When two or three top global advertisers simultaneously place their media accounts up for review, it might be a coincidence. But when almost a dozen giant brand owners, from Unilever to Sony, call a pitch within a few months, something more fundamental must be going on.
M&M Global spoke to industry experts to find out what is driving this desire for change.
Innovation and flexibility
“This is a really exciting time. CMOs have been – certainly in the last 18 months – questioning the norms of their marketing models. We can see innovation and flexibility now being inserted into what was once a really static process,” said Oystercatchers managing partner Richard Robinson.
“Now they’re saying that they’re going to blow the model up and question all the norms that are in place, and actually build a model that’s right for the customer. The customer is now in the driving seat.”
Changing consumer behaviour has been the biggest factor in a growing demand for innovation, resulting in more pressure on marketing teams.
Paul Frampton, CEO Havas Media UK and head of clients and strategy at Havas Media Group UK, agrees: “Marketing teams are now seen as a key driver for business growth by the board, which has piled on the pressure. The average tenure for a CMO has as a result dropped to just 18 months, leading to a constant demand for change and ‘freshness’.”
With the rapid advances in ad tech, it has become much easier for brands to have a personalised relationship with customers. Programmatic is just one example of this, and brands are starting to understand that they need to continuously question their agency model if they want to make the most of their money.
“The real drive of programmatic and tech innovation in media means there is new stuff coming online every quarter. We all know a customer wants a really disintermediated relationship with their brand right now,” said Robinson.
“There is a deeper questioning of whether the media agency is delivering them the best model for 2015 and also whether they are futureproofing them for the next three to five years. Brands no longer have time to wait and see.”
However, while programmatic may be one of the industry’s most talked-about topics, its importance can be overstated in these situations, believes one major agency leader who wished to remain anonymous.
“In the pitches we’re involved in, of course it’s there, but I wouldn’t expect clients to have that really as their prominent reason for driving a pitch – no matter how high-profile it is,” he said.
“We’re yet to see it as leading the conversation. What is more likely to take the lead is digital on a broader point. It continues to change so rapidly that it’s more common for clients to want to review every three years.”
Late last month, it emerged that Procter & Gamble (P&G) is planning to save as much as $500m in agency fees globally through a reduced number of agency relationships. Sure enough, a few weeks later it was announced that it would be reviewing its $2.6bn North America business.
This headline has been has been misinterpreted, says Robinson: “Technically what it is saying is that it’s questioning whether the marketing model that it has in place is fit for purpose for 2015. It has too many traditional models that are based on a pre digital era that are still in place.
“What P&G is doing is shaking up a lot of the traditional norms and blowing away the cobwebs,” he added.
Citing new successful businesses Uber and Airbnb, Robinson argues that such brands are not burdened with the media legacy of 100 years’ worth of advertising history.
“We talk a lot about the burden of legacy with CMOs because they’ve got a brand and things have grown up over a period of time – they have a legacy that they drag around with them. It’s a very brave CMO that says they’re going to blow the model up and start again and, when they do it, it’s a very powerful thing to see.”
So should we expect to see more major companies following in P&G’s footsteps? Yes, says Robinson
“What P&G should be credited for is putting financial value on it and then telling analysts and shareholders. It has connected half a billion savings with its stock price on Wall Street – that’s really bold and exciting.”
Globalisation of accounts
Last but certainly not least, the globalisation of accounts is becoming a more prominent concern. Fifteen years ago, brands didn’t have the ability to do this, but developments in new technologies are finally allowing them to plan globally.
Frampton believes that brands are actively pursuing the agencies which offer this capability: “We are at a major tipping point in the media model shifting from the legacy paid-only approach to one where marketers are demanding an omni-channel approach transcending paid, owned and earned channels.
“Not all media agencies are prepared for this transformation, so I can only assume that these brands are reviewing in pursuit of agencies genuinely offering this new model.”
Robinson believes that if brands have the opportunity to go global then “they will take it.”