Everything's up for grabs for the agency of the future

McDonald's has foregone a 35-year relationship to throw in its lot with the "agency of the future" - it's a sign that clients are considering all options to save money and supercharge their marketing.

McDonald's has hired the "agency of the future" on a pay-for-performance basis.
McDonald's has hired the "agency of the future" on a pay-for-performance basis.

Labor Day came and went and it’s back to work big time – though for the communications sector it seems to have been pretty much business as usual.

PRWeek marked the change in seasons with our first Le Retour party on Wednesday evening, and from what everyone was saying there has been no let-up in the pace of the PR business during the summer. Indeed, many said August was the busiest they can remember.

Just as it seems to be during the end-of-year holiday season, the pitching and client work doesn’t slow down.

There’s a big pitch imminent in the next two to three weeks, as HP’s printer and PC business puts its corporate and product accounts up for review yet again. Currently held by an Omnicom consortium of Porter Novelli and FleishmanHillard, it is understood the incumbents will go up against teams from Burson-Marsteller, Edelman, and Weber Shandwick in the shootout.

Given HP CMO Antonio Lucio’s decision to send a letter to his agencies last week about the need for more diversity, you can be sure this will be a big talking point in the PR review.

Elsewhere this summer, there have been other large account moves that have significant implications for PR and other marketing services firms, especially on the integrated side.

Leo Burnett lost the creative account for McDonald’s after a 35-year tenure, sending shockwaves around the marketing industry, not just because of the length of time the Publicis firm had been working on the business, but also because of the unusual payment structure Omnicom shop DDB agreed to in order to win the account.

Helmed by former Coca-Cola marketer Wendy Clark, the McDonald’s business will comprise a new as-yet-unnamed standalone agency led by DDB, of which Clark is CEO, but with contributions from other Omnicom firms.

Most controversially, there is a strong pay-for-performance aspect to the new arrangement, which McDonald’s is dubbing the "agency of the future," and which apparently prompted WPP to withdraw from the pitch process back in May.

(If I ever venture back into a McDonald’s restaurant, maybe I’ll ask the folks there if I can withhold payment for my burger and fries until I’ve consumed it and can confirm that the performance of the meal lived up to its promise – I’m not holding my breath though.)

GolinHarris has been McDonald’s PR firm of choice for more than 60 years and is deeply embedded on the account, and there are not supposed to be plans for a PR review anytime soon – the fast-food operator told PRWeek: "PR and the work with our ethnic agencies is not part of the scope of the new agency of the future."

But you can be sure Omnicom PR Group’s CEO Karen van Bergen will be sniffing around for opportunities in the new agency of the future structure, and one thing you can say for certain in today’s uncertain and fast-changing marketing world is that anything and everything is up for grabs.

Look how McDonald’s USA CMO Deborah Wahl describes its agency of the future arrangement:

"This new agency will become our partner for all U.S. national marketing initiatives. In selecting this agency we will have access to top talent, technology, and thinking with digital and data at the core.

"They are fast, fluid, and flexible and poised to deliver the caliber and volume of storytelling needed to support our business today and into the future. This new model will, over the next few years, create great work at the speed of the marketplace at an efficient cost. Their creative approach and bold use of channels will elevate our connections with customers in new and innovative ways."

So while McDonald’s might say PR is not part of the scope of the new agency of the future, that vision and mission sure sounds like a big part of the purview of a modern PR firm to me.

Agencies are looking at all sorts of ways to operate in a more integrated fashion. This could include having a single P&L across all agencies, like Publicis Groupe is doing.

It could encompass piggybacking on existing creative agency relationships that have suddenly woken up to the power of storytelling that their PR siblings can deliver, again particularly prevalent at Publicis and Ogilvy, given they are the sole PR brands within their respective holding company network structures.

"As the only PR firm in the holding company, we’re the solution when it comes to engagement," says MSL’s CEO of U.S. operations Ron Guirguis, who has seen many more holding company solution RFPs this year.

In some markets that means combining creative and PR under one offer, such as MSLGroup has done with Leo Burnett in Chicago, where the brand now goes to market as MSL, which has opened up new PR client work with Allstate and United Healthcare.

Guirguis also touts significant new PR relationships with a global CPG company and a global food and beverage company, where MSL was brought in by the ad agency.

"It’s the difference between PR trying to fight with advertising for the dollars, people, and best idea, rather than working together and saying to the client it makes no sense for your marketing and communications strategy to be misaligned," he adds.

MSL is also gaining fringe benefits from the creation of a new entity by Publicis Groupe and Walmart to cover U.S. creative, in-store and other parts of non-advertising business.

The statement from Publicis in July, when the arrangement was unveiled, echoes elements of the McDonald’s agency of the future concept: "The new entity will focus on how Publicis Groupe and Walmart will partner on advertising and marketing efforts as the companies together navigate the future of retail." Those fringe benefits for MSL include conversations and, already, some work.

What all this says to me is that clients are getting restless and have itchy feet.

If their current agency service arrangements aren’t satisfying them they’re open to all options.

They want to cut costs, consider new payment structures, and consolidate the number of firms they work with, especially the big global brands.

They’re doing some stuff in-house or with new partners such as media owners, cutting out agencies altogether.

They want the best creative ideas backed up by data and research, no matter what the channel or discipline.

In short, they want the agency of the future now – and they’re not going to wait while their incumbent firms play catch-up.

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