Let’s face it, the agency business was already under stress
before the pandemic with consolidation and in-house marketing businesses
creating a smaller, scrappily competitive ecosystem.
Then came the pandemic and
advertising budgets dried up as did consumer demand in certain sectors. The need
for agencies to change and adapt increased exponentially. In all of this chaos,
Michael Roth, Chairman and CEO of Interpublic, remained calm, assured that his
company is well placed to not only maintain its industry dominance but also
excel.
Roth sat down with MediaVillage
Founder, Jack Myers, and revealed how he is shepherding his company not
only through the uncertain economics of the pandemic but also demonstrating his
continuing commitment to diversity and inclusion within his company and
throughout the industry.
IPG’s
Philosophy
When it comes to the state of IPG
within the media ecosystem, “I like to view ourselves as the best looking house
in a bad neighborhood,” Roth deadpanned. “The bad neighborhood is the marketing
and communications companies and we have outperformed our peer groups for the
last five years… in terms of share performance and financial performance.” It’s
clear to Roth that the industry, “has to change to be competitive with all of
the new entrants into the marketing and communications side of the business.”
Under his leadership, IPG began to address these challenges years ago. “That is
one of the reasons we continue to out-perform,” he noted.
From when he first joined the IPG
board, he saw some disturbing fissures in the agency model that didn’t make
economic sense. “The holding company model was structured as a series of
roll-ups… Because of conflicts, the holding companies went out and bought up
more agencies because with more agencies you could have less conflicts
(because) you use a separate shop,” he explained. But, “If I can field the best
team in the business and put it up against my competitors why isn’t that a
better proposition than having three agencies of our own competing with the
others.” This change in outlook led to an
open architecture, putting in place an IPG team, “comprised of the best brands
we have that can meet the needs of our clients irrespective of what brands they
were,” he stated. The success in that philosophy is evident in the overall
business success of the company including the share price.
The
Importance of Synergies and Partnerships
The commitment to an agency model of open
architecture has proven to be the competitive solution to attracting and
retaining business. “What better relationship can you have with a client if the
client knows that you are looking out for their interests not just yours,” he
stated. If McCann World Group, for example, knows that sister agency FCB has a
better offering that fits for the client, “how powerful it is to say, ‘let me
call FCB into the picture and let them come in and provide their expertise to
work with us.’ We are not giving up the relationship to solve your problem.”
When Roth brought this idea of open architecture to the agency world, he met
with some pushback. “But think about it,” he posted, “if we don’t have, which
is unlikely given the size and depth of our company, a resource, then we would
bring in an outside resource to help.” This demonstrates a real commitment to
high quality agency service from the client perspective.
Data
is Central to Success
Media has historically been a simple
transaction type of business. But technological advancements and the
proliferation of screens has made it more complicated and, in some cases
challenging. According to Roth, for years, strategy discussions with the board
included the need for data and analytics. “First party data management and data
is critical to finding the right consumer where and how,” he explained.
“If you start with the premise that
you are looking at the client first, we are in a marketing and communication
business and we have all these other assets that we can bring to the table. We
have PR, sports marketing, experiential, media, digital capability. The
question is, how do you find the consumer that’s relevant to the client and how
do you create a message that is relevant to the consumer that is trustworthy
and relevant to what they are looking for?”
For Roth, his company has all of these resources, but, “the missing
ingredient was the data and analytics part of it.” To solve for this, the
company acquired Axiom. “When Axiom came on the market, I said to the board,
we’re going to kick the tires. The more we looked, the more we realized that
this is what we’ve been looking for,” he noted, “Two thirds of the Axiom
business is first party data management so it wasn’t just info-based, the third
party data that people use to locate consumers.”
Data
Adds to the Creative Juices and Content
Data also informs the creative process
at IPG. For Roth, just knowing where the consumer is doesn’t give the full
picture. “You have to know what their likes and dislikes are, what their habits
are and the data and analytics provides this insight into the consumer,” he
stated. Instead of buying audiences, he added, “we are able to buy consumers,
real people.” By adding motivational purchasing insights into the creative
process, “it resonates and brings the messaging to life,” in the form of, “data
driven marketing.”
Throughout the process, creative juice
is vital. Priceless for Mastercard, for
example, “is the billion dollar idea,” Roth noted. But, he added, “What do you
do with that once you have it? You have to reach the consumer. You have to have
a relationship with the consumer.” As the media landscape expands with a myriad
of new ways to reach the consumer, it is the creative juice that demonstrates
why that brand offers greater value and preference to offset price
considerations.
For Roth, it is vital to remain
agnostic when it comes to media. His agency doesn’t own any media companies.
“Some of our competitors take equity positions in media so they’re not
agnostic,” especially when they advise clients to allocate dollars to a medium
where they are using their own inventory. “The future of this business is value
proposition,” he added. He warned that, “If you don’t have transparency, forget
it… We are supposed to be agnostic. We are supposed to be an independent
arbiter of where our clients should spend their money. And if we are not
transparent then how can they rely on us that we are getting them the right
answer.” He added that, for media choices, “Content is king. People are going
to go where the content is.” He predicted that those media companies that
offer, “the best content, best analytics, best pricing and transparency will
prevail.”
The
Focus on Diversity and Inclusion
Roth explained his long term commitment to inclusion and diversity
to his childhood upbringing. Brooklyn born, he grew up in a diverse
neighborhood. “It was part of the way I lived,” he explained, “It resonated
with me in terms of how well it could work.” So the importance of bringing diversity
and inclusion into the workplace figures prominently in his goals. Also, as the
son of a working mother, there is the “desire to see women also advance in
business.” To that end, “the initial
movement in IPG was the focus on women’s representation,” and currently 40% of
IPG’s board is female.
In order to enforce the commitment to diversity, Roth hit upon an
idea. “I knew that the only way I was going to get our organization to pay
attention was to hold them financially accountable,” he remarked. “So starting
in 2006 all of the CEOs of IPG had in their incentive targets diversity and
inclusion goals. They weren’t quotas. They were goals.” Roth added that he
thought his was the only company that held its agencies financially accountable
for diversity. “But we have to go deeper,” he admitted. “This is critical to
the future of our business and our society.”
Agency hearts may be in the right place but there are obstacles to
those who might otherwise enter a career in advertising. Entry level low
compensation and the unclear path to upper management are two that, Roth
agreed, need greater consideration.
The Road Ahead
For Roth, the
future of the business relies on open architecture. This works, “because we are
working together to solve problems. We are not working to sell product,” he
explained. “In the consulting part of the business we are developing business
solutions. All of these come together to help our clients solve business problems,
not just create an ad. It is that partnership, that relationship that will
sustain our industry going forward. But you have to have the goods, the people
who can do it, understand it and the compensation has to be appropriate,” he
concluded.
This article first appeared in www.MediaVillage.com
No comments:
Post a Comment