David vs. Goliath
By: Jim Lake
Jim Lake is currently Principle at Nahigian Strategies in Washington, DC. He is a former Senior Vice President at Cohn & Wolfe, Chair of Burson-Marsteller’s U.S. Public Affairs Practice and President at Gibraltar Associates.
As I’ve read multiple stories over the past few weeks since Sir Martin Sorrell resigned as the head of WPP, there seems to be a consistent theme, the PR Goliaths that were built to limit competition, own the market and upsell cross company services, are now having the opposite effect, declining market share and revenue. One has to ask one’s self, what’s going on here? Having done my time at a couple of those firms inside the WPP family – Cohn & Wolf and Burson-Marsteller (now Burson Cohn and Wolf), I have a couple of thoughts as to the why. The larger firm’s obsessive focus on margin contribution, staff billability and increased revenue generation at all costs, has taken its toll on the larger firm’s business model. Not to mention the toll on their staffs. And, clients appreciate that senior level executives are engaged at all levels of their accounts with the smaller firms versus just when pitching to win the business. The high-level of expertise associated with their accounts is a constant, not a rarity.
I, for one, believe savvy clients are in the market for smaller, more nimble firms who feel a sense of family in working with them. Firms who nurture and develop truepartnerships with their clients and will go to the mat for them regardless of the remaining available billable hours, Firms who will invest with them to build long-lasting relationships over margin contribution. Clients want a team to be in the trenches with them. They want the best in class the market has to offer, not just the best the holding company has to offer.
Conversely, what they don’t want is to continue to pay for inflated overhead costs associated with sustaining these old and tired business models.
One recent article I found particularly interesting was written by Joe Mayes, Five Options WPP Could Consider Post Sorrell, – Bloomberg, April 16, 2018. In the article, Mr. Mayes notes in item 2, “Cut back PR.” I would tend to agree given their shrinking market share and inability to adjust their business models to accommodate client results over profitability. I’ve noticed over the past several years that the market disrupters are the small-to-medium sized communications firms. They’re the ones adapting their business models being guided by a “client first” mentality. They’re the ones growing and winning new business, many times the same clients who used to be with the big name brands. And, they’re the ones recruiting top talent away from the holding company’s firms.
Don’t get me wrong; I had a great career at Cohn & Wolf and at Burson-Marsteller back in the day. What they failed to do was recognize the changing market demands and adapt to evolving client expectations.
So, what can we expect in 2018? What will the Goliaths do to stay relevant in the market? I believe only time will tell but, one thing is for sure; David (small-to-medium sized firms) is currently slaying Goliath.