What are Agency Holding Companies ?
Agency Holding Companies is an industry term used to describe the parent Advertising Agency companies that own smaller advertising agencies. Whilst there is no definition of what qualifies as an Agency Holding Company, they typically have an excess of $5 Billion dollars in gross worldwide revenues.
Agency Holding Companies are in charge of developing, overseeing, and putting sponsored marketing messages into action. Additionally, some firms have expanded into other areas of marketing communications, such as direct marketing, interactive media, public relations, and sales promotion.
These companies struggle with issues including commodity pricing for their services, high customer turnover, inflated scopes of work, low pay for their employees, “overburn” working conditions, talent shortages, and growth expectations that are unrealistic given the state of the industry. Acquisitions aren’t very useful unless they enhance existing skills. In the past, media firms served as the holding corporations’ main drivers and their primary emphasis. Now, forward-thinking companies that expand through acquisitions should consider the culture of the new partner and which businesses make sense within the current frameworks.
The controlling businesses’ and their agencies’ most fundamental problem continues to be pricing. When media commissions vanished more than thirty years ago, agencies welcomed getting paid “by the head” rather than “for their job,” and agencies have made matters worse by neglecting to record, measure, or negotiate their workloads and headcounts due to payment issues. Agencies have reduced staff and kept compensation at extremely low levels in order to preserve or increase profitability. However, with the passage of time, these agency issues have been resolved.
The activities of agency holding companies need to be reviewed, and they should concentrate on resolving the price issues that are so problematic. They ought to follow the example of consulting firms, which command higher fees by providing better customer outcomes. They should plan improved training for client leads—those employees of the agency who really manage clients—and impart “best practices” for customer management and retention. They ought to spend money on measuring and documenting the scope of the work.
Imagine a pyramid to get a sense of how the advertising industry is organized. A select set of sizable holding firms at the top own and manage several advertising brands all over the world. Holding firms don’t carry out routine marketing and advertising responsibilities. Instead, they collaborate closely with the advertising companies’ board of directors to create a plan and solidify intra-group ties. The top international holding firms include WPP Group, Omnicom Group, Publicis Groupe, Interpublic Group of Companies, and Dentsu. Advertising, public relations, media, and market research networks including AKQA, BCW, CMI Media Group, Essence Global, Finsbury, Grey, Mindshare, Ogilvy, Hill+Knowlton Strategies, Wavemaker, Wunderman Thompson, and VMLY&R are among the numerous businesses that WPP plc owns. Along with Publicis, the Interpublic Group of Companies, and Omnicom, WPP is one of the “Big Four” advertising firms. WPP is a component of the FTSE 100 Index and has its principal listing on the London Stock Exchange.
Near the base of the pyramid are advertising agencies, which may be divided into three categories: full-service agencies, creative boutiques, and media planning and purchasing agencies. Large advertising firms with global reach and customers from other countries, like BBDO Worldwide and McCann Worldgroup, are often full-service. Their customers span from well-known companies with substantial budgets like American Express, Ford, and IBM to less well-known ones with smaller ones. Development of a marketing strategy, ad creation, media planning and purchasing, account planning and research, and production are all included in full-service.
Agencies with four or five international offices can also be organized as micro-networks. These companies may design international marketing programs, which can subsequently be carried out locally or modified by their regional offices. Thousands of regional or local clients are served by local advertising companies. This kind of agency might have a workforce of just one person or as many as 50. Advertising agencies that are local or regional cater to customers that advertise nationally but are headquartered in the same city as the agency and prefer the ease of doing business locally. Additionally, they provide services to businesses that promote locally or regionally but are unable to get the attention of advertising companies in New York City, Sydney or other major cities.
The agency holding companies’ ability to include the experts on the client businesses of its branded agencies has contributed to their success in recent years in fostering organic revenue development. The employment of affiliates is undoubtedly favorable for the holding corporations, and it might be helpful for customers looking for a lead agency to manage coordinated complete marketing communication programs.
To accomplish their business objectives, media companies assist their customers in implementing and managing marketing campaigns. To improve brand recognition and market share in order to raise income, these agencies promote the goods and services of their clients and conduct paid media campaigns. Media agencies take the help of advertising agencies for media buying. Agency holding companies may consist of several advertising agencies. Media agencies can take help of these agency holding companies to improve their business by leveraging the technology of the advertising agencies. Therefore, it can be assumed that they benefit each other via their skills and talent.
One significant change in recent years has been the establishment of specialized “vertical” agencies within the holding companies. These agencies were created with the sole purpose of managing the marketing requirements of specific multi-national clients, and they drew personnel and resources from the group’s other multi-client agencies. With the development of exclusive networks for Ford or Coca Cola company, WPP is often recognized as the industry pioneer; nevertheless, all the major organizations today provide a comparable service. WPP has more than 50 of these units at this time. WPP has more than 50 of these units at this time. This has effectively reversed the trend of post-1980s unbundling, leading to the revival of full-service agencies of the past that provided all forms of marketing under one roof, but now for only one customer as opposed to many. Since 2018, Publicis Groupe has developed a single, massive agency that can draw on the expertise of its whole global estate to serve specific clients, taking this devoted agency model one step further.
Several analysts believe that holding companies are more valuable than agencies. These companies are often the decision-makers. They provide better marketing services. They can do better media buying than agencies. Holding companies developed in different ways. Many holding agencies buy additional agencies just to grow their portfolio or even their geographic reach. It is their option either to work with a small number of companies or large brands. Holding businesses can reclaim some of their lost distinction by acquiring agencies that excel in a certain field.
The top Advertising Agency Holding Companies around the world include:
Dentsu Inc is a Japanese international advertising and public relations joint stock company headquartered in Tokyo. Dentsu is currently the fifth largest Agency Holding Company in the world in terms of worldwide revenues.
Havas SA is a French multinational advertising and public relations company, headquartered in Paris, France. It operates in more than 100 countries and is one of the largest global advertising and communications groups in the world.
Interpublic Group of Companies
The Interpublic Group of Companies, Inc. (IPG) is an American publicly traded advertising company, headquartered in New York City.
Omnicom Group Inc. is an American global media, marketing and corporate communications holding company, headquartered in New York City.
Publicis Groupe is a French multinational advertising and public relations company, and is the oldest and one of the largest marketing and communications companies in the world, by revenue, headquartered in Paris.
WPP is a British multinational advertising and public relations company with its main management office in London, England, and its executive office in Dublin, Ireland. It’s regarded as the largest Agency Holding Company in the world. Advertising, public relations, media, and market research networks including AKQA, BCW, CMI Media Group, Essence Global, Finsbury, Grey, Hill+Knowlton Strategies, Mindshare, Ogilvy, Wavemaker, Wunderman Thompson, and VMLY&R are among the numerous businesses that WPP plc owns.