Why no one talks of co-opetition in advertising

I was first exposed to the concept of co-opetition many years ago in the Japanese advertising industry. We in India then were completely driven by the Western concept of agency exclusivity, wherein if you worked with one brand in a given category, then you were automatically shut-out by other competing brands. Such monogamy was seen to be a necessary ethical virtue — but with an expanding number of brands in every category, large ad agencies started to “cheat” by launching second agencies and third agencies to circumvent the problem and grab available competitive businesses. In Japan, however, every large client, say Toyota, worked (and continues to work) with multiple agencies concurrently. Just that Dentsu — the market leader, for example, has a lion’s share of the Toyota business. But then other ad agencies like Hakuhodo, Asatsu, Daiko or Tokyu, too, handle large chunks of the brand’s advertising. And the same pattern, with varying shares, is repeated at Honda, Nissan and Suzuki with the same ad agencies carving up the business between them. Simply, a business philosophy of live and let live.

Coopetition or co-opetition (sometimes spelled co-opertition) is a neologism coined to describe cooperative competition. Yes, a portmanteau of cooperation and competition. Co-opetition gained wide attention after the publication in 1996 of a book by Adam Brandenburger and Barry Nalebuff bearing the same title. Co-opetition is a business ideology taken directly from insights gained from game theory. Co-opetition games are statistical models that consider the ways in which synergy can be created by partnering with competitors. The concept of co-opetition interdependencies is broadly based on three formative constructs of outcomes (goals, rewards), means (task related) and boundaries (friendship, geographical closeness, sense of team belonging). Cross-functional co-opetition is further based on task orientation, communication, interpersonal relationships and tangible and intangible resources, which can be accessed by all. The Japanese, by their practical approach to accommodative co-existence in business have been able to perpetuate and grow such an ecosystem for years.

The concept of co-opetition is not new. History is witness to the fact that while the moon landing more than 50 years ago is remembered as the culmination of a fierce competition between the United States and the USSR, in fact, space exploration almost started with cooperation. US president John F Kennedy proposed a joint mission to the moon when he met with his Russian counterpart Nikita Khrushchev in 1961 and again when he addressed the United Nations in 1963. It never came to pass, but in 1975 the Cold War rivals began working together on Apollo-Soyuz, and by 1998 the jointly managed International Space Station had ushered in an era of collaboration. More recently, even the hypercompetitive Jeff Bezos and Elon Musk have been known to have discussed combining their Blue Origin and SpaceX ventures.

In recent years, most of the ad networks from the Western world have consciously or sub-consciously emulated the Japanese model of co-opetition. They have competing ad agencies in their individual folds that handle competitive brands, albeit under different banners. WPP has Grey, Ogilvy, VMLY&R, Wunderman Thompson and many more local brands, like Contract in India. Omnicom has BBDO and DDB. Similarly, Groupe Publicis has Leo Burnett, Publicis and Saatchi & Saatchi; and Interpublic has FCB, McCann and MullenLowe (more popular as Lintas in India). So an Ogilvy not only competes in client pitches against a Leo Burnett from another network, but also against its own network sibling Grey. But each of the Western agency networks now have shared resources in data, research, public relations, digital and more. It is a centrally managed system of co-opetition, without calling it that.

The moot question, therefore, is why are Western agency networks so shy of openly acknowledging this co-opetition? Why the reticence in saying openly that we are all joined at the hip — that we have different restaurants but a common kitchen (read corporate and financial superstructure)? The common excuse proffered is that clients are “uncomfortable”. All I ask is “uncomfortable” about what? Especially when the largest of the Western networks has all its major agencies co-located in the same building in Mumbai! What Chinese walls? What client confidentiality? Bah!

I honestly see nothing wrong with the co-opetition model, be it WPP or any of the other agency networks.  It is the public opacity in an increasingly transparent world that perplexes me. If lawyers or chartered accountants can handle competitive businesses, why can’t ad agencies? Why the hypocrisy? The question is equally valid for clients: How can you quiz ad agencies about “category experience” when you actually expect them to have remained monogamous in their brand relationships? By that logic, every agency should really not have handled more than one, maximum two brands in any category. But that is really not true.

Co-opetition is a global reality. And necessity, especially today. Let us not hide it in the advertising business. It is nothing to be ashamed of.

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The writer is managing director of Rediffusion