Why 'Integration' doesn't work!

Integration or Horizontality as WPP puts it is about making existing verticals work together for network profitability. It ignores ground realities, employee psychology and effort incentivisation. That’s where it’s wrong. And that’s why it will fail. 

We all know by now the media story and how the creative obsessed ad industry now laments the break-away faction that has become a behemoth, more because of the loss of revenue than the loss of true insights that media data can provide the creative and planning teams. 

Obviously and #facepalm slappingly evidently, the advertising industry never learnt from this colossal mistake because it repeated the same insular thinking with digital. 

Repeat #facepalm 

Now that all ad networks have completed buying up independent digital agencies at insanely unprofitable valuations, they are busy trying to sell all these different agency capabilities to their clients. Essentially, the sales pitch goes like this, ‘Come on dear client, you love us so why don’t you just work with our digital agency, our PR agency and our media agency as well? Give me all your business on the basis of the great relationship we have. I will get all these agencies to work for you’. The problem is that this approach hardly ever works. If you have made this pitch and heard the client say, ‘Sounds great! Let me get back to you’ and then keeps avoiding the topic like the plague, I am sure you have wondered why!

The reason is that your entire pitch was flawed. You didn’t offer the client a great solution to his problems. You just asked him to replace existing agency partners with ones from your own network without telling him how this will work process wise, price wise and effectiveness wise.

How does replacing these multiple agencies from different networks with multiple agencies from your own network solve the client’s problem? 

Well, it doesn’t! Cause the client is still dealing with multiple agencies with their own ‘Profitability’ agendas. Because the truth is that every ‘Vertical’ agency in a Horizontally enabled network still has to answer for its own growth and profitability.

How do we solve it? 

We solve this by dismissing Horizontality and embracing the fact that all our existing ‘Smart’ models are broken and can never be repaired. 

We have to build a new model based not just on ‘How can we get more business from clients’ but based on ‘How can we get more business from the same clients that costs us less to service and therefore gives us more profitability’.

And then leverage this ability to get increased scope of work for greater revenue at larger profit margins without having to hire more people. A jaded veteran of the ad industry might call it ‘Deluded Thinking’, but I call it ‘Financial Engineering’. 

Sacrilege! How can you say ‘Finance’ and ‘Advertising’ in the same paragraph and then I added a supremely alien and intimidating word called ‘Engineering’ to the caboodle.

We really need to ask ourselves what makes people from different teams and agencies in the same network want to work together. In my mind, there are three main motivations, the first two driven by the network and the agency they work at and the third is personal #1. Don’t lose any business to other networks, #2. Get more hooks into the same client, #3. Learn new skills. The last one is quite difficult to find because most of us don’t really want to learn something new because we are so busy trying to keep our heads above the water with the workload. However, the one key reason that is always ignored is ‘Revenue’. People won’t, don’t and can’t collaborate if there is no financial incentive. Not necessarily personal incentive but definitely ‘agency incentive’. Let me elaborate.

Agency X from 123 network handling the creative duties of Client A gets agency Y from the same network to handle the digital business of the client. Agency X is putting a lot on the line. It’s relationship with the client, time and effort and the headache of supervising agency Y. What does agency X get in return? Nothing really. So agency X might want to sell agency Y’s offering with some cost padding that it can then pocket. This usually makes the offering of agency Y a little more expensive than what other players might charge the client. So either the deal doesn’t go through or agency Y gets paid less than what they are asking for because agency X has sold the services at the same cost that agency Y presented but has kept a finder’s reward of say 20% or so.

Once agency Y starts working on the client at this less than optimal cost, chances are that either the staffing is inadequate or the people are not the best in class. Chances also are that something will go wrong in either ideation or delivery. Guess who the client is going to point a long accusing finger at? Agency X. So in a lot of cases, agency X avoids the entire scenario in the first place.

How do you solve this?

Financial Engineering. If the network can figure out a way of incentivising both agencies for working together through a new financial process, both agencies will be highly motivated to work together. With the finances taken care of, both the agencies can then focus on delivering best in class solutions. The results, #1. Great integrated solutions across the media spectrum delivered through a single relationship, #2. A super happy client who will not think twice before giving more and different businesses to the network as well as recommending them to his peers in the industry and #3. Re-skilling and up-skilling for the people working on the business.

Sounds fantastic and utopian and ridiculous? Wrong! This is already happening for the last two years at Publicis Groupe. And the results, both financial and work-wise are incredible. I know this to be true because this is the core of what I do at Publicis Groupe as the Chief Integration Officer. A lot of people asked me what I really do in this role. A role where there is no P&L, no team and is a staff function to boot. In one word, I drive ‘Growth’ by identifying client problems that advertising alone can’t solve. Then I pair specialist teams from different agencies under a single structure and create a process flow to ensure that we deliver solutions that either agency on it’s own would not be able to deliver. And it’s not always a mainline + digital agency pairing. It is sometimes just Technology + Mainline or Production + Digital or PR + Mainline. With the width of offerings we have across the group, the number of potential combinations are truly incredible.

The role of a CIO has never really worked in any network so far. I did a lot of research before accepting the job and after. I realised there are two really crucial reasons this has never worked, #1. None of the networks were structurally ready for integration and #2. There was no financial model in place to encourage, nurture and give wings for integration to succeed. We are hugely successful at Publicis in integration not because I am so good at my job but because the network remade itself to be structurally and financially ready to make this a success. I happened to be at the right time and at the right place and I would of course, like to believe that I am also the right person for this role.

I have seen other networks in India in the last 6 months hire Chief Integration Officers. I can only hope that they are giving the CIOs all the structural and financial support they need to succeed because the more success we find in this role as an industry, the more we will grow as an industry.

No client today wants integration without deep specialisation. And really good integration is not just about great skill sets coming together, it’s about two or three or four different work and agency cultures coming together. It’s about trust. It’s about transparency. And that’s actually the job of a CIO. Make growth happen by making culture happen.