NEW YORK (AdAge.com) -- WPP's MindShare has launched a wholesale restructuring of its business -- effectively splitting the agency into four distinct units -- designed to move the shop beyond planning and buying, and create new revenue streams from content and intellectual property creation and McKinsey-style business consulting.
The global reorganization, the first in MindShare's 11-year history, comes as at a time when commoditization of media buying is a real threat, as procurement executives and the requirement for transparency in terms of costs have enabled clients to squeeze media agencies' margins to such an extent that many are often left making only a couple of percentage points on marketers' media expenditures -- media expenditures that are themselves often flat, or even down, in developed markets. That leaves agencies such as Mindshare -- which counts Unilever, IBM and Sprint as clients -- to try to re-create themselves as more than just volume buyers of media owners' wares. Aegis' Carat recently reorganized its operations around digital, defining that as the space media agencies need to own in order to ensure future growth.
Branded content and more
"Our goal is to provide stronger leadership for our partners," said Scott Neslund, MindShare's North American CEO. "We think media should be at the center." Part of the MindShare restructuring is strengthening its emphasis on creating branded content, particularly for the new media space but also for TV, out-of-home and radio. But it's not only about creating content. The move is also a clear delineation of just what services are on offer, and a way to eventually get paid for those different functions by establishing the value of each discipline (much as the controversial unbundling of media from creative was a way to get paid for both those disciplines).
The restructuring will integrate 12 existing operations within MindShare (including digital operation MindShare Interaction) into four new areas that will span all MindShare services: a consultative business planning unit; content creation or an invention group; a unit dubbed "The Exchange," which will handle the actual purchasing of media; and a client services team.
Make like McKinsey
The business-planning group will serve in a management-consulting-like capacity, focusing on solving issues most relevant to the CEO, rather than simply developing a media communications plan. Aspects of media planning will still exist within each of the units, but this group will use consumer research, as well as sales and distribution data from the marketers, to identify business opportunities and marketing challenges that might be solved by something other than the right media schedule. The answer might be to introduce a new product or even eliminate of a product line, a new way to approach distribution, or to change how a marketer's employees interact with customers.
The focus of the invention group will be to create content that reaches consumers in a way that meshes with a marketer's business goals. The group, which is defined as media neutral, will also handle strategic planning and contact planning. "Invention reflects the fact that what media strategy can do is invent advertising space," Mr. Neslund said.
Depending on a marketer's goal, the invention group will create entertainment opportunities such as branded integrations on TV or online; identify sponsorship or retail opportunities; or manage content production to ensure that the ad matches the environment or platform in which it will appear.
Inventing new ad spaces
In recent years, MindShare has made strides when it comes to inventing advertising space. One prime example is "In the Motherhood," a series of webisodes created by MindShare Entertainment for Sprint and Unilever made in partnership with MSN. The content for the webisodes sprang from consumers who submitted personal stories that were then selected for development and made into a script by professional writers and directors. The first season garnered more than 5.5 million video views, and the series' online community on MSN, IntheMotherhood.com, became the fifth most-watched parenting site on the web during the two months it was live, according to MindShare. The series was brought back for a second season this year.
The actual buying of media space will be handled by the Exchange, which will combine digital and non-digital buying, inventory management, data management and planning. Mr. Neslund said the goal of the Exchange is to address the fluidity of consumer behavior. For instance, a buyer can easily switch investments from daytime TV to online programs under the new exchange unit.
MindShare becomes arbitrageur
An important aspect of the Exchange is that MindShare will be getting into arbitrage -- meaning it will be both buying and selling media. Arbitrage is an important play of MindShare's parent company, Group M, which has invested in Invidi, a company developing addressable TV ad technology. Though specific plans are still unclear, Group M will likely use the technology to buy chunks of TV inventory, make it addressable and resell it to marketers. MindShare will seek out similar opportunities where it actually owns media space it can sell to marketers.
The client leadership unit will consist of senior agency executives who will serve as the primary client contacts for each account. This group will also be accountable for performance, quality and profit and loss statements.
Mr. Neslund said the time is right for MindShare to reorganize now, because "it's better to reinvent business when you are doing well." MindShare, which handles more than $21 billion in billings globally, is one of the world's biggest media buyers, and the largest U.S. player, according to RECMA. The reorganization, which will affect all of MindShare's 97 offices, is expected to be complete at the end of the year.