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Holding companies are in many ways captive to their own legacies. It used to be that largeness itself was the goal—whether it was the number of businesses acquired, the number of employees or even the size and reach of its geographical footprint. Holding companies evolved in a far different media environment than we’re in now, and most have still not adjusted to the world of today, let alone tomorrow.
Today, after dominating the advertising landscape in recent decades, they are losing their relevance and distinction, cutting staff and missing out on new talent, as well as emerging agencies.
So, are independent agencies the only way forward? Despite their pitfalls, holding companies aren’t necessarily destined for history books. There’s a place and a real need for a specialized approach that leverages the strengths of inter-agency collaboration and diverse capabilities.
Here are the pain points that holding companies need to address.
They’re focused on global dominance instead of best-in-class
Many holding companies acquire new agencies simply for the sake of getting bigger or even expanding their geography. Having a clear set of criteria for acquisitions will help you narrow the field of potential candidates and focus on best-in-class agencies. Acquiring agencies that excel in a specialized area will help holding companies regain some of the distinction they’ve lost.
Consider how passionate and forward-thinking they are about their craft. Are they established thought leaders in their space? Importantly, are they willing to scale and grow into something bigger and better?
They’re not leveraging complementary capabilities
Acquisitions don’t make much sense unless they complement collective expertise. It used to be that media companies were the engines driving holding companies and that was their focus. Now, innovative groups that grow via acquisitions should be looking at the culture of the new partner and thinking about which businesses make sense within the existing structures.
There will be growing pains, but with an administration that focuses on allowing new acquisitions to continue doing the work that made them great in the first place, these potential frictions dissipate.
They’re getting in the way of their agencies’ success
Top-down control doesn’t work. The architecture should be inside out, surrounding the client.
Your agencies are the best at what they do. Why would you get in the way of that? Holding companies looking to provide the best services for their clients should focus on acquiring agencies that specialize in one thing and do it better than anyone else, then let them do it.
The parent company should function as a strategic advisory that provides overall direction, custom assistance and the necessary business infrastructure for the components to best serve the clients.
They’re not providing support where it’s needed
While you should get out of your brands’ way when it comes to letting them do their best work, you can also help them by providing some “light and tight” administration.
This doesn’t mean scrutinizing every hire or micromanaging finances. Instead, focus on helping with recruitment of talent and subsequent learning and development. Smooth out finance and operations while developing smart shared services like back-end infrastructure.
It’s hard for massive holding companies to come up with customized or prescriptive solutions rather than a one-size-fits-all approach, but that is what’s needed.
They’re all about the ‘holding’ instead of the doing
We are at that point where a new collective model is taking shape. The old holding companies were simply the sum of their parts, with no overarching brand or identity to pull everything together in a coherent way.
Agencies that work to build this type of identity will be able to provide clients with specific expertise—which, when integrated, offer a complete, multichannel solution.
The bottom line
The traditional holding company model is a problem in the desperate search of an innovative solution. While independent agencies will (and should) regain some of the ground lost in recent decades, there remains an unmet need for a new take on the holding company model.
A new model that collaborates across complementary strengths—that enables and empowers agencies as opposed to micromanaging them and pitting them against one another—will provide the flexibility and range of expertise necessary to serve modern brands.
