In graphic detail: The numbers making the case for what holdcos could be

An impending crisis 

The conflict in the Middle East has yet to deliver its full economic shock. When it does, ad budgets will feel it. Warc has already warned that a prolonged conflict could threaten $49.9bn of global advertising growth this year, and $93.9bn over the next two years. CMOs are already making contingency plans in markets they can’t fully read. For agencies, that uncertainty is an opening — the kind of moment where genuine strategic counsel is worth more than any media plan.

A relationship built on trust – and running low on it

The relationship between CMOs and their agencies has always run on trust – more so than process or price. A survey of 141 senior marketers across 22 countries by the European Association of Communications Agencies and Kantar confirms it. The problem is that trust is exactly what’s running out. CMOs suspect agencies are skimming from budgets they don’t fully control or understand. Agencies watch the same clients who squeezed their fees to the floor turn around and accuse them of finding other ways to make the margin back. It is, as cycles of mutual resentment go, a remarkably self-sustaining one. And so far, neither side has shown much appetite for breaking it.

Marketers need all the help they can get

Agency bosses have long cast themselves as the CMO’s consigliere, advising on everything from creative to which ad tech vendor to back. For a time, that was a defensible position. It’s harder to hold now. Platforms, consulting firms, even talent agencies all make the same claim, and CMOs have more options than they’ve ever had. Which makes the following finding from Ipsos something of an opening.

Only 35% of marketing practitioners across the U.K., U.S., Canada and Australia passed a basic ten-question assessment of foundational marketing concepts, developed in collaboration with Professor Mark Ritson. If CMOs are under pressure to prove they can run a business, and their own teams can’t pass a marketing fundamentals test, the agency that positions itself as the place that closes that gap has a clearer value proposition than most.

The practice that poisons the well 

No examination of the CMO-agency relationship is complete without principal media. The practice — agencies buying media on their own behalf and reselling it to clients at a markup — has grown into a significant revenue line for holding companies, and a significant source of mistrust for the marketers funding it.

Here’s why: an agency cannot give a CMO independent advice on where to spend if the answer determines whether the agency makes some money or a lot of it. The further that practice extends, the more the advisory relationship curdles into something else.

A whistleblower lawsuit against WPP, currently making its way through the courts, illustrates where that slope leads. Awareness of the issue is rising – 96% of respondents to an ANA survey of 114 senior marketers said they were at least somewhat familiar with principal media, up from 87% in the prior study. Familiarity, though, is not the same as control.