After two years of soaring e-commerce transactions, empty toilet paper shelves, stranded ships, wars, and other disruptions to shopping, advertising holding groups are seeking deeper supply chain insights to improve the effectiveness of their marketing campaigns for clients.

WPP, Publicis Groupe, and Omnicom have all recently invested in logistics and product delivery data services, aiming to become better business partners. Industry observers note that these moves stem from a frequently mentioned but long-unrealized desire to more deeply understand and engage with the operational aspects of client businesses.

This trend is the intersection of two growth drivers in the industry: more granular and accurate data streams, and the exponential growth of e-commerce, especially when e-commerce enables direct-to-consumer (DTC) fulfillment.

"As the importance of direct-to-consumer models, digital share, and last-mile availability rises, barriers to entry are lowering, so it makes sense for the large agencies managing these sites to enter this space," said Michael Felice, partner in the communications, media, and technology practice at strategy and management consulting firm Kearney. "What clients really care about is the transparency of the expectations you set. They're saying: 'If the product you're marketing to me can't be delivered to my door, that's an insult.'"

'Doorstep experience' becomes the new retail frontier

Although advertising agencies have long fought for a greater voice in client business issues, these supply chain-related moves are a response to recent events. The pandemic-driven growth of direct-to-consumer e-commerce means marketers must understand where products are—or, more importantly, might not be—available when making plans.

"The past few years have permanently changed how people shop," said WPP CEO Mark Read in apress releaseannouncing the company's launch of its Everymile offering. "The acceleration of e-commerce, the shift to consumers buying directly from brands, and the growing importance of social in the shopping journey all mean the market needs a fully managed service with omnichannel expertise."

According to James Scott, chief growth officer of Everymile, Everymile aims to provide an "end-to-end" customer experience without requiring significant capital investment from clients.

"The low barrier to entry is very attractive," Scott said. "The 'doorstep experience' is the new retail frontier. This could include everything from the look of the box to the ease of returns, to product and subscription costs. It might even involve some kind of special experience."

Extending further along the supply chain

WPP is not the only holding group making moves in the supply chain space. In May, Publicis Groupeacquired Dublin-based company Profitero, whose analytics software optimizes content and user experience and tracks product availability. Meanwhile, Omnicom Media Group launched its ownSupply Chain IQ Scoreto help marketers link media spending to product availability.

"We're starting to see e-commerce take a more dominant role in our business," said Frank Riva, vice president of marketing at analytics provider 1010data. "These holding groups are seeing a whole new digital ecosystem, and they're thinking about how to go further along the chain."

With the ability to track the entire process from digital ad clicks to product delivery, holding groups hope to demonstrate added value to clients seeking to improve efficiency and manage inventory intelligently.

"For a long time, the industry has discussed linking product availability and inventory to advertising to share product availability in real time," Riva said. "Then you can combine that with dynamic and programmatic digital ad placements."

Too many eggs in one basket?

But will clients buy it?

Success may depend on how holding groups position these new capabilities. Felice suggests positioning them as client retention and loyalty tools, especially among younger consumers who have not yet formed shopping habits.

"Positioning these capabilities as a way to attract clients makes sense, and also as a growth tool," Felice said. "Gen Z and millennial consumers have fairly high churn rates, and they want a closer connection with brands. The more effectively I serve my clients, the more I can gain a margin advantage and expand the long-term value of clients."

Deeper supply chain insights also enable brands to better control their consumer messaging and subsequent execution, Scott added.

"We believe the direct-to-consumer model is the best way to tell a brand story," Scott said. "If your brand is positioned around convenience, then it should be convenient from end to end."

However, whether advertising holding groups possess the supply chain logistics expertise and understanding to provide actionable insights remains unclear.

"Clients love the idea of integration, but whether including logistics truly saves brands time and money has not been proven," said Greg Paull, co-founder and principal at agency search consultancy R3. "Whether holding groups have the talent, platforms, and processes to leverage logistics data and integrate it into the overall work they do for clients—that is not yet clear."

If the value to clients fails to materialize, it could harm holding groups in the long run. Felice said that over-focusing on supply chain-related services could delay "capital and talent investments" that could have helped develop other areas of the business.

Moreover, Paull noted that clients may be reluctant to fully engage with these holding groups due to concerns about putting too many eggs in one basket.

"For clients, the risk is that once they fully commit, it will be difficult to benchmark performance and exit the relationship," he said. "Establishing the right agency model and auditing transparency will be crucial to mitigating any potential issues in the future."