Brandstand: From Integrated Communication Programmes to Integrated Business Models

As the holiday season begins in full earnest in India, the mood in the global agency networks is far from celebratory. Latest reports suggest plainly that not just the beleaguered WPP but even the other large networks are soft takeover targets for consultancies, especially Accenture. A continuous dip in shareholder value in close tandem with an uncertain future scenario has weakened the bargaining power, especially of creative agencies, leading to the imminent dissolution of their standalone stature. To salvage their position, even from a valuation perspective, the industry must evaluate its fundamental delivery model, embracing integration in their own business and not just the client’s.

Every industry that enjoys predictable continuity and organic growth operates on a clear understanding of Primary Value, a set of deliverables that are both important as well as unique. This principle is true for hospitality, aviation, healthcare, governance, entertainment, retailing, FMCG and so much more; exception invariably leading to obsolescence. A primary cause of the latter connected to Business Myopia, an inability to clearly define the root cause of customer necessity and subsequently delight, thus leading to a manufacturer’s perspective over-ruling market realities. Theodore Levitt in his famous essay ‘Marketing Myopia’ had covered this subject exceptionally in the 1960s, inspiring enterprises to re-calibrate their delivery trajectories successfully. This is exactly what the Creative Agency business needs at this critical juncture of existence sandwiched by prolific left-brained and right-brained solution providers tugging hard at the already hard-earned commission.

The solution–fairly simply and compellingly–lies in the fundamental tenets of Integration that communication solution providers are experts in providing to clients as a routine matter of living. In this case happily there is an opportunity to apply the rules forward or backward integration, in the quest for reinforcing the foundation of primary value. Forward clearly signifies the strategy of becoming final solution providers, eliminating the individual role of event managers and production houses. Backward signifies most appropriately the ownership of Brand Strategy, in terms of taking responsibility for business outcomes. In a perfectly hybrid world, the two can actually come together in a totally integrated manner but that will again remain in the realm of fantasy and not implementation.

Let us at first consider the organisational and behavioural implications of a Forward Integration approach if that were to be implemented by the current networks, wherein the last mile of implementation is owned totally by the agency brand. Just as a hotel owns every aspect of in-stay service experience or the hospital is viewed as the single provider of multiple layers of specialised assistance, even though they are actually sourced from multiple points of origin. It would begin with the acquisition of specialised content creation houses, the traditional production companies as well as the new-age digital creators as well as event management firms, as a route towards eventually developing in-house competencies that are truly proprietary, standing for a cohesive brand value that stands above the specific human skill sets. Once again, a comparable frame of reference can be the hotel or the hospital, both chef and surgeon supremely talented individuals who rise above to unite under a single cohesive banner yet performing at their finest unique potential.

In this format, clients would once again view agencies as final solution providers in the Marketing Content space, responsible for the total spectrum of creativity from content strategy to execution. Just as comparable service providers stand for a signature delivery style, including management consultants and airlines, an intuitive segmentation of agencies will happily emerge, with clients preferring partners based on their perceived strengths. There will be room for the behemoths as well, just as a SPG or Taj thrives in hospitality, appearing as comprehensive generalists with enough room for the smaller boutiques. Imagine now the potential for revenue acceleration as we all know that the margins in the film production or event management space are way more than the paltry fee contracts of the advertising companies. This will also bolster the brand value significantly as the agency NCD will no longer have to share IPR credit with the Film Producer and also create a culture of total accountability, as opposed to interim awards.

The second form of restructuring is the Backward Integration strategy, wherein the agency is viewed as the overall owner of Marketing outcomes wherein creative solutions are simply one part of the ensemble and not the overwhelming output. Essentially a merger of the current tasks being performed by a consultancy firm and an advertising agency where content creation still remains the domain of specialised freelance providers who complement the role of this industry. Imagine a brand setting out to launch an FMCG business division or perhaps a top-end mobile phone that must currently take on board a business consultant, a market research agency, an identity designer and eventually an advertising agency and is given the opportunity of going to a single solution provider. It starts with the business potential assessment of a certain market context, moves on to determining the product mix and then then gets on with pricing, positioning and the entire go-to-market plan. The agency takes on the entire assignment as a turnkey project, thus enabling the management of the client to focus on organisational and operational matters instead of trying to integrate multiple functions.

What makes this avatar attractive is the migration of businesses from the legacy setups to the VC-funded promoter start-ups, operating usually with an assessment of enormous potential or perhaps the inspiration of a proprietary idea. In either case, the rigour of customer-mapping and product design leading to engagement platforms is more critical than ever before, as such companies do not usually enjoy an established Marketing culture. So, the idea of a Go-To-Market advisory entity, with accountability from segmentation to communication becomes a very attractive proposition for industry at large. In terms of resourcing, the conventional agency has to add on aggressively from the Consultancy and Research cadres, with the definite assurance that remuneration too will shoot up significantly, as clients see a form of partnership that is truly value-adding. The culture of accountability will increase significantly as the gap between ideation and implementation will rapidly dissolve.

In the quest for defining a sustainable and profitable source of Primary Value, both Forward and Backward Integration can work as successful solutions, although the former does seem to be implementable far more easily. What is certainly clear that the current half-hearted brand stewardship role of agencies, bereft of significant accountability, must be replaced urgently by re-calibrating the undoubtedly formidable strengths of the industry, especially in terms of talent. It is definitely time for the physician to heal thyself else the creative agency will quickly become a nameless element of the business value chain, taken over by consultancies for undeservingly low valuation.

(Shivaji Dasgupta is the Founder of INEXGRO Brand Advisory and can be reached at: shivajidasgupta@inexgro.com)

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