Atifa Silk
Apr 3, 2017

Mainardo de Nardis: Exclusive interview

THE ATIFA SILK INTERVIEW: OMD’s global chief executive says that clients and agencies need trust more than ever as the rules are rewritten.

Rewarding performance: Improved transparency and technologies are allowing clients to recognise the business value of agency work.
Rewarding performance: Improved transparency and technologies are allowing clients to recognise the business value of agency work.

The world’s biggest and most influential brands are demanding greater trust and confidence in their media partners. The issue of transparency has been accelerated through the technology platforms developed for the digital media process. At a time when the cost to agencies of doing business has never been higher, from investments in technology, people and training, OMD’s global CEO Mainardo de Nardis, explains why solving the issues around transparency in financials, data and behaviours is key to not only earning the trust, but reengineering the industry.

Atifa Silk: How does the media industry rate on the issue of transparency?

Mainardo de Nardis: Transparency is a big word that means many different things. The issue of financial transparency, I would hope, is now behind us. I’m sure that there are still pockets of greyness somewhere in the world, but I have to believe that thanks to big clients, professional behaviours, auditing and self-auditing, we are beyond that as
an industry.

It doesn’t mean that everything’s perfect. I’m not trying to say that. Perfection doesn’t exist. There will always be a rotten apple somewhere. But I would hope that we’re behind it and the fact that it’s constantly discussed very openly with clients helps. Financial transparency is something that we can control and it’s voluntary.

Atifa Silk: 10 months on, did we learn anything from the Association of National Advertisers’ media transparency report?

Mainardo de Nardis: I don’t want to put blame on the one side or the other side, but I think the biggest learning was the lack of understanding, particularly between ANA and the Four As, so those representing the clients and the agencies. Could we have resolved it better by talking instead of doing it through the press and reports? Every agency suffers if one misbehaves. Is that fair? I haven’t heard of an agency yet that hasn’t said that they’ve suffered because somebody else misbehaved. Somebody must have done something improper. But we still don’t know who that was. Now, that’s not entirely fair for the industry, is it? Are we talking about the trend that affects a big chunk of the industry? Or is it a few scattered, small, less significant, exceptional events? In which case, is it right to condemn an industry because of those small events? We don’t know. It is not healthy at a time when our clients need us. It’s a huge distraction. Financial transparency should be a hygiene factor. You have to expect transparency and trust to do business. It’s not something exceptional that we’re discussing; it’s a given. Working with global clients helps because it forces us to have the systems in place. And when you repeat the systems 47 times you create the behaviour. You create the rules, the processes, and the behaviours.

Atifa Silk: How can we get better control over data transparency?

Mainardo de Nardis: Mistakes happen. I can’t believe that Facebook was behind some of the errors that they suffered from. I’m sure they weren’t. I’m sure that Google didn’t realise what was happening with the spurge of certain complaints in the UK about YouTube. I don’t think it’s voluntary. Data transparency is harder than financial transparency because it is harder to control. We are all learning what brand safety really means in 2017 and what practices we need to have in a world that is changing at 2,000 miles per hour. So we’re making the rules while the train’s running. We don’t have the luxury of saying, let’s stop the train for a year. Let’s sort everything, and then start again. It doesn’t work that way. And, unfortunately, mistakes happen. And you have to think that most of the mistakes that have happened in the data area are, of course, not wanted but they’re still very problematic.

Atifa Silk: Where does responsibility sit?

Mainardo de Nardis: Even in an agile and fast-moving industry such as ours it takes time to sort things out. Consider that Facebook faced the same error two or three times in a row. Google was slow to understand what was happening in the UK. And by slow I am talking days, not weeks. But when we’re working in hours, a day itself is a long period; they should have understood it before. There is division in the marketplace among agencies and clients and I do agree with people who argue that the likes of Google can’t pretend not to be a media company. They are a media company. They can’t all pretend they’re a tech company, have nothing to do with it, and have no control over what happens. That’s too easy. They’ve got to take their share of responsibility as a media company. But again it’s a role that’s changing and I’m not sure that five years ago they ever intended to be a media company or knew that YouTube or Facebook would morph into what they are now. What’s clear is that as a media company they need different talent, processes and attitudes than a tech company. They may struggle in that area, but that’s not a justification for not improving over time.

Atifa Silk: What role should agencies play in protecting clients?

Mainardo de Nardis: It’s ironic that this is a time when our clients needed the partnership with us the most. We are their privileged advisors on these matters. We understand the digital space, better than most of their people, internally. And we understand what needs to be done to protect their brands. At the same time, we’ve had these discussions over the last couple of years, with ANA for instance, which goes against everything we should be. So, on one side there is a lack of transparency and trust. On the other side there is a need for transparency and trust. And, of course, we are the same agency that works on the left and the right. We have to earn that role. We are a valued advisor to our clients. We profit on that partnership. We profit when they profit. We do well when they do well. Their success is our success. We are linked to their success and trust and transparency is utterly fundamental. Without it, we can’t do our job. We’re not a broker or a supplier. With our client there are very precise contracts. There are very precise behaviours. Some of these clients we’ve had for years or decades. So, the trust is implicit. And trust, of course, implies audits and checks. Trust is not just given. One has to earn trust.

Atifa Silk: How is that trust earned?

Mainardo de Nardis: It’s through transparency in behaviour. This, in my view, is most important in a people business like ours. It is the people who represent the brand clients choose to work with. Having the right people and demonstrating transparency in behaviours to our clients’ business is what drives trust. It is the building of trust that inevitably leads to higher transparency. We have to put a focus on the human aspect because it isn’t just the financial machine or the data machine. We’re dealing with people.

Atifa Silk: How is data accelerating the shift to addressable?

Mainardo de Nardis: It doesn’t matter if you call it the era of one-to-one marketing at scale or the addressable era. Recent events such as the US elections and Brexit have shown us that big data is not the most effective. Big data can give us trends but it doesn’t go deep. We have to match it with small data, which really helps us get under the skin of people or consumers. If you match big and small, and horizontal and vertical, you can find ways to go deeper and understand trends better. You can then model them on a quantitative big-data-led way. I’m a strong believer in that because understanding consumers is what we do in business.

We are all learning what brand safety really means in 2017 and what practices we need to have in a world that is changing at 2,000 miles per hour. So we’re making the rules while the train’s running.

How do we get to that? Addressability. Which is going to change everything. It is the opportunity to have a dialogue with each consumer in a different way—on the right screen, at the right time, in the right context, with the right message and at the right price. Addressable television is around the corner. The word digital has expired. We don’t talk about digital because it’s everywhere. In a year, we won’t be talking about programmatic; it will be the way of doing things. We can benefit from technology and data to have a higher degree of precision—getting the right analytics, and learning for the next round, or the next message. In three years’ time addressable will be everything we do. And there will be a new era, one that will put media agencies at the centre of everything.

Atifa Silk: How will the role of planning adapt to a future in content?

Mainardo de Nardis: I strongly believe that content distribution or content-planning is a core part of what a media agency has to do today. We sit in a unique place, unlike the PR or ad agency, as we see the entire content journey. We have to enhance this role and add content-planning as part of strategic planning or comms-planning. It is a core part of deciding how you tell a story using the content instead of just throwing it at customers. Content distribution is the new media-planning, which is distributing content to the right people, on the right screen, at the right time, in the right context and at the right price. It’s all about content distribution. So, we have a role in the definition of the content, the sequence of the prioritisation and the building of a story. By exclusion, nobody else can do it because they don’t see every part of it.

Atifa Silk: What areas of the business do you see becoming irrelevant?

Mainardo de Nardis Investments in technology and data have to grow. It also means that we need a different type of talent and need to hire people who are right for this era. I showed a client the other day their scope of work today compared to three years ago and there was 70 percent difference. The implication is that we have to learn how to do less of certain things and do more of others. It can’t all be additional because clients are not paying us anymore.

So, if we do something more, then we have to do less of something else. What is less relevant now? Where do we need new people to do more relevant work in the future? For example, the whole area of reporting needs to be automated much more. We’re still using too much talent to do day-to-day things that could be automated. We don’t necessarily do less of it, but we do it with fewer people because we can’t afford it. We always get to the point where it’s important to make an investment because there is logic versus a saving. Too soon is too expensive, too late is dangerous. It is about getting to that at the right moment.

Another area that always puzzles me is competitive analysis, looking at what happened, say, a year before. Everything now is about predictive modelling, and understanding what’s going to happen next. So, don’t look at the rearward mirror, but look at what’s going to happen next. The same talent has to be focused in that direction. There is more to learn about what is happening now and tomorrow than what happened a year ago.

Atifa Silk: Will client remuneration change as a result?

Mainardo de Nardis: Clients will pay us in a different way, instead of the archaic commission or fee system that was born 50 years ago. It was inadequate then, it’s laughable now. I believe that data and addressability will change it by allowing us to commit to delivering specific performance—business performance, not brand performance for clients. It’s easier to recognise the value, and reward agencies adequately based on the business value they’ve created. Over the last 20 years we’ve proven it in terms of the brand value. But we haven’t proven it in terms of business value. It’s all about better understanding customers and new sources of revenue. What is the cost of acquiring a new customer? What is the cost of retaining an existing customer, and helping our clients to plan their business using media as a resource to drive profitable growth, which is what every client wants? That’s what a CFO wants to hear. And he’s got to pay good dollars to incentivise an agency.

Atifa Silk: Branding versus performance?

Mainardo de Nardis: Marketing is increasingly a business science. There is a need for us and our clients to bring branding and performance together. We can’t have the branding world going in one direction, while the performance world and ecommerce moves in another. Too often it sits separately on the client side because ecommerce is not the responsibility of the CMO. It doesn’t make sense as we’re talking to the same customers. We can’t have one branding message and a different performance message. Everything is one, and it needs to be managed in a cohesive way. In recent years I’ve seen diversion between the two, and it is unhealthy for brands. FMCG brands, which got to ecommerce late, often have it separate and this is always a problem. Where is the data? How do the two parts of the company work on the same data. How do we tell a story to the same customer? People shop across online and brick and mortar, or 360 degree, and we need to build that journey. It’s like having a doctor that says I only cure the right side of your face and another doctor will do the left. They need to talk to each other; otherwise the patient in the middle is dead.

Professional CV: Mainardo de Nardis

  • 2009 CEO, OMD
  • 2006 CEO, Aegis Media
  • 2001 CEO, Mediaedge: cia (now MEC)
  • 1997 Board director, Tempus Group

 

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