As automation takes hold of the advertising industry, media planning and buying agencies are being forced to take a cold, hard look in the mirror.
“We’re dealing with a lot of forces of commoditization,” MEC CEO Tim Castree told AdExchanger.
Castree is in a delicate spot. Following MEC’s merger with sister GroupM agency, Maxus, he’ll have to demonstrate the value-add of his firm while also building the newly combined entity.
But less is more, Castree said. Agencies should be investing in value-added services, not fomenting fragmentation.
“We talk about our products in a fractured way, and it creates confusion for clients,” he said.
Simplifying and realizing the value prop of his media agency will involve building up services once considered ancillary to media planning and buying and then turning them into “the main game,” Castree said. That includes analytics, platforms, content, ecommere and performance marketing.
It’s about survival.
“The vast majority of our revenue comes from media planning and buying,” he said. “As investment dollars become more scarce, we have to be shrewder in how we spend them.”
Castree spoke with AdExchanger about driving forces behind the merger.
AdExchanger: Did the MEC/Maxus merger cause concern for your clients?
TIM CASTREE: In the short term, we’re able to offer our clients stability. It’s massively encouraging. Their first question is “Is my day-to-day team changing?” and the answer is no.
In the long term, it’s about freeing up investment for more value-added services. They understand that; they’re businesspeople as well. They’re being disrupted by pretty significant forces of change. I think they’d be more worried if we were standing still.
How will your client roster change?
Maxus and MEC will get new clients from each other. We’re not envisioning losing clients. There’s little conflict and overlap between the entities.
How do you recover from losing big accounts like AT&T? How do you keep other clients from leaving too?
Clients are smart. They don’t say, “AT&T made a different choice, therefore I should.” They’re constantly evaluating and reevaluating their partnerships. There’s a lot of pressure on their businesses.
I don’t think AT&T is relevant to client stability overall, even though it was a very painful loss for us. But we’re clear that we need to earn our clients’ business every day, not just when they’re up for review.
Neo@Ogilvy was also folded into Mindshare last week. How do these mergers play into a larger trend of consolidation across WPP and its competitors?
Significantly. There are people who will advocate for the old model of smashing creative and media together. My instinct is: We’ve moved past that. But clients want what they want, and they don’t all want the same thing. They still expect us to manage fluidly, regardless of context.
We need to consolidate and be more amorphous in how we integrate. Clients want us to partner with every marketing partner they work with. If we make it difficult to work with partners who aren’t part of WPP, we do that at our peril.
How did cost pressure from clients and the shift we’re seeing to zero-based budgeting (ZBB) models play into the decision to merge?
ZBB is a big force of change, but it’s not the only force.
The starting point is low economic growth. [Clients] look at us and ask, "What are you going to contribute to our needs for cost savings?” That’s the challenge, and it’s very real. The only way to deal with commoditization is to innovate and bring distinctiveness. The cost pressures aren’t going away tomorrow.
If clients want to get back to higher growth, marketing and media investments are going to be essential. There’s a danger in convincing themselves they can get the same outcome by slashing budgets. The challenge for us is to use our tools, technology, data and platforms to get to a more fully attributed understanding of the value of those investments in driving growth.
How can MEC differentiate itself from media agencies both within GroupM and outside?
Our approach to purchase journey planning is unique in the marketplace.
Most important to me is that we get to a position of substance. Agencies want to put a fresh coat of paint on things, and they talk about things that aren’t backed up by capabilities. The transformation of our business is product-driven. It’s not a story, it’s not a positioning, it’s not a process. It’s bringing increasingly relevant products and services for clients.
Like purchase journey planning linked to mPlatform’s unique identifiers at scale. It’s very powerful to quantify that in context as we build our plans.
We’re moving from point-in-time research to persistent data against individual IDs. We can start to use the same data set in all of our planning and activation, from TV to programmatic.
Will there be layoffs?
We’re taking a fresh look at our structure. WPP is a big company. Essence is building out their value proposition and Mediacom and Mindshare have a lot of needs, [as well as] the other WPP entities. It will certainly create movement, not necessarily layoffs – but it may.
Edited for clarity.