Executive Summary – Monthly Recap:
Another summer is upon us. The early part of 2018 was nothing more than a succession of earthquakes in the advertising industry: The European Union’s General Data Protection Regulation (GDPR) took effect May 25. Data for as many as 87 million (vs. the original estimate of 50 million) Facebook users was improperly shared with Cambridge Analytica. WPP confirmed that its board investigated now former CEO Martin Sorrell after an allegation of “personal misconduct.” As the iconic leader stepped down, some think that WPP and the advertising industry at large might be entering a new era. Of course, everyone is wondering about the future of WPP without its mastermind creator. Can WPP or the holding company concept survive without him? Most certainly. You can’t ignore that Sorrell built not only the ultimate holding company archetype, but also the world’s largest advertising group with revenue of $19.7 billion and over 130,000 employees. Like any other earthquake, it may not kill you, but it will shake you. Our industry is in deep transformation
Newsworthy reports and recent developments:
At AMS, we approach the agency management discipline as four distinct but complementary practice areas – Talent, Work, Financials, and Performance and Value— which is how we categorize the following developments:
TALENT: securing the right talent and resources
At the 4A’s “Accelerate” conference, where the world of agencies meets to discuss the future of the industry, equality, inclusion, and diversity of talent, Facebook’s data scandal and new client/ agency models like “People First,” or P&G’s new approach to get rival agencies from Publicis, WPP and Omnicom to work together, were centerstage. What characteristics do agencies and clients of the future have in common? Will the ad industry be dominated by “cagencies” (the mix of creative and consulting)? In a world where collaboration is essential, and where agencies are all incentivized against the same KPIs, do we need to rethink how talent is brought together? Will the marketing landscape favor smaller, more nimble agencies, magnets for top talent, or large, global agency networks?
- The #MeToo movement continued to encourage many in the ad industry to speak out against sexual harassment, abuse, and bullying. Diet Madison Avenue, the anonymous Instagram account, has been calling out sexism and discrimination in the ad industry.
- He’s back (actually he never left). Former WPP CEO Martin Sorrell joined UK investment firm Derriston Capital, renamed S4 Capital, as executive chairman. The entity is dedicated to building a multinational communication services business in technology, data, and content.
- Dentsu Aegis Network acquired Miami-based digital and performance marketing agency M8, allowing iProspect to target multicultural audiences more effectively.
- Adobe launched a new Audience Manager certification program created by Digitas, the first of its kind in the data management platform (DMP) marketplace. These roles are in high demand and brands expect that level of expertise.
- Adobe acquired ecommerce platform Magento for $1.68 billion, as customers want ecommerce capabilities integrated with other marketing activities. Competitor Salesforce bought Demandware for $2.8 billion two years prior.
- MDC Partners acquired a majority partnership stake in digital Portland, Oregon-based agency Instrument, which has a range of clients including Google, Nike, Levi’s, Airbnb, Sonos, and Dropbox.
- MDC Partners realigned four of its agencies (Bruce Mau Design, Hello Design, Northstar and Varick) under the Yes and Company specialist network to provide brands a cohesive and comprehensive strategic and creative offering.
- The Brand Marketer of the Year Ad Age Creativity Award winner was George Felix, Director of Brand Communications, KFC. Campaign of the Year went to Wieden+Kennedy Portland and KFC’s entertaining Colonel Sanders work.
- At AdExchanger’s recent Programmatic I/O conference, brands like Uber, Ubisoft, and Bayer explained how they evolved in-housing programmatic capabilities. Key drivers: increased sophistication, need for collaboration. Many still rely on their media agencies for channel expertise and buying power, even strategy and planning in some instances.
- Per the ANA in-house agency fact book, 62% of participating brands (American Express, Bank of America, BD (Becton Dickinson and Co.), Chevron, Constellation Brands, Humana, JP Morgan Chase & Co., MGM Resorts International, PwC, The Wonderful Company, Thomson Reuters, U.S. Cellular, Vision Service Plan) have inhouse agencies established in the last 10 years. Most in-house agencies use a small percentage of freelancers, with a vast majority of the work completed by full-time employees. Only one of those in-house agencies does not work with external agencies at all.
- JPMorgan Chase’s in-house agency, Inner Circle, is considered a success story and now includes video production, influencer marketing, and corporate partner marketing.
- The Association of National Advertisers (ANA) acquired the Data & Marketing Association (DMA) to create the largest US trade group devoted to marketing. The entity will represent 20,000 brands and 150,000 professionals.
- Publicis Media launched UNIT3C, a group that brings together all social marketing-related creative, production, and media. The concept is a “one-stop shop” for social media work to help clients be more responsive to news events.
- Food maker Nestlé reduced its agency roster in North American, down to four-to-six agencies in order to reduce costs. In 2014, the brand cut its roster of US digital shops from 15+ to eight.
- GDPR is hot. Dentsu’s Isobar launched a consultancy dedicated to helping its clients comply with the EU’s General Data Protection Regulation. IPG rolled out 200 “GDPR Champions” within its European agencies to assist clients.
- Hershey cut its creative agency roster in 2017, dropping Arnold and Havas and gave Dentsu-owned McGarryBowen a big assignment while keeping its creative incumbents: MDC Partners’ Anomaly and CP+B.
- Independent creative agency Mekanism launched a new media practice. The media operation will be located in New York and serve as a hub for all of the offices and its AOR clients.
- Drawing on specialist expertise from various WPP agencies coming together under one roof at Unilever Foundry, Unilever and WPP created their new “Team Unilever” model to provide innovative solutions for Unilever’s 400+ brands.
- Havas Group opened an artificial intelligence (AI) center in Montréal to focus on AI, data science, customer experience design, and programming.
- Accenture’s entry into the ad buying business with the Accenture Interactive Programmatic Services unit raises conflict of interest concerns because the consultancy also audits client-agency relationships and runs agency reviews for clients. The new unit assists clients with bringing programmatic in-house, but also with running full-service global digital media campaigns for clients. Accenture Interactive’s revenue grew 35% to $6.5 billion last year.
Noteworthy quotes:
» “Brands will need data strategy and the right technology to allow them to analyze data, and that’s where agencies come in.”—Brigitte Majewski, VP and research director, Forrester
» “What we want is a team that’s as diverse as the consumers we’re trying to serve.”—Eric Reynolds, CMO, Clorox » “That separation of media doesn’t in any way suggest there shouldn’t be incredible levels of collaboration and consistency of analytics and insights that inform both the creative brief and the media brief.”—Irwin Gotlieb, former chairman, GroupM
» “Let [marketers] bring in the commoditized stuff and then agencies can go back to bringing big ideas. Marketers want that big thinking and they’re willing to pay for it.”—Nancy Hill, founder, Media Sherpas
» “Our customers are multicultural, so we need that same diversity in our agencies.”—Julie Rieger, President, Chief Data Strategist, and Head of Media, 20th Century Fox
» “We can no longer follow the Golden Rule. The Platinum Rule: Treat others as they want to be treated.”—Jeff Fromm, Partner, Barkley
» “I think we are almost working with all the agencies around the planet. We want to reduce complexity and we want more consistency.”—Jochen Sengpiehl, global chief marketing officer, Volkswagen
» “Part of the problem is you have constant change. Reviews take an incredibly long time. They’re very taxing on both sides. Is it necessary to go to the level of depth they’re going? Agencies need to be clear about the value they bring, and the price associated with that.”—Marla Kaplowitz, CEO, 4As
» “At Unilever, we remain focused on driving a quality digital ecosystem and raising the bar for the industry. To do this, we equip our marketers with the right tools and skills needed to navigate a rapidly changing world as the complexities and challenges are not going to go away.”—Keith Weed, chief marketing and communications officer, Unilever
WORK: producing great work and outcomes
Our social feeds are saturated. From Starbucks‘s restrooms to the social media frenzy around the audio clip Yanny vs. Laurel, brands are working hard to grab and keep consumer’s attention on whatever platform or device they may be found. The 2018 TV upfronts presentations are now complete, so industry leaders can now switch their attention to packing their swimsuits for the Cannes Lions. To drive performance and growth, marketers need to invest in talent and technology. The talent gap is not going away anytime soon. In the meantime, brand advertisers are investing aggressively in technology and marketing automation, a category expected to reach $25.1 billion annually by 2023 from $11.4 billion last year.
- Per GroupM, digital’s share of the time global consumers spend with media in 2018 will reach 38%, overtaking TV for the first time (37%), followed by radio (18%) and print (7%). Consumers will spend an average 9.73 hours with media, up from 9.68 hours in 2017.
- Unilever’s Knorr brand is trialing video ads rewarding viewers who watch for at least 15 seconds with a donation to one of three charities of their choice. The chosen charity is given half of the revenue generated by viewers watching.
- Bank of America launched its AI-driven virtual assistant Erica to its 25 million mobile clients. The digital assistant combines artificial intelligence, predictive analytics, and natural language to search for past transactions, access key information, schedule meetings, view bills, and transfer or send money.
- As part of its “Here to Create Legend” campaign and strong of a crew of 20 with seven cameras, Adidas created individual videos for all 30,000 Boston Marathon runners, released just hours after the event.
- JC Penney leveraged its internal creative team of around 120 staffers to produce a new Shaquille O’Neal overarching campaign, instead of relying on its creative agency Badger & Winters.
- Adobe’s “2018 State of Digital Advertising” shows that while 74% of marketers believe they’re serving relevant ads, just 35% of consumers say digital ads delivered to them are often or always relevant. The study is based on 183 billion website visits, 12 billion video views, and 150 billion emails.
- Data privacy anyone? Facebook now requires advertisers to certify they have permission to use any data collected outside Facebook that is used to target ads inside Facebook.
• Per CMO Club, 30% of CMOs aren’t satisfied with their current agency lineup, 55% are “moderately satisfied” and only 14% are “highly satisfied.” The biggest concerns with AOR relationships is a “lack of innovation/creativity.” - RIP to the RFI? Less emphasis on a series of formal presentations and spec work, and more focus on how agencies think and solve problems, informal conversations, and case studies. Months-long RFI/RFPs are now going away, making room for faster, more streamlined agency selection processes. Recent examples: MassMutual eliminated the RFP altogether, shortening the review process from six months to three. Community won a project from Verizon’s Oath digital media division after meeting twice via Google Hangout.
- Per Seb Joseph of Digiday, the five biggest issues facing the advertising agency model: 1) Only rich brands can afford transparency, 2) Advertisers aren’t spending less on media; they’re spending less on ads that don’t work, 3) Agencies have more to lose from advertisers owning programmatic strategy, not execution, 4) Consultancies are becoming a bigger threat to agencies when brands pitch, 5) Holding groups must change faster.
Noteworthy quotes:
» “You get all the senior people and all the most polished people and all the smartest people in the room— and then, poof, all those people disappear, and you don’t see them again.”—Karen Kaiser, VP of national advertising, Domino’s
» “The work that shines in those pitches is more conceptual. You run the risk of making this meeting fetish object that’s not really going to turn into an operation-izable product. You don’t want to be tempted to do something that’s not real or meaningful just to win.”—Gene Liebel, founding partner, Work & Co.
» “All parties involved in any model that pulls together rivals must share the same ambitions, and measurements of success need to be singular and fair. You need to ensure that you have removed self-interest and silo mentality. How do you ensure that all work is only produced in the advertiser’s best interest and not influenced by individual parties? Get that right, and the model is a no-brainer.”—Scott Moorhead, founder, Aperto One
» “Creativity tells a compelling story. Creativity looks at data in a fresh way to gain new insight. A creative media solution invites, rather than intrudes.”—Greg Stern, CoFounder & CEO, BSSP
» “Clients expect agencies to be the early adopters of change—and rightly so. They expect us to take risks, get out in front, create the future and then lead them there. After all, we were built for this. It’s time for agencies to rise to the challenge and take the lead.”—Julie Koepsell, managing director, Mirum Minneapolis
» “In many cases, when in-house starts to pop up, the trend is for the more traditional or creative agency to take the role as a captain—a quarterback that oversees the guidance of the brand and bringing to life what they stand for. This scope is often brand strategy, creative, and the production of Tier One work. From there project work kicks in that any agency, publisher studio, or other partners may end up supporting. At the center is an orchestrator that puts the business needs at the core and assigns without bias the best possible group to deliver – in-house, on roster, off roster.”—Lindsey Slaby, Marketing Advisor & Founder, Sunday Dinner
Keeping up with the fast-paced advertising production community
By Jillian Gibbs, CEO & Founder, APR. APR, the world’s largest production optimization consultancy, focuses on hot topics and insights in the fast-paced advertising production community
APR Diversity Support
Many advertisers encourage and support minority and female owned businesses. One way to do that is behind the camera in creative production. There are many wonderfully talented women directors, editors, and photographers out there, and here are some suggestions on how to add more diversity to your next production:
- Take the #FreeTheBid pledge and ask your AORs to do the same. Insist that every commercial production be triplebid, and include at least one bid from a woman director.
- Reach out to Girlgaze and hire a young woman filmmaker or photographer on your next social media campaign.
- Make sure your casting specs clearly require a range of ethnicities and abilities.
- Hire diverse vendors and support women- and minority-owned businesses.
- Make sure many diverse people review your creative or social media before posting.
Free the Bid
Free the Bid is an initiative started by filmmaker and commercial director Alma Har’el. They ask advertising agencies, brands, production companies, and “guardians” to take a pledge to include at least one female director every time they triple-bid a commercial production. Brands including HP, Visa, Coca-Cola, eBay, Nestlé Waters, Airbnb, Levi’s, LinkedIn, and Toys”R”Us have signed the pledge, as have agencies 72andSunny, BBDO, CP+B, DDB, FCB, Leo Burnett, McCann, Publicis, and Saatchi & Saatchi, to name a few. Free the Bid has an ever-growing database, currently at over 400 reputable women directors, which is searchable by product category (food, fashion, branded content, etc.), location, or production company. Free the Bid recently added women editors to their database and links to search for women directors of photography. See www.freethebid.com.
#Girlgaze
Founder and CEO Amanda de Cadenet (creator of The Conversation with Amanda de Cadenet) created Girlgaze in 2016 to help support women photographers behind the lens. From their website: #Girlgaze is a digital media company, based in LA, that promotes and highlights the work of female Gen Z photographers and directors. Our mission is to close the gender gap by creating jobs for girls behind the lens. With over one million Instagram submissions, #Girlgaze is expanding into original video content, IRL events and eCommerce. Brand partners include the Gap, Teen Vogue, and Warby Parker.
The 3% Movement (formerly The 3% Conference)
The 3% Movement was launched by Kat Gordon when just 3% of agency creative directors were women. While that figure is slightly higher now at 11%, the number of women in creative and leadership roles at agencies is still far behind that of men, even though women make 80% of household purchasing decisions. The 3% Movement is challenging agencies and brands to get more women and people of color in creative roles. “3% Certified” is an audit that agencies can participate in. Detailed information can be found on their website at www.3percentmovement.com.
Streetlights
Streetlights is a non-profit organization created in 1992 by former producer Dorothy Thompson. They provide commercial production training to underprivileged youth in Los Angeles. They are always looking for sponsorship from corporations or agencies. Walmart, General Mills, Honda, and Wieden+Kennedy are on their list of supporters. Remember, embracing diversity and inclusion isn’t about fulfilling a quota; it’s about doing the right thing. Your brand and your business will be better for it. Email Diversity Specialist Jeri Vaughn at [email protected] with any questions.
FINANCIALS: driving efficient use of resources
Looking for the buzzword of the year? Blockchain—a ledger that encrypts information for secured sharing and allows an advertiser to track how media makes its way to the media owner—is expected help eradicate some ad fraud like domain spoofing in the media supply chain. Clients and agencies are figuring out how to leverage Blockchain. Agencies like Horizon Media, Havas, GroupM, Droga5, 360i and Huge all claim to test the use of blockchain for clients while some clients handle it internally like Unilever, IBM, and AT&T. We see that advertisers are increasingly taking direct control over all third-party ad-tech and mar-tech contracts, but outsourcing most or all of the operations to agencies. Advertisers are hiring in-house specialists to operate these ad-tech and programmatic buying systems. Full in-housing of digital media services is on the rise, primarily among “digitally native” companies.
- Per Ad Age’s Agency report, US agency revenue grew only 1.8% in 2017, the slowest growth since the ad market emerged from the recession in 2010. Digital work accounted for over 51% of US agency revenue (that share doubling since 2009 – at 25.8%). All major disciplines are slowing comparatively, especially in traditional agency services vs. digital, data centric, CRM-type activities.
- Per R3, there were 100 agency-related mergers and acquisitions (M&As) globally in the first quarter of this year, accounting for $4.6 billion. This is a large increase (126%) compared to the prior year.
- Does scale matter when building IP? Recode reported that Amazon spent $22.6 billion in 2017 on research and development, more than any other US company.
- Per the Interactive Advertising Bureau and PwC, digital ad revenue reached $88 billion last year. Mobile accounted for 57% of that revenue. Mobile video reached $6.7 billion, and social spend grew 36% to reach $22.2 billion. Per the CMO Council, half of marketers intend to boost their investment in digital video advertising by up to 25% in 2018.
- Per eMarketer, native advertising and programmatic are both on the rise. 60% of US display ad investment in 2018 will be spent on native advertising, mostly driven by mobile, social, and Amazon. 96% of social ad spend and 77% of mobile display spend will be invested in native.
- Per Forrester, investment in marketing technology and services will surpass $122 billion by 2022, up by around 20%.
- Amazon’s ad business reached $2 billion in revenues in the first quarter, up 139% from the same quarter a year earlier, contributing to the brand’s profitability.
- Facebook reported $12 billion in revenue for the first quarter, a 49% increase year-over-year. Mobile advertising revenue represented 91% of advertising revenue and the brand reported a 13% increase in monthly active users (2.2 billion), plus daily active users (1.45 billion). Facebook now has six million advertisers.
- The biggest digital agency in the world Accenture Interactive (a subsidiary of Accenture) generated $6.5 billion in revenue in 2017, up 35% year-over-year. It has acquired 20 digital and design agencies since its launch in 2009.
- Per eMarketer, programmatic advertising in the US will add up to $46 billion, $10 billion more than last year and now accounting for more than 80% of all digital display. This growth is fueled by rich audience targeting capabilities. Per GroupM, 44% of online display investment was transacted programmatically in 2017 versus 31% in 2016, rising to 47% in 2018.
- Per PQ Media’s Global Branded Entertainment Marketing Forecast, the content marketing industry reached $106.2 billion worldwide, up 8% year-over-year.
- Holding companies are disclosing their CEO compensation. Omnicom says its CEO John Wren makes 596 times its employees’ median pay, while IPG’s Michael Roth makes 264 times the median. John Wren took home approximately $24M last year, while Roth’s total compensation was close to $17M.
- What was the Market Cap of top holding companies in April? WPP Plc $1,519,003.9 MM, Omnicom Group Inc. $16,616.42 MM, The Interpublic Group of Companies, Inc. $9,265.73 MM, MDC Partners Inc. $448.72 MM.
- Financial performance of major holding companies (first quarter of 2018):
- MDC Partners: $327 million revenue—down from $344.7 million a year ago due to what the network said was a slowmoving new business pipeline and pullbacks from a few existing clients. Organic revenue grew only 1%.
- WPP: 5.1% revenue decline to 2.948 billion British pounds (approximately $4 billion), with a 0.1% organic revenue decline overall (a 2.4% drop in North America —36% of full company revenue), its worst performance since the financial crisis. WPP’s biggest client, Ford, put its $4 billion global advertising account in review adding to fears about future performance.
- IPG: 6% net revenue gain to $1.77 billion, with organic revenue growth of 3.6% (including a strong 4.3% gain in the US where 62% of IPG’s business operates).
- Publicis Groupe: Net revenue was $2.575 billion (2.082 billion euro). 1.6% growth globally and 2.8% in the US thanks to new account wins gained in 2017 (McDonald’s, Diesel, Lionsgate, and Southwest).
- Omnicom Group: 1.2% revenue gain to $3.269 million with organic revenue growth of 2.4% (decline of 0.1% in North America where 55% of the revenue comes from, but a 9.7% increase in Europe). Net income was up 9.2% to $264.1 million.
- Dentsu: 5.7% increase in revenue to 242 billion Japanese yen ($2.2 billion) with organic growth of 2.1%. Operating profit declined by 13.3% due to various investments (work environment and global tech systems). 60% of group revenues are now generated outside of Japan.
- The Creative Group published salaries for creative and marketing positions across the US as shown below. As we know too well, the cost of creative and marketing talent varies significantly by city.
- Per Pivotal Research Group, the average revenue per employee comparison shows Omnicom performing stronger by 30% as shown here, citing different ways that agencies report “media trading” as revenue (Omnicom books “principle trading activities” as revenue).
Noteworthy quotes:
» “The reality is that modern companies, especially large ones, require a delicate blend of dedicated insider talent and external creatives to get it all done. In-house agencies are not going away — many companies have them nowadays — but they’re also not going to be the death of ad agencies any more than the internet or TiVo turned out to be. We merely need to adapt, as we always do.”—Libby Brockhoff, CEO and co-founder, Odysseus Arms
» “We need to solve the problem by benchmarking advertising and figuring out how to create value more strategically for clients.”—Sebastián Tonda, president of the board for the Mexican Association of Advertising Agencies and CEO of Dentsu agency Flock.
» “Zero-based budgeting doesn’t have to be all bad for agencies. In fact, it can act as a catalyst for agencies to be more invested in the business results of their clients. I don’t think anyone would argue that eliminating inefficiencies is a bad thing for marketers and their agencies.”—Greg Paull, co-founder and principal, R3 Worldwide
PERFORMANCE: driving stronger performance and value from the partnership
There are continued secular industry pressures from fee negotiations, consolidations, in-sourcing of talent, competitive agency pressure, increased reviews, project bidding, and shortterm client decision making.
- World Federation of Advertisers (WFA) released 8 “Principles for Partnership” for advertisers to promote a better marketing ecosystem: 1) Zero tolerance to ad fraud with compensation for any breach, 2) Strict brand safety protection, 3) Minimum viewability thresholds, 4) Transparency throughout the supply-chain, 5) Third-party verification and measurement as a minimum requirement, 6) Removal of “walled garden” issues, 7) Improve data transparency standards, 8) Take steps to improve the consumer experience.
- Per Infectious Media, 72% of digital marketers say agencies are struggling to measure programmatic effectively, and 92% say the responsibility for more accurate programmatic measurement lies with their agencies.
- Per CMO Club, 46% of CMOs they surveyed still use an AOR model. Only 14% say they are very satisfied with their current model, while 30% say they are dissatisfied. Per the study, the most common reasons CMOs are dissatisfied with the AOR model is a lack of innovation (55%) and narrow capabilities (35%). 58% use small- and mid-size agencies frequently. One of the biggest challenges in changing agencies (33%), is the time it takes to find and vet them.
- Deliverable-based pricing on the rise. A group of agencies in Mexico is calculating fees based on a remuneration model that focuses on the amount of content produced for each client. Their goal is to deliver fewer high-quality deliverables efficiently. This approach has received mix reaction from clients.
- Per McKinsey, advertisers can build more transparent, partner-like relationships with their media agencies by taking these steps: 1) Build accountability by engaging senior leaders, 2) Embed transparency in contracts and pay fair compensation to agencies, 3) Institute an annual governance process, 4) Bring in the right auditors when needed.
- Revlon went through the internal restructuring of its digital organization, hiring in-house for the past year while transitioning from its AOR relationship with Sapient Razorfish. The goal is to produce content (marketing visuals, social media posts, and overall campaigns) more affordably and more often to better control influencer relationships.
- Publicis Groupe revealed its Artificial intelligence (AI) Marcel which gathered more than five billion data files from the Groupe’s 80,000 employees across 1,200 entities and 200 specialties, as well as thousands of clients.
- Per Stephan Argent, six questions marketers should ask themselves to assess if they are ready to implement a pay for performance agreement with their agencies: 1) Do you have executive-level buy-in? 2) Do you have sufficient budget? 3) Can you define meaningful, measurable metrics? 4) Do you have a robust evaluation system? 5) Are you (really) prepared to share your results? 6) Are you in it for the long-haul?
Agency Mania: don’t panic, it’s a good thing!
By: Patricia Berns, Agency Relations Consultant
What do The Vatican, Maserati, and The Radisson Hotel Group have in common?
Even taking a wild guess, it may be challenging to align these three uniquely different brands (yes, The Vatican is considered a brand) under a single umbrella. The answer. They each, in their own way, are investing in building a truly global experience for their brand. This integrated global experience, the sum of all the interactions the brand has across virtual, digital, and physical touch points can become one of today’s strongest competitive differentiators. Not an easy task in our complex world where global consumer experiences remain disconnected, overpromised, and underdelivered.
The Evolution of Accenture Interactive’s “Global Experience Agency”
The creation of Accenture Interactive’s Global Experience Agency concept (in the fall of 2017) is all part of Accenture’s strategy of expanding into Marketing services and challenging the traditional role of ad agencies. Accenture Interactive, with a staff of 25,000 globally, now leads the Global Customer Experience engagement for Maserati, The Vatican, and most recently The Radisson Hotel Group. Their success rests on their commitment and ability to deliver a truly global end-to-end brand proposition.
Maserati is Accenture Interactive’s first Global Experience Agency client
In the fall of 2017, Maserati was the first client to select Accenture Interactive as their “Global Experience Agency of Record,” with an all-encompassing role covering customer experience, brand, creative, content, analytics and programmatic media. Maserati’s mandate was clear:
- Deliver a great customer experience for our target of very discerning customers around the world who purchase over 50,000+ vehicles annually.
- Maximize our investment in supporting and enhancing the end-to-end customer journey.
- Effectively manage customer touchpoints holistically.
The Vatican
In December 2017, the Vatican’s Ministry of Communications named Accenture Interactive their “Global Experience Agency” responsible for modernizing the way the Roman Catholic Church communicates with its estimated 2.1 billion members worldwide. They were selected because of their ability to bring a broad range of digital capabilities across the global user experience (design, content, branding, analytics, search, and social), as well as help with the challenging change management process that will be required for this dramatic transformation to be successful.
Radisson Hotel Group
In May 2018, Accenture was named the “Global Experience” Agency of Record for the Radisson Hotel Group portfolio of 1,100 hotels in 80 countries. Competitors like Airbnb continue to disrupt the global hotel marketplace. Radisson recognized they needed an innovative, fully united, end-to-end global strategy to increase the digital presence of their brand and help positively transform their guests’ in-person experiences if they wanted to improve customer acquisition and strengthen retention. They wanted to differentiate themselves through personalized and meaningful experiences starting with a simple Google search, to a memorable hotel stay, post-stay engagement, and on-going tailored content.
The Question for traditional Holding Companies
Accenture positions itself as having the best creative minds in the world, being leaders in business consulting, being viewed as trusted business advisors, and running a technology powerhouse. The combination of these strengths has enabled them, over the last three quarters, to create and successfully launch their “Global Experience Agency” platform, which will certainly continue to draw the attention of today’s CMOs with their increasingly global challenges. How can traditional holding companies respond to/get out in front of the recent success of Accenture Interactive’s “Global Experience Agency” model and their quest to expand into marketing services and challenge the traditional role of ad agencies?
- Per Darren Woolley, five reasons why performance-based remuneration or payment by results often fails: 1) The stick is bigger than the carrot, 2) The objective is virtually unobtainable, 3) The calculation is way too complex (or too expensive), 4) The metrics are irrelevant to the business, 5) Linking contribution and value creation to payment.
- Per Chiefmartec.com, the Marketing Technology Landscape has now over 5,000 brands across marketing categories and is an eye-chart for most people. Expect your eyes (and the chart) to get worse over time.
Noteworthy quotes:
» “They [advertisers] will pay for innovation, but that innovation has to deliver ROI. The math around FTEs [full-time employees] will have to be more precise. The conversations can’t focus on bodies; they need to focus on outcomes.”—Michael Kassan, chairman and CEO, MediaLink
» “I grew up in a business where the media guy was a trusted adviser to the client. And operated in a fashion where you put your clients’ interests ahead of those of your company. And you put your company’s interest ahead of your own. I’m not sure that that’s the case broadly today because of some of the distrust that has crept into the relationships.”—Irwin Gotlieb, former chairman, GroupM
» “When a client opts-in to non-transparent buys with the promise of lower media rates, a lot of things happen in the background. Agencies are now in a position to recommend a specific media buy where they will make a profit, instead of another buy where they may make a lower margin or no margin at all.”— Manuel Reyes, CEO, Cortex Media
» “We’re becoming more capable as we’re developing digital assets internally, which is much faster and much less expensive than outside agencies.”—Paul Meister, executive vice chairman, Revlon
» “The model of decoupling creative and media that has permeated this industry is starting to trend the other direction. We created Mekanism Media because we believe agencies need to have a more collaborative approach in order for creative to work harder for clients.”—Jason Harris, CEO, Mekanism
» “[In-house] has been a home run for us. We will not go back.”—Kristin Lemkau, chief marketing officer, JPMorgan Chase
» “If a client is putting their creative or traditional business up for review, it’s unlikely that we would bid on that. If a client is reinventing the dining experience and shifting half of a $30 million ad budget to Accenture Interactive to do that, that does probably displace agencies.”— Brian Whipple, Head of Accenture Interactive
AGENCY REVIEWS AND ROSTER CHANGES
According to the latest data by our partner and research firm COMvergence:
- OMD is the top-ranked agency by ad billings with $7.7 billion and with a 7.7% share of market in 2017. Independent Horizon Media is second-ranked with $6.6 billion (6.6% share), and Carat is third with $6.5 billion (6.5% share).
- The US dominated the media new business activity in Q1 2018 in terms of total spend reviewed ($1.6 billion).
- Out of the 25 media reviews assessed, there has been no retention from the incumbent agency. The average retention rate (across the 28 countries) has dropped to 13% vs. 26% in 2017. Retentions exceed 40% of the accounts assessed in France, Italy, Poland, and Spain.
- Out of the $3.9 billion of spend reviewed in Q1 2018, independent agencies have a combined 16% share ($610M), of which a great part is concentrated in the US ($470M).
- Based on new business activity in media in Q1, the leading agency is Starcom and the leading media group is Publicis Media.
- Ongoing major pitches to be completed in 2018:
- Global/regional: Adidas, American Express, GSK, Mercedes-Benz (Daimler), McDonald’s, Mars, Mondelez Int’l, Revlon, and Shell, among others.
- US: Charles Schwab, Chrysler FCA, Dunkin’ Donuts, Quicken Loans, LVMH, and Macy’s, among others.
Disclaimer: The reviews listed often capture larger review activity reported in the industry trade press, which we understand to be only a subset of total review activity. Specialist reviews (digital, social, PR, etc.) are rarely reported in the trade press. Also, due to the increasing number of project reviews (versus AOR/retainer reviews), many of those are not receiving media attention and therefore are not included here.
- American snack company Jack Link’s hired Omnicom’s GSD&M as creative and strategy agency of record after a review, replacing incumbent Carmichael Lynch, the brand’s AOR of 13 years.
- Procter & Gamble Co. hired a dedicated shop comprised of Omnicom’s Hearts & Science, Marina Maher Communications, Publicis Groupe’s Saatchi & Saatchi, and WPP’s Grey to handle its North America Fabric Care account.
- Procter & Gamble Co. consolidated media duties for its North American hair-care business (Pantene, Head & Shoulders, and Herbal Essences) with Dentsu Aegis Network’s Carat after a review, replacing incumbent Omnicom’s Hearts & Science (which remains on the roster) since 2016. Old Spice hair-care products will still be handled by Wieden+Kennedy for creative and media.
- Portable storage and moving provider PODS appointed MDC Partners-owned agency KBS as its AOR to work across the company’s portfolio, following some project work. The scope includes strategy and creative for all channels as well as front-end development of a new web application.
- Weight Watchers International kicked off an agency review to better integrate, unify, and personalize brand experiences. Incumbent agencies include Havas, DiMassimo Goldstein, Wieden+Kennedy Portland, and McCann New York.
- Mini USA appointed Crossmedia as its media AOR for its Western Region following a review. The agency will handle media planning and buying, as well as the overall strategy, and will partner closely with the creative AOR, Pereira & O’Dell.
- Retailer giant Macy’s launched a media review as part of its company policy to conduct a review at least every five years. The incumbent Carat will defend. The chosen agency will partner with the brand’s new creative agency, BBDO.
- German automaker Volkswagen Group launched a global creative agency review to centralize marketing control and improve VW’s image in wake of the 2015 emissions scandal, in partnership with its media AOR, Omnicom’s PHD. Incumbent IPG’s Deutsch Los Angeles (the US AOR since 2009), Omnicom Group’s DDB and BBDO will defend.
- Pharma and consumer-health giant GlaxoSmithKline (GSK) launched a review of its global media business. The brand is on a mandatory three-year review cycle. Incumbents Omnicom’s PHD and WPP’s MediaCom and Mindshare are expected to defend.
- Dunkin’ Donuts hired Omnicom’s BBDO Worldwide as its new creative AOR following a review, replacing incumbent IPG Hill Holiday which did not participate. Leo Burnett’s Arc will handle retail and in-store marketing efforts. A media planning and buying review is still under way.
- The US division of telecom giant Altice consolidated its marketing business with WPP’s Wavemaker and Y&R as its media and creative AORs without a formal review. Wavemaker is replacing incumbent Horizon Media that handled media activities for Altice. Y&R has been working in some capacity with the brand since 2017.
- Luxury goods company LVMH (brands include Louis Vuitton, Hennessy, Bulgari, TAG Heuer and Marc Jacobs) launched a review of its media agency business for North America. Incumbent since 2009 Havas Media is expected to defend.
- Nike selected Wieden+Kennedy as its lead creative AOR on Converse following a review, replacing incumbent Anomaly since 2007. The brand has been working with independent Wieden+Kennedy for 36 years now.
- Automotive giant Ford kicked off a global creative agency review in hope of driving greater marketing efficiency, effectiveness, and customer insight, leveraging the latest tools and technology. Incumbent WPP and its multi-agency dedicated Global Team Blue (previously called Team Detroit and created in 2006) will defend. WPP is expected to remain Ford’s agency of record in some other key areas. The brand has been working with WPP agencies like JWT since 1943.
- Multinational cosmetics conglomerate Revlon launched a review of its global media planning and buying business after consolidating media and creative with WPP just under a year ago. Incumbent Mediacom is not participating. WPP Grey will retain its creative AOR duties.
- Insurer company The Hartford selected Terri & Sandy as its AOR following a review, replacing incumbent Rodgers Townsend. Media duties will remain with Crossmedia.
- Oil and gas giant BP selected WPP as its “preferred partner” for marketing communication services for its Corporate, Fuels, and Castrol businesses globally, following a review. WPP and BP have worked together for years. The dedicated unit created by WPP, Team Energy, provides advertising, media (including digital), marketing communications and branding, PR, and brand research services. The unit will draw talent from VML, Ogilvy, Mindshare, Grey, Essence, Social Lab, and Landor.
- Chili’s Grill & Bar named O’Keefe Reinhard & Paul its agency of record. The brand previously had a projectbased relationship with the agency and is now formalizing their relationship. The brand will continue to work with 360i as its media agency, Fact & Fiction as its social agency, and Ansira on email and digital marketing.
- Delta Air Lines selected Omnicom’s PHD as its media AOR in the US, which is now handling all media work including digital work done by incumbent Publicis Groupe’s Digitas. Digitas will hold on to customer relationship management.
- Technology giant Microsoft retained Dentsu Aegis Network as its global media planning and buying AOR following a review that included all major holding groups (WPP’s Wavemaker, Publicis Groupe’s Starcom, IPG’s UM, etc.), with the exception of Omnicom, due to a conflict.
- Advance Auto Parts hired independent The Richards Group for brand and creative and Dentsu Aegis Networkowned 360i for media and analytics following a review, replacing incumbents indie agency Crossmedia and LAPIZ.
- Financial services and banking firm HSBC selected Omnicom’s PHD to handle its global media account, following a review, replacing incumbent WPP’s Mindshare. The brand was looking for strategic skills and advanced transformation capabilities.
- Ocean Spray kicked off a creative agency review. Incumbent of 20 years Havas Group agency Arnold is not defending.
- Automotive giant Fiat Chrysler kicked off its US media agency review. Incumbent since 2009 IPG Mediabrands’ UM will defend. Publicis Groupe’s Starcom handles some of FCA’s global duties in Europe, Middle East, Africa, and Asia-Pacific.
- KFC assigned US media buying and planning duties to Wieden+Kennedy, its US creative agency since 2015. Wieden+Kennedy replaces incumbent Spark Foundry, which won media duties for KFC at the beginning of 2017.
- Diageo’s major global liqueur brand Baileys selected WPP agency VML to handle its global digital as AOR, following a review. There was no digital AOR incumbent as creative agency Mother previously handled that work. The brand’s agency roster includes Mother, Carat, Ogilvy PR, and Geometry.
- National retailing giant Macy’s selected Publicis Groupe’s Spark Foundry as its new media AOR following a review, replacing incumbent Dentsu Aegis Network’s Carat since 2012. The dedicated team, based on the holding company’s “Power of One” model, will be a blend of Spark Foundry and Digitas. The agency will partner with newly appointed creative agency BBDO.
- Bridal and special occasion apparel retailer David’s Bridal selected January Digital as its digital marketing AOR following a review. The agency will handle paid search, product listing ads, display media, programmatic media buying, and paid social media services.
- Global brewing conglomerate Heineken kicked off a review of the media planning and buying business. Incumbents Publicis Groupe’s Starcom Worldwide and Dentsu’s Dentsu Aegis Network are participating.
- Financial services giant American Express launched a global media agency review, the company’s first such review in over a decade, with main incumbent Mindshare expected to participate.
Disclaimer: The AMS Monthly Industry Update is a summary and analysis of newsworthy agency/client developments picked up in recent trade related publications and news media
