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Holding groups need to rethink their operating model, says PwC’s Megan Brownlow

PwC partner Megan Brownlow has told holding groups that opportunities lie within consolidation and centralisation.

Speaking at PwC’s ‘Joining the dots: the future of creativity’, Brownlow told the room of senior marketers and agency executives that holding groups and agencies need to rethink their operating models and introducing a centralised model beyond the “back office”.

Brownlow said holding groups need to focus on centralisation

“There’s an interesting opportunity for the holding companies that often own the creative agencies. Historically, to manage conflicts of interests where you had customers, clients in the same category, you had different brands and through acquisition, you ended up with all of those different client-facing brands. What we will need now is new operating models for those holding companies.

“What it will essentially look like… is centralisation, and not just the low hanging fruit of the back office, which is IT and finance and HR.”

Brownlow said the industry is starting to see some of these changes and these shifts and it is “strategically sound”.

“It is being framed as consolidation, but actually where we are seeing it, it is strategically sound if it can be executed well. It is one of the ways we can expect to see the successful agencies and holding companies operate in the future.”

Brownlow, who has been with PwC for over a decade, said increased collaboration between clients and agencies is also pivotal to the future of creativity.

“With more collaboration within the agencies, within a holding company and with the clients, that’s the path forward.

“This wonderful intersection between data and technology and finding that sweet spot, which unless you have all those things under your roof, requires partnering and more collaboration,” she told the room of industry executives.

When addressing the challenges the industry is facing due to slashed production budgets and growing output channels and expectations, Brownlow said agencies need to turn to technology and marketers should be rethinking budgets.

“More assets are being created, they have to be created, but production budgets are not necessarily increasing and how do you deal with that new world when you have got agencies with high fixed cost structures? Essentially they are a bit top loaded, with really expensive wonderful people. How do you manage in this new world?

“There are two responses, the first is technology is helping. So by streamlining creative, by automating, by using AI all of these wonderful things there are now tools in place to reduce some of the grunt out of making numerous creative.”

The second piece of advice Brownlow gave the room was aimed at marketers: “this one is really on the marketers and it is to rethink budgets”, she said.

“I didn’t understand why the whole idea of online creative was considered so unimportant compared to more traditional creative, it was almost as if this concept of above-the-line and below the line was still a thing. They are not a thing, because the internet has essentially demolished that demarkation, it doesn’t exist really anymore.

“Why wouldn’t you think that good creative isn’t imperative wherever a consumer runs into it?”

Howatson said all ad agencies used to do the same thing

Adding to Brownlow’s points about creativity, collaboration and centralisation, Chris Howatson, CHE Proximity’s CEO, said the industry is facing a crisis and it is because all ad agencies used to do exactly the same thing.

“I wonder if a bit of the crisis we are facing right now is if we look around the room and all the different agencies we represent, do we all know what we are doing? And I don’t mean that in the sense of what we are doing in our jobs, but do we know what our agencies are here for?

“We have all read about the WPP mergers and maybe it is genius or maybe it is a disaster, who knows, but we have seen 130-year-old brands gone overnight, we have come from a world where basically every agency did the same thing, there is a copywriter and art director and suit director and we all basically did the same thing. Maybe now is the moment when we are actually really proud to just do different things.”

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