Will more clients follow Unilever in adopting a holding company model?

Unilever is ditching its relationships with individual agencies in favour of wider arrangements with their parent groups.

The owner of Dove and Lynx is currently two-thirds of the way through the process, which is designed to ensure the right talent is working on its challenges regardless of where in the group it sits.

"I know that WPP have got all the talent that we need to solve our brand problems, and so do Omnicom, so do Interpublic," Unilever chief executive Alan Jope explained to Campaign in Cannes.

"What I don’t want to do is just have a relationship with one narrow vertical just within WPP [for example]. We’ll give them a problem and I want them to go find within WPP the expertise and talent to work on solving our problems."

Each of the holding groups has been adapting to more flexible relationships for some time. Publicis Groupe introduced its "power of one" model in 2015 in an attempt to improve the way its agencies work alongside each other on client briefs.

Former WPP chief executive Sir Martin Sorrell said after leaving the group abruptly last year that he regretted not moving it towards a client-oriented model – something he terms "horizontality" – faster. WPP has since merged agencies J Walter Thompson and Wunderman to provide end-to-end solutions within the same network. It also merged digital network VML with advertising agency Y&R.

Michael Roth, chairman and chief executive of Interpublic, says its agencies have been working together on brands on an "open architecture" basis for well over a decade. Interpublic shops, such as McCann Worldgroup, partner on clients – each getting financial recompense – without the need for a restructure.

"We maintain the value of our brands, and what they stand for and we work on a collaborative basis together to meet the needs of our clients," Roth explained. "And, candidly, we've been outperforming the sector for the last 20 quarters. So it must be working."

"We maintain the value of our brands, and what they stand for and we work on a collaborative basis together to meet the needs of our clients," Roth explained. "And, candidly, we've been outperforming the sector for the last 20 quarters. So it must be working."

Marc Pritchard, chief brand officer at Unilever rival Procter & Gamble, praised the shops it works with last month for "raising their game" after it introduced a new "fixed and flow" model in 2018. The new approach means its agency groups – including Publicis Groupe, WPP and Wieden & Kennedy – are paid a fixed annual retainer.

Marketers do not only want to work with holding companies in new ways. They are also opening up the types of businesses they want to partner with. Both Jope and Pritchard have indicated they want to continue to widen their creative partners beyond agencies to entertainment companies, such as film studios in Hollywood or Bollywood, or broadcasters such as Cartoon Network.

Accenture Interactive is also adapting to brands looking for a more bespoke solution. Anatoly Roytman, senior managing director, Europe, Africa, Middle East and Latin America lead and global commerce offering lead at Accenture Interactive, says its marketers are looking for a joined-up offer. 

"I think the beauty of today is that we all agree on where we want to go." Roytman said. "Who will get there, the time will tell, but I'm very excited about what we have from clients. Cannes was amazing. In comparison to last year; I was amazed myself how mature we have become."

So it’s clear that marketers are looking to work with their partners in new ways. But does that mean there is no place for the traditional agency/client relationship?

Annette King
Chief executive, Publicis Groupe UK

Several years ago, Publicis Groupe restructured to become a platform designed to help our clients find new paths to growth through connecting our 80,000 talent base seamlessly and at speed.

Our "power of one" proposition has been very successful in helping businesses transform and Unilever is not alone in seeking a more connected, agile operating model with their partners.

The FMCG industry, which we know well, has had to undergo significant change over the last few years, so it’s no surprise that Unilever is seeking a different operating model. Unilever, like many others, should ensure it doesn’t just change agencies but also changes ways of working with those agencies. 

Victoria Fox
Chief executive, AAR

As an industry, we love to simplify the complex. It’s all about in-housing, all about independent shops or all about holding companies. Choosing the right agency model is as unique as a fingerprint. There is no silver bullet, but do clients even want one?

Different brands have different requirements. Some want (and need) a holding company arrangement. For others, this simply won’t work and partnering with smaller specialist shops combined with an element of in-housing is the answer.

For clients, it has to be about finding the landscape to suit their unique circumstances, and as an industry we just have to accept this complexity and embrace it.

Angus Crowther
Founder, Alchemists

Yes, if they have a scale and depth to be an interesting client on a holding group level. Today, being great at marketing, achieving the often elusive goal of building brand loyalty and driving sales through performance channels is more complex than ever.

Technology is enabling us to get qualitative insights from data at scale and use it in real time. Consumers are tired of traditional ads. We need to excite them and it’s not easy. Clients can’t increase demand exponentially on their teams, so something has to go. That something can be the complexity of managing multiple agency relationships. Long live the "recoupling".

Zaid Al-Zaidy
Chief executive, The Beyond Collective

Once again, Unilever has proven itself ahead of the curve. Its aspirations make complete sense. A tangled web of separate agency relationships does not bode well for smart brand stewardship in a modern age.

However, whether Unilever’s ambitions can be achieved is another matter. The bid to engage the holding companies at a corporate level does not necessarily come hand in hand with a simple shedding of the predictable challenges around P&L, leadership, agency culture, office politics and reporting lines.

There is also a risk that Unilever’s own giants, such as Dove, will see change faster than their small to mid-sized brands with lower budgets.