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Holding company executives often downplay the impact of major account losses, suggesting they represent only a small portion of revenue, while highlighting the strength of their new business pipeline during better times.
EssenceMediacom X in the UK, a division of Mediacom handling conflicting accounts, has reportedly lost one of its largest clients, L’Oreal UK and Ireland, to a customized proposal from Publicis Media. The pitch also involved Omnicom’s Manning Gottlieb OMD. L’Oreal, a global advertising giant with an annual spend of approximately $15 billion on advertising and promotions, assigns agencies by country. In the UK and Ireland, L’Oreal spends an estimated $275 million, a substantial amount capable of significantly impacting any agency’s financials.
EssenceMediacom is also in the process of repitching for Sky, another major spender. Despite being the largest media agency in the UK, EssenceMediacom saw a decline in billings last year and will be eager to avoid losing two such high-profile accounts.
Is the once-dominant media agency facing a crisis? If Sky transitions to another holding company, it could certainly escalate concerns. The loss of L’Oreal (which was originally managed by the now-defunct Maxus, later merged into Wavemaker) intensifies fears that WPP’s decision to position digital specialist Essence above the much larger Mediacom was a strategic error.
WPP has admitted difficulties in simplifying its media agency offerings through GroupM globally, despite significantly reducing its number of brands (previously including MEC and Maxus, now Wavemaker, alongside Mindshare and Mediacom, with the addition of newcomer Essence).
WPP CEO Mark Read’s primary strategy has been to streamline WPP through internal mergers, such as consolidating Wunderman Thompson and VMLY&R (both of which were themselves the result of mergers) into VML. However, media agencies have proven more challenging to reorganize (and there’s no certainty that the creative side will fare any better).