David Bonthrone heads the U.S. for Group FMG, a production network.
The latest industry jargon is “horizontalism.” Sir Martin Sorrell used it recently at the ANA conference to mean the centralized adoption of services across agency networks. In this instance, he was specifically referring to the advertising production process. To illustrate this point, he mentioned WPP production agencies Hogarth and Deliver as being horizontalized across the group.
This is a trend worth following. Look at the suite of services that an agency has traditionally provided: strategy, creative, production and media. Media has already been spun off and run as a separate P&L, arguably horizontalized, since they work across multiple creative agency groups within one holding company. There is plenty of evidence to suggest that the production process is going the same way. In just a few years, creative agencies will provide strategy and creative services — with production and media services being horizontalized across a holding company network. After all, the main reason people go to work at a creative agency today is for a strategic or creative, rather than a production-based, role.
One of the key drivers of this trend is the procurement department of major global marketers. They know that when it comes to production services they can receive the same quality for far more competitive prices in certain emerging markets. It’s no secret that marketers like General Motors, along with their agency partners, have been sending non-mission-critical work offshore for some time. There have been challenges to this approach, such as communication difficulties and delivery quality, but this is no longer the case as emerging markets have well-matured.
This is a big opportunity. The collective 2011 global revenues for the four big holding companies were just over $45 billion, according to AdAge. If one approximates that just
11 percent of that is spent on production (and that is conservative), there is a $5 billion market segment. Applying better processes and allocating resources more efficiently via a globally balanced delivery model can achieve savings of at least 25 percent across the board. That equates to over $1 billion that provides significant value for agency, holding company and brand owner.
The demand for content creation to be deployed across multiple channels will surely continue unabated. The costs of producing such content in multiple formats and languages, with quality video, photography and a commerce-enabled function, are now under the procurement microscope more than ever. It goes without saying that horizontalism is not simply a term but a call to action in a new advertising era. Brand owners must look to offshore non mission-critical functions wherever possible if they want to stay globally competitive.
More in Marketing
Manchester City uses Fortnite to expand its global audience
As Manchester City rolls out its own Fortnite experience, it will have to contend with the fact that this brand new world does not come with a pre-existing user base. To address this problem, the company plans to leverage its network of players and talent to spread the word across their social feeds.
How Chipotle’s fighting-game-focused esports strategy is paying off at Evo 2024
In 2024, Chipotle’s choice to court the relatively niche fighting game community appears to have paid off. According to a joint study by YouGov and the agency rEvolution, which helped develop Chipotle’s gaming strategy, U.S. esports fans between the ages of 18 and 44 reported a nearly 100% increase in their intent to purchase Chipotle following the brand’s esports campaign last year.
How Revolut’s creator strategy is benefitting from YouTube’s long-form swing
The challenger bank is prioritizing YouTube creators in bid to reach consumers.