The Rise of the Holding company

15 Nov,2021

 

 

By Prabhakar Mundkur

 

Prabhakar MundkurWhen WPP won a large part of the Coca-Cola business worth $4 billion, it was an affirmation that the holding company once looked upon as just a holding company that does nothing but inspects individual company, P&Ls had transformed themselves into an integrator of their individual companies.

 

True integration has eluded the ad agency business for over two decades now, if not more. Sir Martin Sorrell took the lead for integration by pitching for large businesses globally. Mark Read has followed quickly in his footsteps by employing the same methods to win the global Coke business easily one of the top advertisers in the world for a long time.

 

Conflict of Interest

Once upon a time, agencies got bogged down by conflict of interest to handle more than one account in the same category.  This is because the traditional agency was unable to build an effective firewall that convinced clients that conflicting accounts could be handled without a leak of confidential information within the agency. No longer.

 

Because holding companies have been able to put together special teams hand-picked from each of their operating companies offering a wide range of disciplines for mainline advertising to digital, to form individual units that handle each conflicting account, it promises a very effective firewall which means that clients are no longer worried about conflict. WPP’s GTB for Ford, Red Fuse for Colgate-Palmolive and now Open X for Coke are just examples of how these specialist units can operate.

 

While it may seem like an innovative way to handle clients, the Japanese have been doing this for the last many decades. If you have been to the Dentsu or Hakuhodo buildings in Tokyo, you will notice that there can be as many as three or more automobile accounts being handled by these agencies, with each agency unit being located on a different floor.

 

For example, Nissan could be on the 13th floor, Honda on the 17th, Suzuki on the 20th and Toyota on the 25th. The beauty of this structure is that employees working on a particular floor do not have access to any floor but their own therefore providing an effective firewall that ensures confidentiality of the individual account.

 

WPP’s Coke win includes creative media and marketing technology business for 200 countries so it is a fully integrated business. I quite liked the Open X name for the WPP unit which handles the Coke integrated business.  Unusual for Coke who has been hesitant to commit themselves to any agency in the past although IPG has had the longest run.  I remember a time when Coke thought that it did not need their creative agency McCann and began flirting with individual Hollywood producers for their commercials.

 

 

It’s a pity that the major new creative platform of Real Magic was launched just two weeks before the WPP announcement.  While I thought that the Real Magic commercial worked well, initial feedback from the gaming community suggests that it has put the brand back by a few years.  Tim Crow sports and eports advisore says, “Gaming is not a divided world. They are a big tribe that doesn’t need Coke’s help to connect with each other because they already are. Games are about fun and the competition brings people together… Coke [came off as] tone deaf about gaming and what it is. They’ve put themselves back years with the gaming community with this globally.”

 

It would be interesting to see how WPP takes this theme of Real Magic forward.

 

 

Post a Comment 

Comments are closed.

Today's Top Stories
Videos