Johnson & Johnson, one of advertising’s biggest spenders, has consolidated and streamlined its creative business with two dedicated teams of WPP and Omnicom agencies. This follows a closed review that was initiated to cut costs and adopt a new operating model, the Wall Street Journal reported this morning. News of the review was first published late last year.
As part of the change, WPP and Omnicom will each staff a New York office with dedicated employees. These spaces will also be home to employees from Johnson & Johnson’s digital media partners such as Google and Facebook and from its dedicated Interpublic Group media group, J3, according to the Journal.
Spokespeople for Omnicom, WPP and IPG all deferred to Johnson & Johnson for comment on the news. A client representative declined to comment on the WSJ story or any specific element of its marketing business or its relationship with the three holding companies, providing only the following statement:
“It is well known and widely accepted that the current agency model no longer works in the modern marketing world—we need to change—our agencies need to change—this is about defining and building the agency model of the future. The J&J consumer evolution is all about growth and agility and although we will save money—the goal is to transform the agency ecosystem to be more transparent, nimble and relevant for the digital, social world.”
In consolidating with its existing agency partners, J&J follows such companies as McDonald’s, which launched the all-Omnicom unit We Are Unlimited in 2016 after a closed review.
Pivotal Research Group senior analyst Brian Wieser told Adweek that today’s news is “not by itself that meaningful,” adding, “From investors, this is a continuation of what we’ve been seeing. It’s not a radical difference in terms of anyone’s revenue or margin trends.” He did, however, note that “hundreds of souls” at the involved agencies could be affected, depending on the size of J&J’s subsequent cuts.
“You could characterize it as a simplification,” he said.
The WSJ reported that Omnicom’s dedicated agency will be named Velocity and bring in talent from shops BBDO, DDB and Roberts & Langer. WPP’s dedicated group, Neighborhood, will be comprised of employees from creative agency JWT, digital shop VML, production studio Hogarth and shopper marketing agency Geometry.
Work will be divided amongst the holding companies by brand, but J&J did not clarify exactly how it will determine which agencies handle which campaigns moving forward.