Agency holding companies are displacing traditional IT systems integrators when it comes to commerce services and strategy. Per Forrester’s latest research, the sector is now led by holding companies Publicis, Omnicom and WPP, plus Accenture. IPG and Dentsu-owned Merkle are in the second tier, according to the research firm, but still on par with IBM and ahead of the likes of Capgemini. Report co-author Ted Schadler notes “a very important shift in the landscape” as holdcos race to re-engineer their models to ride the wave of disruption that is collapsing traditional funnels and drastically shortening the path to purchase.
What you need to know:
Top of the shops
Forrester ranks WPP, Publicis and Omnicom as leaders when it comes to commerce – ahead of Denstu-owned Merkle and IPG. The research and advisory firm also ranks Accenture as a leader albeit marginally behind the three top-ranked agency groups.
With the likes of IBM and Capgemini ranked outside the leaders circle, the report suggests that agency groups are walking the talk on joining the dots between creative, media, customer experience and the pointy end of commerce – and displacing traditional big integrators, “a very important shift in the landscape”, per report co-author, Ted Schadler.
Schadler said agencies bring two perspectives and capabilities that consultancies either struggle to replicate or choose not to replicate: a media business and a commitment to customer databases for operations and optimisation. “They have also integrated creative capabilities much deeper into marketing and commerce execution than others.”
Schadler, said brands need to become similarly horizontal: “Most companies operate marketing, commerce, and customers in silos, often even at the channel level. That makes it very difficult to share information, data, content, and operations across the silos.”
As the report notes bluntly in its opening line: The consumer life cycle has collapsed. Agencies have recognised what that means for traditional business models – and are moving at pace to adapt.
Publicis
Per Forrester’s analysis of commerce services offering and strategy, the three holdcos came neck and neck, just ahead of Accenture.
Per the report, Publicis and Omnicom had a retail media edge over rivals, while WPP’s Open – the group’s centralised marketing operating system – was highly rated. Accenture scored highly due to capabilities in scaled commerce solutions, plus its consulting heft.
Publicis went early on retail media, buying Australian platform Citrus Ad for north of $200m in 2021 and predicting CPG advertisers would be spending more via retail media channels than on TV advertising by 2025. With the US retail media market alone expected to top $50bn this year – and retailers and now banks scrambling to build out networks – it looks a decent bet.
Publicis also acquired US ecom analytics business Profitero in 2022 and earlier this year rolled Citrus into Epsilon to create Epsilon Retail Media, headed in APAC and Japan by Rob Odd and which uses AI and Epsilon’s IDs and data trove to deliver “precision marketing” and “measurable results”, per Odd, who reckons it will keep Publicis “ahead in a highly competitive landscape”.
Omnicom
Omnicom has likewise recognised the importance of beefing-up commerce capability, spending US$835m on digital commerce platform Flywheel. Former Omnicomer Nick Manning described it as a “landgrab” as agencies scramble to adapt business models to digital commerce’s impact on customer journeys and their own services. He suggested the Flywheel deal “will be seen in time as a pivotal moment in the evolution of the agency model and the traditional holding companies”.
Omnicom chief John Wren clearly agrees. Not known for making major acquisitions, he described the buy as a “gamechanger” for clients, bringing together “commerce, media and precision marketing”. The network has also spent the last six years building out its digital transformation consulting arm, Credera, to 4,000 heads globally – a leap from the 300 US based employees it had when Omnicom bought it in 2018. With the combination of both those assets, Omnicom can offer its clients managed services for commerce operations and technology.
Madison & Wall analyst Brian Wieser, suggests Omnicom could use more of that kind of firepower and has more work to do to de-silo and future-proof its business. But he said the Flywheel deal is “really important” for Omicom’s ambition.
“It's definitely going to be speaking to where there's a lot of client interest and client need,” Wieser recently told Mi3. “You can imagine every single pitch to marketers in FMCG, apparel, electronics, you'll have people from Flywheel involved, I assume – and that will help them on so many levels.”
But Wieser thinks all agency groups must invest much more aggressively to ensure growth amid significant disruption – and that overall, IT services firms are now striking much bigger deals for marketing-adjacent services.
Omnicom Media Group ANZ boss, Peter Horgan, said that Flywheel’s integration “is already elevating our discussions with brands”.
But he suggested that commerce “is becoming one of widest but also poorly defined terms” within the industry. “For us it’s about direct connection between marketing and sales growth.”
He also backed Omnicom’s model versus some of the major tech and data bets made by rival groups in recent years.
“Omnicom's philosophy is tech and data orchestration not ownership. With so much complexity and self-preferencing within supply chains we have been very clear that orchestration that enables speed to market, rapid adoption of what's next and most importantly trust with the brands we represent is the only way to deliver sustained growth,” said Horgan. “Globally that has given the likes of Uber the confidence to share their data with us – in privacy compliant way – as it has locally with the likes of Flybuys.”
WPP
Forrester credits WPP’s unified approach – across performance marketing, commerce technology, strategy, and organisation capabilities – with enabling the holdco to “optimise total commerce experiences”.
It's underpinned by WPP Open, the group’s centralised marketing operating system (not dissimilar to Omnicom's Omni), which gives all WPP’s staff access to a shared cloud of data and products in order to better service key clients. (Wavemaker global boss Toby Jenner claims it’s built off the back of Wavemaker’s own system – with circa 50,000 staff globally now plugged-in to the new back-end.)
Centralising those capabilities serves the growing demand for integrations across commerce, media and creative, as clients seek those efficiencies described by Forrester’s Schadler.
“Every one of our clients has to transact and has to use commerce in one way or form to get their products to their customer base,” WPP ANZ chief Rose Herceg told Mi3. The trick, as ever, is doing it in the right place at the right time.
“Every day there is a new evolution in the [Open] platform that is most effective for an audience to be a commerce moment, or a transaction moment, or just an interaction moment… I would argue we are just doubling down on trialling and making sure we are getting the best return on the investment of our client’s money," said Herceg.
Another example of the accelerating race by holdcos to join the commerce dots: WPP’s performance media investment arm, GroupM Nexus, last year added retail media buying capability to its Fusion platform. “Retail media is forcing media agencies to really rethink the business that we’re in,” according to Nexus boss JiYoung Kim. “This is really the first time at scale and at this speed that our clients have started asking us to take responsibility for the whole thing, [not just the media].”
Accenture
Despite the shifting tides of the commerce services sector, Accenture retains a top-ranking spot thanks to significant investments to build out a diversified marketing services business in Accenture Song.
It has long touted end-to-end capabilities from creative, through CX, digital transformation and commerce – and is now adding media buying to that mix in a move that locally leaves rival IPG seeking a new leadership team for Initiative, its star performing media agency.
“Our point of difference is that we are able to offer our clients service across the entire end-to-end customer journey,” said Accenture Song’s ANZ commerce lead, Peter Davias. “Our commerce strategy does not simply come at the end of that chain – it is embedded throughout. We have our creative teams interacting directly with our commerce teams, as well as our technology teams, and our clients are never far from the centre of the work as it is developed.”
“We see the convergence of all of these previously siloed functions as necessary and beneficial to the customer,” Davias told Mi3.
“The customer journey is never siloed and so it makes little sense for the elements of that journey to be developed separately. Every touchpoint along the journey can provide the opportunity to engage and create tailored personal experiences that create loyalty and drive sales.”
Though Accenture was noted by Forrester to have taken less of an interest in retail media than its holdco counterparts, Davias said its recent acquisition of martech consultancy The Lumery was an example of its efforts to fill this gap, adding “significant depth to [Accenture Song’s] commerce offerings in Australia, and our capabilities in the retail media space".
Where next?
“When marketing consolidates around the acquisition journey, that's a big step forward, and agencies are deeply involved as suppliers, often across many or all channels,” said Forrester’s Schadler.
While cautioning that it is still rare for marketing and commerce organisations to work in concert, he said most brands recognise that the future requires a seamless view – and optimisation from first media impression to purchase.
“They are making big investments in content, data, and execution readiness, often funding those efforts from technology consolidation as well as media optimisation or performance marketing,” said Schadler.
He gives the example of a brand that retired dozens of content management systems and consolidated around a single content engine for marketing. “They must still consolidate that with the product information management system for efficient marketplace, retail, and dotcom transactions.”
Agencies, he suggests, can help with these consolidations and funding models – and the rise of agency groups above the traditional IT systems integrators within Forrester’s leadership set may be the shape of things to come.
According to Schadler: “This is a very important shift in the landscape as the role of technology in marketing, transactions, and ownership continues to grow. Every brand is making bigger bets on core systems of engagement, often powered by large technology suppliers like Adobe, Salesforce, Shopify, and others. That means providers must have those technology alliances as well as the design/build capabilities of a strong systems integrator.”
He said agencies bring two perspectives and capabilities that consultancies either struggle to replicate or choose not to replicate: a media business and a commitment to customer databases for operations and optimisation. “They have also integrated creative capabilities much deeper into marketing and commerce execution than others.”
That might just have the major integrators now lagging holdcos on commerce wondering whether they need to acquire agencies...