Why is Ogilvy putting toothpaste back into the tube?

During one of his visits to India, Martin Sorrell, chief executive, WPP group was asked about the possibility of re-integration among agencies. His response was, “The toothpaste is out of the tube,” indicating how difficult it is to get back to the old ways of doing business. Earlier this week, one of WPP Group’s brands Ogilvy, announced that the global array of Ogilvy brands is consolidating into "a single, branded, integrated operating company". That means standalone brands like Ogilvy & Mather, Ogilvy One and Ogilvy PR will disappear in favor of a single, unified brand presence. Effective immediately, Ogilvy operations in the U.S. will operate as one P&L. The collapsing of brands will be reflected globally over the next year.

 

Ogilvy & Mather Worldwide Chairman & CEO John Seifert, said, "Every market in the world is working on a plan. It’s a beacon for rest of the worldwide network."

 

The new rules

Under the new structure the predominant organising principle will be clients and markets, rather than vertical global businesses, disciplines, and client leads.  The move is an effort to clear away internal structures within the greater Ogilvy organization, removing P&Ls, management and marketing capabilities that were being replicated across the network and made collaboration more difficult. "Rather than trying to manage 10 different Ogilvies as separate businesses and then trying to figure out how we then connect those businesses for the good of the client," Seifert said, "we are now saying, ‘Let’s start with the client."

 

Ogilvy and matters

While Sorrell would have ruled out re-integration in the context of media and creative agencies merging operations, the question is why is Ogilvy trying to put some toothpaste back into the tube?

More than a decade back, when 360-degree communication was everyone’s go-to-market strategy, advertising agencies started specialist divisions in digital, PR and so on and started accumulating several sub-brands under their umbrella.

 

According to naysayers, the immediate fallout of this strategy was that each sub-brand would try to undercut rivals (sometimes from their own sister agencies) to justify their respective P&Ls. Another issue was that there would be several people from the agency side trying to get the client’s attention on a single business. Often, the best relationship, and probably not the best idea, made its way through the crowd.

 

“That’s a thing of the past,” says Ranjan Kapur, country manager, India-WPP, who spent close to four decades at Ogilvy, and retired from the agency as its Chairman.

 

According to Kapur, “Collaboration is the order of the day and the incremental returns from growing together are significant.” He feels that the business has become extremely competitive and hence agencies need collaboration – or horizontality as he calls it – to get that extra bit of growth. “It works like a charm,” he says.

 

Kunal Jeswani, CEO, Ogilvy India adds that the plan for integrating the Indian operations is still evolving and the new structure will be announced in the near future. He agrees that will the new structure in place, there will be a lot of clarity on who in the agency is the custodian for the brand.

Jeswani says, “When we were building new capabilities from scratch they needed to be incubated separately. Now, divisions like Ogilvy’s digital business in India have reached a tipping point and they can be combined to create a large integrated enterprise.”