Why big agencies are investing in supply chain and inventory services

After two years of increased e-commerce transactions, understocked toilet paper shelves and shopping disruptions resulting from stranded ships, wars and other events, agency holding companies are seeking better insights into the supply chain that will make their marketing efforts for clients more effective. 

WPP, Publicis Groupe and Omnicom have all recently invested in providing logistics and product delivery data in their quests to be better business partners. The moves are part of an oft-expressed, but long unfulfilled, desire to have more understanding and input into the operational side of their clients’ businesses, according to industry observers. 

The trend is the confluence of two growing aspects of the industry: more detailed and accurate data streams and the exponential growth of e-commerce, particularly when it enables direct-to-consumer fulfillment. 

“As we see barriers to entry coming down through direct-to-consumer, digital share and emphasis on the last-mile availability, it makes sense that the agencies who are managing these websites are moving into the space,” said Michael Felice, associate partner in the communications, media and technology practice at strategy and management consulting firm Kearney. “What customers care about is the transparency into the expectation you’re setting. They’re saying, ‘It’s insulting when you’re pushing a product to me that you can’t get into my hands.’”

Doorstep experience

Though advertising agencies have long pushed for a seat at the table where they would have a greater understanding of their clients’ business issues, supply chain-related moves are a response to more recent events. The pandemic-fueled rise in direct-to-consumer e-commerce means marketers have to understand where products might — or more importantly, might not — be available as they put together their plans. 

“The last couple of years have changed the way people shop forever,” WPP CEO Mark Read said in a release announcing the company’s Everymile product. “The acceleration of e-commerce, the shift to customers buying direct from brands, and the increasing importance of social in the commerce journey have all meant that there is a demand for a fully-managed service with omnichannel expertise.”

Everymile is intended to provide an “end-to-end” customer experience without requiring significant capital investment on the client’s part, according to James Scott, Everymile’s chief growth officer.

“The low barrier to entry is very appealing,” Scott said. “The doorstep experience is the new retail frontier. That could include everything from the look of the boxes to the ease of returns to the product and subscription costs. Or it could even involve some kind of special experience.”

Further down the chain

WPP is not the only holding company making moves in the supply chain space. In May, Publicis Groupe acquired Dublin–based company Profitero, whose analytics software helps optimize content and user experience and track product availability. Meanwhile, Omnicom Media Group unveiled its own Supply Chain IQ Score that will help marketers connect their media spend to product availability. 

“We’re starting to see how e-commerce is taking a more dominant role in our businesses,” said Frank Riva, vice president of marketing at analytics provider 1010data. “These holding companies are seeing a new digital ecosystem, and they’re thinking about how they can go further down that chain.”

With the ability to follow the process from a click on a digital ad through to product delivery, holding companies hope to demonstrate an added value to clients looking to increase efficiency and intelligently manage inventory. 

“For a long time, the industry has been talking about linking product availability and inventory to advertising, to share product availability on a real-time basis,” Riva said. “You can then tie that to dynamic and programmatic digital advertising to target.”

Too many eggs?

But will clients go for it?

Success may depend on how holding companies position these new capabilities. Felice suggested selling their value as a customer-retention and loyalty tool, particularly among younger consumers who have yet to establish purchasing habits.