Oh, not another bloody 'new-model' agency again

05 Sep 2016  |  Dominic Mills 
Oh, not another bloody 'new-model' agency again

Omnicom and McDonald's think they are working together to build the agency of the future, but Dominic Mills isn't buying it

In front of me I have a nice brochure from Alfa Romeo, telling me all about the new Giulietta model. Except that it isn't that new. In fact the only new things seem to be a few tweaks to the badges and a 'honeycomb' grille, whatever that is. Very unexciting.

I can't help feeling that, with all this talk about new-model agencies for new times, agencies - and especially the holding companies - are playing the same trick.

This week it was announced with a big fanfare that Omnicom would create a new agency to handle its latest client triumph, McDonald's.

At least that's what Deborah Wahl, McDonald's CMO, thinks she's bought. She and Omnicom will work together to build the "agency of the future," she told the Wall Street Journal. "In selecting this agency, we will have access to top talent, technology and thinking with digital and data at the core. This new model will, over the next few years, create great work at the speed of the marketplace at an efficient cost."

Curiously, the one thing the new agency won't get to do is create a new tagline. 'I'm lovin' it' lives to fight another day.

As far as I can see the "top talent, technology and thinking" that McDonald's is buying from Omnicom already works for the different bits of Omnicom and will be assembled from there. Not very revolutionary.

In fact it all sounds a bit like car marketing: the grille changes, and maybe the fascia too, but underneath the bonnet change is very infrequent.

I've got to thank the very sharp Simon Andrews of mobile agency Addictive for pointing out in his excellent weekly newsletter that in virtually every victorious big-client pitch, the winning holding company promises to create a new-model agency.

Of late, Omnicom has been leading the way, what with creating Hearts & Science to run P&G's media account, and then - also with H&S - landing AT&T's creative and media accounts.

Is Hearts & Science genuinely different? It claims to be data-led and, in its words, seeks to "protect the balance and leverage the connections between information and emotion, combining data-driven planning and buying practices with orchestrated content creation, delivery and optimisation across all touch points."

Yeah, right. That sounds pretty much like every other media agency, including Omnicom ones. I bet PHD and OMD could, or would, if it suited them, claim the same.

Indeed, what media agency these days doesn't claim to be data-led or put data at the heart of what it does? All of them, even if in reality they are trading-led.

In this creation of so-called bespoke agencies, Omnicom is of course only following in WPP's footsteps, which pioneered the ideal of special agency teams for special clients: Dell (although what a disaster that turned out to be), Ford, Vodafone, HSBC and uncle Tom Cobbley.

And in this world of smoke and mirrors, Team X or Team Y all claim to be new-model agencies for the new era.

Meanwhile Team Ford, formerly known as Blue Hive, seems to have morphed into something a bit different - Global Team Blue (how do they think of those names?) by merging three different dedicated Ford teams. I know what you're thinking: 'if it's a dedicated team, how come there were three of them?'.

So, you wonder, how come WPP didn't win the recent VW media pitch? Did it fail to field a 'team'? Did VW say 'no thanks, we don't want to be like Ford'? Or did it have a silly name - Team Emission, say - that irked the Germans?

So what remains is the big question: where is all this going? Of course, clients will feel buttered-up and flattered at the prospect of having their own team or new-model agency. So what do the ones who don't have their own bespoke team feel? Surely, because every client that hasn't got a new-model agency has, by definition, got an old-school one, they'll be miffed. And if the new agencies are fit for purpose (as they are invariably described), does that mean their current one isn't?

But it is surely impossible for the big holding companies to endlessly create new-model agencies to suit every client. In the end, they are variations on a theme, and variations are nothing more substantial than a honeycomb grille or a new badge. And behind that, it's still the same old people mostly doing the same old stuff.

However, and it's an important however, where the Omnicom/McDonald's new model does look interesting is its financial modus operandi. There is widespread speculation - none of it denied by McDonald's - that it has appointed Omnicom on a zero-margin basis, meaning that unless the new Omnicom agency achieves the agreed outcomes, only its costs are paid for.

Agencies have long - and rightfully so - argued for a greater element of payment by results (PBR). But none have ever gone this far. In fact, despite agency pushing, most clients have resisted it.

As the latest ISBA Paying for Advertising Report describes it, PBR is not in a good place. It says there has been both a dramatic reduction in the number of PBR arrangements, and the number that actually pay out: six in ten don't, compared to one in seven that didn't in 2000.

That's very poor, and I suspect that it is because clients have become increasingly financially risk-averse. It is, I think, a psychological thing - scientists would call a variation on loss aversion - which means that although PBR means both parties potentially gain, clients don't like not knowing exactly how much their PBR costs will be.

It is the uncertainty, and the potential extra cost, that deters them. Somehow, the prospect of paying out some of the profits that the marketing activity generates sticks in the throat of clients.

The esteemed Mark Ritson thinks the McDonald's deal is a good thing, but it remains to be seen whether other clients do. No doubt the arrangement, designed by the pitch consultant Flock, will stimulate a lot of interest (and open client doors for it), but there'll be a lot of client humming and hawing before they say: "You know what, I think I'll just have a new-model agency - but not too new. Just one with a honeycomb grille would be fine."

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Simon Francis, CEO, Flock Associates on 5 Sep 2016
“Dominic, as you point out we have indeed architected the agency of the future. Naturally we can't comment. But having run Aegis, Saatchi & Saatchi and OMD, and my partner Coca-Cola and ABInBev, allied with very deep experience at McDonald's I hope you'll give us some credit for not coming up with agency of the past! We've seen most old models and this isn't it. But, you'll have to take our word for it, until activity breaks! Best, Simon”