McDonald’s demanded that Omnicom create an ad agency dedicated to its business. Now that unit will fold.

We Are Unlimited, the dedicated agency launched by holding company Omnicom in 2016 to manage the McDonald's account in the US, will fold into its parent company DDB Worldwide as of January, according to multiple sources with direct knowledge of the matter who spoke to Business Insider on condition of anonymity.

A DDB spokesperson declined to comment, and McDonald's did not respond to a request for comment.

The development comes less than one week after the fast-food chain moved lead creative duties on its US advertising business to independent agency Wieden and Kennedy in a major strategic shift. An internal memo that Wieden leadership sent to all staff on Friday called the win "a huge coup" and implied that it went against industry trends in which marketers value data over creativity.

Read more: Internal memo from McDonald's new ad agency reveals why the world's biggest fast-food chain bucked industry trends to reshape its marketing strategy

In recent years, holding companies, whose model has been under increasing pressure, have developed custom, integrated units that are dedicated exclusively to clients, in response to demand from marketers including McDonald's, HP, Ford, and Johnson & Johnson. DDB later used the We Are Unlimited approach to create a similar unit for longtime client State Farm.

This trend also reflects advertisers' efforts to rein in the spending of decades past by cutting the number of agencies and holding companies they use.

Some of those dedicated shops have since been dismantled or restructured. Most notable among them is Ford's GTB, which consisted entirely of WPP employees before Wieden and Kennedy and Omnicom's BBDO won lead creative and brand strategy work for the automaker in a late 2018 review.

It is unclear whether other advertisers will follow McDonald's lead in moving away from their custom agency models.

The formerly dedicated agency will become a division of DDB Chicago with a shared P&L

We Are Unlimited will retain its name but no longer operate as a standalone company with a separate profit and loss statement; it will instead become a division of DDB Chicago, the network's largest office. The two entities have shared an address since 2018, when DDB moved into the Illinois Center complex at 225 North Michigan Avenue as part of Omnicom's effort to consolidate all agency operations in the Windy City and reduce overhead costs.

The formerly dedicated team in Chicago will continue working on several key aspects of McDonald's marketing business, including its popular Happy Meal promos, its website and its mobile app. OMD, which handles ad-buying work for the brand in most regions of the world and functioned as part of the dedicated agency, was not affected by the review.

But the decision still marks a major loss for Omnicom, which positioned the We Are Unlimited model as a new way of working that would help it stand out in an industry where Google and Facebook dominate digital spend and lucrative agency of record contracts grow rarer by the day.

Sources told Business Insider that no other changes to the We Are Unlimited team are planned at this time, though AgencySpy reported earlier this month that a small number of employees at the agency had been laid off and a few more transferred to DDB Chicago as the McDonald's review wound down.

Internal documents reveal how Omnicom won McDonald's business

An internal pie chart and positioning document obtained by Business Insider reveals how Omnicom won the McDonald's business and promoted its We Are Unlimited offering. The model was an industry-first, the holding company claimed, because it combined the services of not only every Chicago-area Omnicom entity but also several direct competitors as well as full-time or "embedded" teams from Google, Facebook, and Twitter.

A former We Are Unlimited executive who spoke to Business Insider on condition of anonymity disputed this characterization, stating that Google employees were "occasionally in the office" but describing the word "embedded" as a misnomer.

We Are Unlimited's exclusive contract with McDonald's ended in January 2019, but it is unclear whether the agency is working for any other brands.

"We are transforming every aspect of our business, and now took the opportunity to ensure that we have the right agency partners in place to accelerate our growth," read a statement from McDonald's CMO Morgan Flatley announcing the Wieden and Kennedy win last week.

When its internal memo leaked, a Wieden representative said the agency looked forward to working with the Omnicom team.

We Are Unlimited

We Are Unlimited

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