrell “pointed to a screen that displayed the logo of McDonald’s, AT&T, Procter & Gamble and Volkswagen.”.

“What do these companies have in common, he asked. The answer: Those were all accounts WPP had lost. He said WPP, home to agencies like J. Walter Thompson, Grey Advertising and Mindshare, would need to simplify its unwieldy structure for clients that want more integration of functions like media planning, data analytics and creative advertising, according to agency executives in attendance.

“When WPP last week reported a steeper-than-expected slowdown in revenue growth in its latest quarter and reduced its forecast for 2017, fueling a stock selloff, a big point of focus were the cutbacks in spending by consumer products and packaged goods companies and the business headwinds those firms are facing.

“But agency holding companies are also under pressure to revamp an organizational structure that has gone out of style.”

“The WSJ story added that “The holding companies’ complex structures have also impeded their ability to move quickly at a time when clients are demanding more real-time digital marketing responses to daily events, particularly on social media.”