“Stop crying and get to work on changing your business model!”
When I started off in the agency world (early 2000s), this is how I used to think. This line of thinking was to my professional advantage and opportunity, as I was bringing to market (along with my fellow business partners) a new way to think about a modern marketing agency in an digital world. Over the past seventeen years, that new business model has been validated. Digital marketing agencies grew with a multiple that was not comparable to traditional advertising agencies, as traditional agencies started initiating technology teams and more to keep pace. With that many other businesses began offering these digital marketing services to better grow their own businesses. Back in 2015, I published an article titled, Disruption, Disruption Everywhere, that listed out the many industries that were now deploying digital marketing services. From a personal perspective, our new business model fuelled growth for over a decade, until we were acquired by WPP (the largest marketing and communications network in the world) in 2014, and quickly took a bunch of agencies (that were within the J. Walter Thompson Corporation) and rebranded as Mirum in 2015 to build one of the largest digital marketing agencies in the world. None of that would have been possible without WPP’s backing (financially and strategically with vision). Since then we have been named (twice!) to Gartner’s Magic Quadrant for Digital Marketing Agencies and, most recently, got named to The Forrester Wave – Search Marketing Agencies.
But, aren’t the advertising agencies business model against the ropes these days?
Many people don’t truly understand what WPP is. WPP is a multinational marketing, media, advertising and public relations holding company that owns brands like GroupM, Ogilvy, Kantar and many more. The company employs over 200,000 people working in over 3000 offices in over 113 countries. There are over 400 companies that make up the portfolio of what WPP is. WPP has a current market cap of about $22 billion USD. These facts are not being written here to impress you. These facts are not being laid out here to debate the current stock price. These facts are being laid out, because when people react to news about WPP or other brands (see: WPP: ‘Our industry may be in danger of losing the plot’ as like-for-like sales and revenues fall), their gut commentary usually sounds something like: “Stop crying and get to work on changing your business model.” Again, this is not just an issue that WPP faces. I’ve seen similar commentary for brands like Apple, Twitter and Snapchat down to local mom and pop businesses that are struggling.
Is it fair to ask a business to change or die?
Maybe “fair” is a poor choice of words. From my perch, I don’t think many people realize just how many moving parts every business has, how much they have actually changed and adapted, and just where – exactly – they are planting seeds for a future that is very different from today. It’s easy to toss out lines like: “advertising as we know it is dead/dying/changing” or “what worked yesterday is completely tossed upside down in a digital world.” Both are only true sentiments if the companies that we are saying this about haven’t done anything to change. But, what if they have done many things/everything to change, while at the same time being equally committed to a business model that continues to make solid returns – even if the future is not perfectly clear/definable?
Wall Street versus Main Street?
Many feel that being a publicly traded company is part of the problem and not the solution. That having to manage and deliver against the street’s expectations makes it increasingly hard for companies to “change the engine, while the plane is in mid-flight.” Some argue that the market is simply too saturated, and the only true answer is for there to be fewer companies (the old quality over quantity argument). But let’s flip the question: what would you do? What would you do with a $22 billion company that is – ultimately – 400 companies all over the world that, individually, don’t look anything like they used to look in terms of traditional verses digital? What would you do if at this moment in time, you were the most acquisitive holding company in the industry (as of this writing, WPP’s Shopping Spree Is The Biggest In Adland So Far In 2017)? What would you do if you weren’t just investing in the businesses you used to, but making investment in new media, analytics, technology and more?
Please do not defend WPP.
The intent is not for you (or me) to defend WPP. It’s too easy to point fingers back at me as towing the company line, or being a corporate shill. Nobody at WPP knows (or cares) that I am writing this. The spirit of this piece is not about my employer or their performance. The spirit of this piece is this: What happens when your business model is/has changed? Just this year alone, WPP has conducted 18+ M&A deals (a mix of majority stakes and full acquisitions). While it would be easy to tag this as “acquisition for growth for Wall Street,” what (to me) is most interesting happens in who they have acquired. Take a look for yourself. Whether with investment or via acquisition, not many of these shops are just another advertising agency. These are not businesses with traditional business models (at all). In fact, very few of these acquisition look anything like an advertising agency. It’s not just a strategy that is being deployed by WPP (and others) in 2017. Look back – through many years – and see if it looks different than what you might have thought.
Something else is happening here… and that’s the point.
Now, take a look at your brand. How much of your growth is still being driven by your traditional business model? How much of your current revenue looks nothing like your business of yesterday? This is the true rub. Many brands can’t get beyond their traditional business model, because there is still so much revenue and opportunity there. Still, many business have moved well beyond their traditional business models, but failed to make it spark within their industry. Long before our company was acquired by WPP, it was hard not to see how all of the major holding companies were moving far away from their traditional investments. With that, there have been disruptive companies being built from within these companies and externally. The point being, that many big brands have completely innovated on their business models, but have not been rewarded or acknowledged simply because the brand perception is still traditional by nature. For me, this culture of the “bright shiny object” is being magnified on the marketing services industry right now. The problem, of course, is how few people are truly looking to see where innovation in really happening. It would shock you.
Sometimes, the business model has completely changed, but the marketing of it has been left behind.