Changes at the top signal cause for concern

Change is afoot among agency CEOs in APAC. Recent research from R3 has revealed that of 18 of the top multinational creative agencies, eight have had a regional CEO change in the last 12 months, while of multinational media agencies, five of 14 have had new agency heads come through the doors. This equates to 41 per cent APAC management change in under a year.

R3 attributes the high levels of churn to four key factors: account turnover, time horizons, a lack of loyalty, and talent challenges. But while industry sentiment to the research appears to be one of agreement, many believe that the findings must also be placed in context following the recent global downturn.

R3’s research shows that Asia has an especially brief agency-client relationship length, with 1,109 account changes in the first six months of 2010 - an increase of 50 per cent compared to 2009.
Intrinsically linked to this is the dearth of loyalty within the industry. Whereas historically agencies and brands clocked up years of allied service, agency CEOs in Asia now “need a lot of patience, persistence, and ability to stabilise their ever-changing agencies in order to stay around long enough build them,” says Sally Warren, GM of agency consulting at R3.

The problem of attracting talent and retaining it is one of the most often-cited challenges, particularly as agencies attempt to skill up on digital capabilities. “When it comes to a regional CEO role, you can magnify this as the challenge of market maturities comes into play. Those markets with more developed digital marketing naturally attract the better talent, leaving those developing ones with something of a vortex,” says Warren.

Warren believes this situation is exclusive to APAC. “Many of these changes are specific - we see agency relationships in markets like US and UK last six plus years on average. The dynamic of agency-client relationships has fundamentally more respect in these markets; advertising is even seen as more desirable, right from university graduation stage. Even Brazil, another emerging market, doesn’t have this dynamic - there we see even more of a similarity to India where advertising professionals are famous, and creativity is widely celebrated and rewarded.”

The financially challenging past two years inevitably led to a keener focus on cutting costs at both client and agency levels and as a result there were fewer changes in senior staffing “Agencies will now fix any talent gaps, make any market corrections to salary and work to retain key team members. I would expect to see a sharp decline now in the number of senior management moves,” says Alex Crowther, the newly-installed  CEO of MediaCom Asia-Pacific.

Opinion appears to unanimous when it comes to the need to deliver results more swiftly, which many state is the true fundamental issue. Matt Godfrey, who recently left Publicis to take up the reins at Y&R, believes this to be the case, comparing the situation to the high pressure placed on mangers in the English Premier League.

“Over the years the demand for results has shifted from yearly trophies to weekly wins,” he says. “A manager can go from zero to hero (and visa versa) in a matter of weeks. Results are expected continuously by the chairman and the fans. So the CEO’s that do well will be those who have both hunger and vision and are prepared to innovate for success, a little like Sir Alex Ferguson. The rest of them won’t stay in the title race and will face relegation - let’s embrace it.”