ITT announced yesterday that it will split into three companies. Sara Lee is considering splitting into two companies. And as you know, I believe Google will split into 3 companies in the next 5 years. All this makes me wonder what’s in store for the big public ad agency holding companies? What will IPG, WPP, Omnicom and Publicis look like in a decade or two?
The drivers of divestiture are usually varied margin and profitability spans. In the case of ITT, the military business is not as profitable as the water pump business. In agency holding companies, I wonder if there are discreet businesses with differing margins?
Our business has changed much in the past 5 years thanks to the computer and digital marketing. Analysis and reports, once the provenance of humans are now much more automated. Translating the big selling idea across platform was always the heavy lifting, but today many media forms are converging. Content is still where the money and margin is in marketing.
If I were a betting person, I’d suggest a bifurcation of creative and analytics. Move the analytics companies nearer the energy plants so the computer farms are cheaper and run the creative companies in urban centers closer to all the stimuli. Patsy Cline? Fast forward. Peace!