"This is not just about being on-site," Simon Martin, founder of Oliver, insists, explaining how his in-housing agency embeds staff in clients’ offices. "It’s a mindset, it’s a culture, it’s a way of working, it’s an operating model and it’s the way people genuinely collaborate."
Campaign is talking to Martin in Oliver’s London headquarters in Islington. The plain decor reinforces the message that this is a marketing services company where most of the 1,500 staff work in the clients’ offices, not in swanky agency premises, and costs are kept low.
Martin spent 16 years in insurance at Aviva before founding Oliver in 2004. He speaks with confidence, because he knows he was way ahead of rivals in spotting the demand for in-housing. Now, clients are asking Oliver for more at a time when traditional agency groups are struggling to adapt. "We’re a disruptor and an innovator," Martin declares.
He launched Oliver because he could see how demand from brands for fast-turnaround content and communications was exploding in the digital age. Putting staff inside the client’s office, often sitting side by side with the in-house marketing team, means they can produce work that is "better, faster, cheaper", a favourite Martin buzzphrase.
But Oliver is about more than just being "on-site". Martin goes on to highlight in his fluent sales patter that it has "a unique model", built on "people, processes and technology", which is "scalable", "adaptable" and "flexible".
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He adds: "It enables us to get to the answer faster for our clients and it fundamentally changes the way that people come up with ideas and execute those ideas to a brilliant standard in a faster, effective and lower-cost way."
Martin’s greatest triumph has been persuading Unilever, the world’s second-biggest advertiser, to let Oliver provide the staff for its U-Studio. This is a pioneering network of in-house content production studios that launched in 2016 and now operates in 18 of the FMCG giant’s offices worldwide.
Unilever told shareholders that the roll-out of U-Studio has cut costs by 30% – a figure that made finance and procurement bosses, not just marketers, take notice. There are now plans to expand U-Studio.
Doubters have claimed that Martin’s cost-cutting methods undermine creativity but he dismisses that as "patently untrue", pointing to a growing list of 190 active clients, which includes Barclaycard, Telefónica, TSB and The Guardian.
Revenues at Oliver’s parent company, Inside Ideas Group, jumped from £69m in 2016 to £120m last year, and earnings before exceptional items (Ebitda) hit £7.5m after several years when profits were virtually zero, as Martin invested to drive growth.
"We’ve grown like crazy," Martin says, citing Inside Ideas Group’s expansion, largely organically, from operating in two countries in 2014 to 36 and rising today. "We’re winning more and more clients and our existing clients are growing."
Martin got his reward in January when he sold a majority stake in Inside Ideas Group to David Jones’ brand technology group, You & Mr Jones, in a deal that was estimated to value the entire business at £200m, although the actual price was not disclosed.
Importantly, Unilever, Martin’s biggest client, publicly endorsed the deal, helping to cement Oliver’s status as one of the most talked-about agencies in global advertising.
Spotting the in-housing opportunity
Martin, 52, was born in Chelmsford, Essex. He has a straightforward, understated manner and clear vision.
"Simon is really driven to build one of the world’s best marketing services organisations, which is different and better for clients," Chris Gorell Barnes, founder of Adjust Your Set, who sold his video content agency to Oliver in 2016, says. "He has infectious energy and makes you feel anything is possible. And, by god, does he work hard. He wants to build an industry-changing business."
Martin wasn’t always so good at spotting trends, however. When he was at Aviva in the early 2000s, he admits to being taken by surprise at the rise of the online disruptors such as Moneysupermarket.com in the insurance sector. "I didn’t see it coming and, when it started, I didn’t see the significance of the change," he recalls.
He sees a parallel here with how the big agency groups have been caught off-guard in recent years, as technology has disrupted advertising and in-housing has taken off. "I can see why agencies are only now waking up to this issue because everyone just focuses on what they know," he says.
"Oliver is a business innovation and transformation company in the marketing services world. We are not an agency per se. We combine different business models to serve up a unique approach to marketing services."
Martin worked in a variety of roles at Aviva across marketing, business processing and management consulting, where he got to know firms in the latter sector such as PwC and EY. When he entered the agency world, he built on a combination of these experiences.
"I was able to come in from the outside and look and say: what this industry needs is a bit of a dose of the consulting approach, a bit of a dose of the business processing approach and to keep what it’s really good at – which is ideas, making stuff happen. But it needs to change the way it does it," Martin says.
"People in the industry were going: ‘No, no, this is the way we’ve always done it, this is the way that works.’ But, actually, with the need for speed, the skill and ability to communicate through different channels, you needed to work in a different way."
Martin had seen how the management consultants had worked inside Aviva – "very close to us, inside our world, really an extension of our team but retaining that separate responsibility and control for what they were doing", as he puts it.
"It occurred to me that agencies should be more fluid, closer to their clients and shouldn’t be acting in a way that is remote and separate – it should be far more collaborative," he says.
Martin, who picked the name Oliver after an early client chose it "from a list of names that meant something to me", believes his company is more than just an agency.
"Its place in the world is very clear," he says. "It’s a business innovation and transformation company in the marketing services world. We are not an agency per se. We combine different business models to serve up a unique approach to executing marketing services."
About 70% of Oliver’s work is digital. It includes content and video creation, performance marketing, ecommerce and physical in-store displays.
"The key point" is that Oliver’s model has evolved to suit "the demands of today’s world" and it keeps changing every 12 to 18 months, Martin says. "It’s not a model that was invented 20 or 30 years ago."
Where have traditional agency groups gone wrong?
Martin’s early move into in-housing means that Oliver has been well-positioned, as the centre of gravity in marketing services has moved away from traditional agencies, especially august, creative shops such as J Walter Thompson and Y&R (both recently merged into other networks), with clients taking more control.
"The centre of gravity didn’t shift for many years when it probably should have," Martin says. Too many agency chiefs were "blinkered" and "focused on core revenues" and "didn’t focus on how the market was changing", according to Martin.
He credits chief marketing officers such as Unilever’s outgoing chief marketer Keith Weed and Procter & Gamble’s Marc Pritchard for changing the conversation in the past two years, by demanding change in the digital-media supply chain, reducing the large number of agencies on their rosters and rethinking the role of advertising as part of the broader customer experience. "What’s really good is that the industry is moving," Martin adds. "The market was definitely slow but it has now woken up."
Still, Martin maintains that Oliver is unique. Competitors such as Johnny Hornby’s The & Partnership and WPP’s Wunderman Thompson, which have moved into in-housing, are, he claims still "traditional agencies in their structures, but they just happen to co-locate their people on-site".
"It’s very difficult what we do. It’s not just about putting people on-site," he says, repeating the point for emphasis. "That fundamentally underplays and simplifies what is going on. It’s all about the organisational design, the people, processes and technology, the way that is deployed, that enables you to do the job effectively. Otherwise all you’re doing is you’re taking the [traditional] agency infrastructure, the layers of management, the ways of working and just putting it on-site with the client. Well, what has really changed?"
Martin thinks clients face three choices: stick with a traditional agency; set up an in-house agency with its own staff, which comes with risks when it comes to hiring talent recruitment and keeping a lid on costs; or use Oliver.
"We are the only company in the world to provide our clients with their own in-house agency in an outsourced service," Martin claims, adding that the cost savings are "sometimes way in excess of 30%" compared with traditional agencies.
So has the established agency-holding-company model been overcharging clients then – at least in the sense that it has been inefficient? The answer to that is yes, Martin suggests.
Oliver is "essentially a digital agency" that developed its processes and technology for a digital world, he explains. By contrast, the holding companies responded to the rise of digital by trying to "shoehorn" that work into existing operating structures that were built for the analogue era, rather than developing new models, he argues.
Martin stresses that Oliver doesn’t do everything, and often plays a "complementary" role in collaboration with other agencies, which might have expertise in high-level creative or buying media.
But how good is the creative work?
Martin is sensitive about critics who have accused Oliver of undermining creativity by driving down costs. "It’s a cheap shot," he says, without any irony. "We wouldn’t retain clients if the quality of the work we were doing is any less than they were getting before."
About 80% of Oliver’s staff are involved in producing creative work – a lot more than at some big groups, where as much as 50% of the workforce are in administration and management, according to Martin. Freelancers make up between 7% and 12% of staff, depending on demand.
The creativity question has been hotly debated since David Golding, group chief strategy officer of Adam&Eve/DDB, wrote in Campaign in 2017 that there was a growing divide between those agencies that make culture and those that make marketing "collateral". He singled out Oliver as an example of the latter, and has revisited his original piece.
Martin concedes that "not everything we make is a John Lewis ad" but says Oliver makes "some fantastic ads" as well as "some brilliantly creative" content and commerce work.
"An ecommerce asset is not going to win a Cannes Lion and we do make a lot of that," he says. "We’re unashamed about the work we do because it’s work that our clients need and we do it excellently."
To prove his point, Martin has invited Rob Kavanagh, executive creative director of Oliver in London, to talk through some of its recent work, ranging from its online "fraud fighter" gorilla videos for Barclaycard in the UK to big-brand TV and press work for Telefónica in eastern Europe.
New Zealand-born Kavanagh, who joined two years ago, and was previously at Omnicom’s Proximity, says: "There might be some agencies that are making what David Golding was referring to as collateral but that’s not us. We have 40-something clients in the UK, each requiring something different from us. Not once have they come to us and said you need to ‘collaterise’ this big idea."
Kavanagh enthuses about what it’s like to work inside the offices of clients such as Barclaycard. "You don’t have to set up a meeting two weeks out – we’re in the building. You can just walk over to somebody," he says, describing how the Oliver team is "not just in-house", "we’re in-brand" with the client. That means "we are as deeply immersed in their brand as possible – so much so that with some clients, we develop that brand with them – whether it’s the brand guidelines or the tone of voice", he explains.
Martin and Kavanagh believe that the "culture versus collateral" debate is a distraction when there is a bigger issue: brands must communicate in new and different ways because consumer habits are changing radically.
"Our audiences are creating six-second videos on their phones every day," Kavanagh says. "That’s what they want to see from the friends. So perhaps that’s what they want to see from their brands – maybe it’s fleeting [content], maybe it’s not this monolithic, 60-second indulgence that is going to sit around gathering dust a week later."
Or, as Martin puts it: "It’s now about ‘seek-out content’. Interruption marketing still absolutely has a place and works. But it’s more about serving up to consumers stuff that they’re interested in and they want to engage with – as opposed to pushing ideas in their face."
And as digital content has proliferated, it’s become important for brands to move faster and have a consistent tone of voice and look across every customer touchpoint. "As a consumer you’re more likely to encounter the brand in the humblest of channels," Kavanagh says. "My belief as a creative is that you always want to bring the idea or brand to life in whatever medium or channel to the best it can be."
Oliver's creative work
A cheeky social film for Barclaycard took a contrarian approach to category tropes. It garnered 12 million views and a 2100% uplift in visits to Barclaycard’s Fraud Fighter tool. Experiential work picked up awards including gold at The DMAs. Inside Ideas Group agency Dare developed the Fraud Fighter tool and Adjust Your Set produced the film with Oliver’s in-house creative and design team at Barclaycard.
Meanwhile, in the week of Valentine’s Day in 2017, when Theresa May met Donald Trump at the White House and the pair were seen hand in hand, the creative team swiftly produced related content for The Guardian’s dating service Soulmates. Within hours they had an idea, client approval and a press ad that ran on Valentine’s Day.
For O2 Slovakia, Oliver created ads for a service whereby the brand’s travel insurance switches on automatically for customers as soon as they leave the country.
He adds: "An in-house brand and creative team is going to be better positioned to make the most of those technology opportunities and to tap into the [client] people that control the levers of the tech stack and that customer journey."
Martin admits that working on-site is "not for everyone". Indeed, a couple of years ago Oliver went through a phase where employee churn was running at about 27%, because, according to Martin, the agency was "growing extremely quickly and [we] found we were hiring people who weren’t quite aligned to our vision and our values".
But he adds that churn has now dropped to about 18% and Oliver has been attracting "some extremely talented people". They earn "the same amount of money" as at a traditional agency but Oliver saves money because "we get to the answer faster and we have much lower overheads".
The assumption in adland that "oh, creative talent won’t want to work in your world" is wrong, argues Martin. "We don’t find that at all," he says. "Creative people do. It’s just whether they’re right for us. This is a very humble, very honest, very transparent culture."
What brands think
Lots of clients like Oliver’s model. When the You & Mr Jones deal was announced, Weed praised the agency’s "radically different approach" and talked about how Unilever had been "an early convert".
Pete Markey, chief marketing officer of TSB, says Oliver’s strength is "anything that falls below the big idea" and cites social media, content creation, internal communications and in-store activation as examples. "[Oliver has] always understood that there’s an ecosystem and where they stand in it and where they can eat into other costs in the ecosystem," he says.
Oliver operates what Markey calls "a proper on-the-ground studio" inside the TSB office and the model is suited to "fast-turnaround work where you’re in a results-driven culture and you don’t want to wait three months for the results".
He also likes the fact that he can ask Oliver to move staff in and out of the team, sometimes by the next morning, to keep it fresh – something that is hard for a client to do.
"We are highly in-demand, there are many clients that want to convert to our unique model, the opportunity is vast and we’ve created a global platform to take advantage of that."
Still, there are drawbacks. One person who has worked with Oliver warns that chief financial officers in client organisations can be seduced by its ability to drive down costs. This, they say, has "unintended consequences" for other agency partners, which have come under pressure to slash their costs too. "It can affect the client’s whole agency mix," this person adds.
Theresa McDonnell, director of digital content and editor of U-Studio for Unilever North America, has also talked about how some aspects of Unilever’s new agency remuneration model are "hurting the creative process".
Speaking at a Campaign breakfast briefing on in-housing in New York in December, McDonnell explained: "Our responsibility is to protect the integrity of the creative process and it’s difficult to do at a time when we are all trying to do everything as efficiently as possible."
She said that Unilever has been talking to its own procurement team "to help them understand" that a focus largely on cost means the company could risk losing out on the best creative talent from external agencies.
Making the numbers add up
Oliver’s revenues have been flying – a compound average annual growth of 64% over 14 years, according to Martin – but everyone wants to know how he makes a profit margin.
Accounts show Inside Ideas Group’s profits were virtually zero between July 2015 and June 2017, even as annual revenues more than doubled over two years. Martin went on to inject £3m into the business in two chunks during 2017 and 2018, investing his own money and turning to friends, including Steve Parish, Crystal Palace FC’s chairman and founder of production company Tag Worldwide, who ended up with a stake of more than 5%.
"That’s the way we were able to grow the business so fast – we had to use our own Ebitda," Martin says, rather than taking investment from private equity or venture capital. "This is an inherently profitable model at the client level. But it depends on how much of your profit you invest to fuel your growth. Clients are demanding we go around the world but they can only subsidise some of that set-up investment. We could have grown slower, opened in fewer countries and shown more Ebitda."
Martin says profits are rising, calling it "a deliberate hockey stick" as the graph starts to point upwards, and he forecasts Ebitda of £13m this year. That would value Inside Ideas Group at a multiple of about 15 times profits, based on Campaign’s £200m estimate. Martin owned 67% before the sale, making his stake potentially worth as much as £130m.
Oliver has recently opened offices in Thailand, Japan and Argentina. Martin says: "The future is very exciting. We’ve only just started – there’s a long way to run. We are highly in-demand, there are many clients that want to convert to our unique model, the opportunity is vast and we’ve created a global platform to take advantage of that."
Oliver has been You & Mr Jones’ largest acquisition. That means Martin ought to have a big say over its future direction, rather than being a small cog in a holding company, and he is thought to have retained a significant minority stake.
The rationale for the deal is that Martin and his team will get access to better technology while the rest of You & Mr Jones should benefit from Oliver’s "on-site" presence inside client organisations.
Martin and Jones do have similar values, both have been using the phrase "better, faster, cheaper" for years before doing their deal. One Young World, a charity co-founded by Jones, has a stake in You & Mr Jones while Oliver has a charitable foundation.
There are many in the agency world who think in-housing has major limitations and the current trend will turn out to be a fad but Martin and his team are enjoying proving the sceptics wrong so far.
As Kavanagh says: "If you’re not in-house, then what’s the opposite of that? You’re an outhouse – and everyone knows what an outhouse is."
You & Mr Jones: How Oliver fits into the fold
David Jones’ acquisition of a majority stake in Oliver and its parent company, Inside Ideas Group, is his biggest deal since launching You & Mr Jones as a "brand tech" group with $350m of investment in 2015.
Back then, Jones, former global chief executive of Havas, warned established agency groups risked ending up "like Kodak", which was exclipsed because of digital disruption. He looks prescient, given the subsequent slump in the share price of WPP and others.
You & Mr Jones has gone on to make 39 acquisitions and investments. Jones has assembled a varied collection of assets, including mobile marketing firm Mobkoi and content agency Gravity Road, plus stakes in augmented-reality platform Niantic, social sharing app Pinterest and marketing cloud platform Automat.
Jones says that they are "trying to disrupt marketing, rather than create some new kind of agency model" and describes "brand tech" as "a belief that you can use technology to do marketing better, faster, cheaper".
The jury is still out on whether You & Mr Jones has a coherent offering, but buying Oliver has raised its profile.
Brian Wieser, former analyst at Pivotal Research Group who has just joined Group M, likens You & Mr Jones to Sir Martin Sorrell’s new venture, S4 Capital, and says they "look like appealing business models" because "they are prioritising on areas of client growth".