Change Is Coming To The Holding Companies
In the wake of Sir Martin Sorrell’s abrupt departure from his CEO perch at WPP, I posed the question about whether or not Holding Companies should (or can) maintain their current structure. Now Forrester Research is digging much deeper into this question, especially as it pertains to WPP. Forrester’s primary finding is that WPP should merge its hundreds of siloed agencies into seven global teams under AKQA, Grey, JWT, Ogilvy, VML, Wunderman and Y&R. This restructured group can still operate as one entity under the WPP flag, but with a whole lot less swim lanes in the pool.
So why the recommendation to consolidate? Clients are demanding fewer layers of agency infrastructure and instead want a more transparent one stop shop. They also want access to a larger talent pool. Right now HoCo stars are sprinkled across hundreds of different agencies, making it impossible to pull together an All-Star team of talent for the biggest and best clients.
What happens to the HoCos if they don’t change? According to Forrester they’re ripe for Wall Street takeovers from someone like Blackstone or Bain. If these investment firms get controlling interest of WPP they’re likely to sell the more valuable agencies at a premium, and then reorg the remnants into a much smaller company. This leaves the HoCos in a precarious position of either needing to radically change on their own, or risk new owners changing things for them. This one will be interesting to watch play out.