Agency consolidation growing, but do it for the proper reasons

Any CCO whose company retains multiple PR firms and is not considering some form of roster consolidation is outside the norm right now.

Any CCO whose company retains multiple PR firms and is not considering some form of roster consolidation is outside the norm right now.

This urgent desire to gain stronger control of external business partners does not necessarily mean consolidation to just one global agency. That remains a rarity.

Why are companies looking at consolidation right now? Well, the problems with the status quo are plentiful: an absence of global integration at a time when many corporate issues are uniquely global; message inconsistency; greater risk to the corporation; too much client time spent on firm management; diffused accountability; an absence of efficiency in idea creation and execution; reduced quality control; potentially reduced market impact; and the total absence of leveraging scale for better pricing.

One caveat: The market will always value boutique shops that offer superior specialized knowledge. Such specialist firms will always have a place in the agency mix. That's one reason the trend to consolidate will rarely result in companies retaining only one firm worldwide.

So, if consolidation is in the cards for you, how do you get started? First, consider your company's structure. Do you place greater responsibility on geographic regional management or on global business lines?

You should likely structure your agency relationships to mirror your own organization. I advocate greater focus and accountability when it comes to global agency consolidation. In short, place the burden of multi-country coordination and management to your lead agency.

How? Let's say you consolidate regionally and make the Acme agency, a unit of the XYZ Holding Company, your lead agency in Europe. Well, Acme might be strong in Europe, but it might not be the best firm for you in every market. You must have a bias to give them an opportunity to strengthen themselves in vulnerable markets so you achieve the benefits of consolidation. But, they'll rarely be the right firm everywhere.

What do you do? First, task the lead agency with the appointment of an account director responsible for the region, not just for Acme's offices. Be sure your account leader taps into his or her parent company's professional resources in each market – leverage your scale.

When independent firms are needed, retain them, but make clear they'll become part of Acme's regional network. Their senior account directors will report to Acme's regional lead, who will report to you or your designate.

Pay a regional management fee to your lead agency and ask the individual offices, regardless of ownership, to contribute to the regional management fund, as well.

Will such a structure work? Yes. Firms want to deliver superior integrated work to clients and don't want to jeopardize a regional or global relationship just to displace several smaller shops in typically smaller markets.

Bob Feldman is cofounder and principal of PulsePoint Group, a communications management consulting firm. He can be reached at bfeldman@pulsepointgroup.com. The company's blog is at pulsepointgroup.com/pov. Bob's monthly column focuses on management of the corporate communications function.

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