David Blecken
Oct 17, 2013

Media agencies need to align more closely with client interests: Matt Seiler

BANGKOK - On a recent visit to Bangkok, IPG Mediabrands global chief executive Matt Seiler (pictured) spoke to Campaign Asia-Pacific about the benefits of flexibility over scale and what he thinks media agencies need to do in order to continue to be profitable.

Media agencies need to align more closely with client interests: Matt Seiler

There are a lot of small divisions under Mediabrands. Of all agency structures it seems the least straightforward. Please explain the strategy and how it benefits clients.

We structured the world based on the way our clients do business—priority markets that work together are clustered accordingly so we can move seamlessly through markets with similar objectives and audiences.  

The cluster structure—G14, World Markets and North America—has led to brilliant sharing of best practices across our markets and peer-to-peer client implementation.  Shashi [Sinha, CEO of IPG Mediabrands in India], said it made him realise he had never been with his true peer group before. It allows us to put a lot of attention on world markets. Now we have people really concentrating on the markets in which they have the most in common.

Every holding company has P&L silos. We had always operated under one P&L, but functioned as if we had separate ones. It wasn’t as efficient as it could have been. So we removed agency-specific P&Ls and instead focused on cluster P&Ls contributing to IPG Mediabrands, led by three people globally. It allowed us to put in strategic leadership at the brand level, allowing them to create, ideate and deliver the best client work without being encumbered by P&Ls. But I can’t say that I’m not going to come back and restructure it all in a year’s time. We will continue to evolve and change.

I think that with the structure we have [in Asia], our objective is much broader than simply Asia. Australia, India and Thailand are doing phenomenally. Is there major potential in China? Yes—we were behind in terms of growth and have now reached a turbocharged level. Japan is interesting. We are really the only significant non-endemic player there [with UM]. But are we where we want to be [in Asia]? No way. The massive adoption of technology suggests much of how the world will evolve will evolve from here.

Mediabrands’ agencies are seen as lagging behind the likes of GroupM and Omnicom Media Group (OMG) in Asia. What has held the network back?

Mediabrands is much newer [than other networks]. It takes time for a brand to get established. It didn’t establish itself with a clear point of view until the last couple of years—I think it’s natural. The evolution of UM from McCann, its independence, is relatively recent. Then Initiative was always mostly a local market business. A network tends to be known for the clients it serves, and Initiative tended not to work with as many multinationals. Recently UM and Initiative have had some great wins, like Hershey and Amazon, and that helps [build profile]. I see us as younger and newer— people are just getting to know us.

GroupM started something totally new. The expected formation of Publicis Omnicom Group (POG) can be seen as a response to this. So if we have another GroupM so to speak, how will it affect the media industry and Mediabrands specifically?

I’ve never really cared too much about what the competition is doing. I don’t look at our competitor set just as companies like WPP and Omnicom—it’s so much more than that. It’s not that we’re unaware of them working for clients that we share, but our competition is broader. If you are involved in content, management consulting, social networks, your antennae have to be up there. I’d rather be looking at how different models are working rather than looking at media holding companies getting bigger or smaller.

If you look at our leadership team, none of them come from media agencies. One came from a media owner, another came from a data provider—they are from diverse backgrounds. I fear that if you’re a holding company that’s just aware of other holding companies, that’s all that you’ll continue to be. Look at all the interesting models out there. Shouldn’t we learn from each other and try to create models that are unique? The more diversity you have, the better.

Is media buying really all about size? Do you actually want to be big?

A certain scale is important. But if you’ve got a name people recognise, then you’ve already got enough scale. I also think scale can work against you. [If you’re smaller], you have a better ability to partner with others and to create valuable content.

Everyone wants to be bigger. Do I want to be bigger for the sake of it? Definitely not. I would like it to be the result of doing better things for clients. Everyone in the media world talks about paid, owned and earned [media]. Yet everyone measures success based on billings. It should just be about doing what’s in the clients’ best interests. Talk of billions and trillions misses the point of pay-for-performance. The commission-based payment system is highly flawed—it means the client is robbed of real innovation. Our KPIs are our clients’ KPIs. Half our clients pay us on pay-for-performance; the reason we can drive automation is this pay-for-performance model.

Mediabrands plans to automate half its buying business over the next three years. How do you expect the nature of buying to change?

The New York Stock Exchange could have automated decades earlier than it did. Even though they knew computers could do the work, they got paid on bodies. Our industry is much the same. If you’re paid based on bodies, how do you do that [automate]? Well, if you get to 50 per cent automation, you can reinvest in much more rewarding things like content creation.

What would you say to those who argue that media agencies are not meant to be creative entities, or worse, are weakening the creative industry with their efforts?

The ones who are good at storytelling are the ones who should tell stories. I couldn’t care less who that is as long as the stories are good. Each of us has a role to play within that storytelling.

How has your experience on the creative agency side helped in bridging the two disciplines? Is Mediabrands moving towards a full-service network?

We believe in taking responsibility for a client’s bottom line. That means concerning ourselves with all components of their marketing and consumer touchpoints. The media agency is adept at ensuring the right stories and messages get to the right consumers to activate on behalf of clients.  Coming from the creative agency side of the business and hiring diverse talent allows us to truly partner with our clients and the array of agencies and partners with whom they work. We believe in a fully integrated model.

How do you see mobile media linking up with traditional media? What are you doing to capitalise on the apparently huge opportunity around mobile in Asia?

We have mobile speciality groups (Ansible and MNet) as part of the Mediabrands offering. But we believe that we must stop thinking of mobile as a device but rather as mobility and that redefines the story. When a marketer—always on—can be of greatest benefit to those they serve, that’s where everything will change. The proliferation of mobile devices and laptops in Asia suggests that a lot of that behavioural change will start there.

What do you think the chief revenue streams for agencies will be over the coming years, given that profits are continuing to shrink? How will Mediabrands continue to add value for its clients?

Pay-for-performance is going to be fundamental to media agencies’ ability to correlate what they do with clients’ success. Diversification is where success will be. We need to think about what it means for marketers to be hyper-local; how agency models could shift if we think more about the here and now and about serving people in a more tailored way. We are pushing for campaigns to be automated. The price of entry will be securing audiences. What you do with those audiences will be the differentiator.
 

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