In what has been dubbed "Shocktober", the leaders of three of the big six UK media agency groups left or changed their job in the space of seven days during October.
Tracy de Groose stepped down as UK & Ireland chief executive of Dentsu Aegis Network after nearly four years in charge; Paul Frampton left as UK & Ireland chief executive of Havas Media Group after a little under two years at the top; and Amanda Morrissey moved from UK chief executive of Publicis Media to a global strategy role at Publicis Spine after 18 months.
Three other high-ranking agency figures departed. Pippa Glucklich stepped down as UK chief executive of Starcom; Nikki Mendonca, president of OMD in EMEA, left to become president of intelligent marketing at Accenture; and Aki Mandhar, managing director of OMD UK, moved to be chief operating officer of Telegraph Media Group.
Big, traditional advertisers such as FMCGs have cut spend in the face of digital disruption and demanded greater transparency about how agencies make money
Frequent job moves are a feature of the media industry, but the sheer number of departures this autumn has been dramatic. Kathleen Saxton, founder of The Lighthouse Company, a media recruitment firm, says: "We see an unprecedented pattern of change."
Some of the new wave of leaders have also been surprise appointments. Stef Calcraft, who has been named executive chairman of Dentsu Aegis Network UK & Ireland and will take over from de Groose, is a co-founder of independent creative agency Mother and has little media experience. Sue Frogley, who replaced Morrissey at Publicis Media, and Matt Adams, who stepped up at Havas after Frampton’s exit, were internal promotions.
Each of the people who left their jobs will have had different personal and professional reasons, but most would agree it has been a tough period for the media agency sector. As Frampton wrote to Havas staff in an email: "Our industry is undergoing tectonic changes and it feels like the time for me to try something different." Frampton, de Groose and Glucklich have not announced new roles.
Pressure on agency leaders has been increasing, because all of the big six ad groups have reported slowing global growth in 2017. Big, traditional advertisers such as FMCGs have cut spend in the face of digital disruption and demanded greater transparency about how agencies make money, after the US Association of National Advertisers launched an investigation, which began in October 2015.
Many of the big ad groups have responded by cutting costs and consolidating internal structures, which has reduced the autonomy some agency leaders have to run their business. Uncertainty over Brexit has also hit confidence. Saxton says: "It hardly creates the right environment for the strategic, creative, visionary leaders we have so long valued."
Two-thirds of leaders have moved in two years
Looking back over the past two years, the change at the top of the UK media agency sector since the end of the third quarter of 2015 is stark.
• Four of the "big six" global media agency groups – Publicis Media, Dentsu Aegis Network, Havas and Interpublic’s IPG Media Brands – have changed their UK group chief executive. Only WPP’s Group M and Omnicom Media Group kept the same UK group chief executive, and there has been speculation for months that Group M is poised to make a change.
• Thirteen of the 19 media agencies within the big six groups have changed leader during a period when one agency closed and one launched. MediaCom, Manning Gottlieb OMD, PHD, Zenith, Starcom, Carat, Havas Media and Initiative have all either changed or lost their UK chief executive. Vizeum, Arena Media and Forward Media have also changed managing director – the most senior leadership role at those agencies. In addition, M2M closed and its chief executive left, while Spark Foundry launched with a new chief executive.
• Only six of the 19 agencies – Maxus, MEC, Mindshare, OMD, Blue 449 and UM – have kept the same leader in the UK, and Maxus’ chief executive is leaving for a new role at Essence, because his agency is merging with MEC to form Wavemaker in January.
One agency leader who has stepped down says: "Leading a media agency has always been a very pressurised job, but in the last couple of years it has become untenable. There are ridiculous targets from global teams who have no understanding of the local market and just put numbers on a spreadsheet."
The person goes on to suggest that it is significant that a number of agency chiefs left toward the end of this financial year – either because they were unhappy about having to make cuts themselves or they fell victim to the need to save money. "There’s no reward for loyalty," the former agency leader claims. "You absolutely have to look after yourself."
A global chief executive of a network media agency warns of the "human cost", saying: "When people are put under this level of pressure, they don’t want to put up with it forever." They add that there are both internal and external pressures as "clients keep beating you up and demanding low prices".
Scott Moorhead, who quit as head of digital trading at Havas last year to found Aperto One, a consultancy that advises brands on media spend, says the leadership changes reflect the fact that new skills are needed – as Calcraft’s appointment might suggest.
"Just the way you plan and buy media is different – you’ve got to have a different mindset," Moorhead explains.
He maintains that transparency has been a significant problem for the agency sector: "I think it’s full of honest people but they’re being constrained by what they are being asked to do and the way they are measured. All of the agency groups know they need to change but the immediate response is to change the leader because it’s easier to do that than to build something new."
This isn’t just a UK issue, according to one EMEA media agency chief, who sees similar challenges in other markets
The biggest structural shift in two decades
Structural change is happening. WPP announced in June it was turning digital shop Essence into a global media network and is launching Wavemaker. Elsewhere, Publicis Media has turned two media-buying units into four agencies in a single operating company. Meanwhile, Omnicom has launched Hearts & Science, a global media agency.
Sir Martin Sorrell, chief executive of WPP, told ±±¾©Èü³µpk10 in June that media agencies are undergoing the biggest upheaval in two decades since he merged the media departments of J Walter Thompson and Ogilvy to form Mindshare in response to clients’ needs. ›
"The market moved," Sorrell said, referring to events in 1997. "It’s doing it again." He is pushing "horizontality" – getting WPP’s agencies to work more closely across different disciplines in a simplified way – and rivals are using similar matrix structures.
Rob Pierre, co-founder and chief executive of Jellyfish, an independent digital media agency in London, believes the challenge for the legacy agency networks is that "they are having to reverse-engineer what they’ve built" to suit a new era of biddable, personalised media, where buying, data and content creation sit together. "We’re both running to the same spot," Pierre says, referring to the new breed of digital agencies and the legacy holding companies. "I think we’ll get there first."
Some former network leaders have not given up on agency life but are trying something more entrepreneurial. Henry Daglish, who resigned as managing director of Arena Media, founded Bountiful Cow, backed by the7stars. Sally Weavers, the ex-managing director of Initiative, launched Craft, a boutique communications and planning agency, with support from independents George & Dragon and Goodstuff Communications.
I am sure some people in agencies didn’t act in the right way in the past and the old commissions and rebates were murky
However, the global stage is what matters to the big six groups. They have survived previous structural shifts by acquiring new blood – from Manning Gottlieb and PHD in the 1990s to Essence and Merkle in the 2010s.
Kelly Clark, global chief executive of Group M, remains bullish because media agencies "have acquired and refined our expertise in consumers, markets and media investment over decades" and are now working "to transform ourselves". He concedes clients are demanding "transparency and different business models" but maintains agencies are "rising to the challenge".
Talk persists that brands are looking to bring some of their media and data capabilities in-house and buy directly from Facebook and Google. Meanwhile, the management consultants and software giants are considering whether to move into media. But Clark argues that agencies’ "singular focus on media", "deep real-world experience" and impartiality are "something new entrants, including consultants, cannot offer".
Transparency remains a concern. Some agencies are still said to be heavily reliant on "other media income" – revenue that does not come directly from client fees and may be generated through trading, mark-ups, rebates and other sources. Both the UK government and Sky highlighted transparency as an issue when they launched media reviews this autumn.
"I am sure some people in agencies didn’t act in the right way in the past and the old commissions and rebates were murky," one senior agency figure admits. "But we all seem to be paying for the sins of our forefathers while they reaped the reward five or 10 years ago."
More change looks certain. The only one of the big six ad groups to change its global leader recently has been Publicis Groupe.
"It’s not going to be any easier for the next 12 to 18 months," the EMEA media agency chief says. "Every agency holding company is facing a period of serious looking in the mirror and addressing how they’ll make the painful decisions to transform their business. It’s been a terribly conservative business. There is going to be a lot more change."
Death of the golden goose
By Anonymous
I’ll tell my grandchildren that I was part of it. I witnessed the birth, growth and death of media agencies. They will be incredulous at the tales of derring-do and how quickly the beating commercial heart of the agency groups withered.
How could this have happened, they’ll ask? I’ll tell them about the determined, entrepreneurial and slightly renegade people who forged the industry in the 1980s and 1990s, took it to maturity in the 2000s and presided over its demise in the 2010s.
Back in the day, agency groups couldn’t believe their luck as these pioneers plundered the land of media owners to return with unheard-of margins. They were given their independence and flourished. All was well across the land.
They ran rings around clients, who grasped at half-blown-up balloons to suffocate "other revenue" sources, only to see them pop up elsewhere. They knew the media guys were outsmarting them but were so easily distracted that they couldn’t see how they were doing this, let alone stop them. It was powerful sorcery and it ran unchecked as all remained healthy in adland.
The clients brought in their first secret weapon – procurement "professionals", a tribe that knew the price of everything but the value of nothing. They were incentivised by their employers to succeed in their own worlds while failing in the real one. They forced headline rates to unsustainably low levels but the resilient, increasingly grey-haired media folk outflanked them through their ingenuity and the shortfall was bridged.
We then entered the era where the grey-beards were starting to look expensive on the P&L. Their refusal to be micro-managed resulted in banishment to a land where they lived in comfort on the fruits of their labour.
They were replaced by a new tribe – one that spoke convincingly of the new magic of digital, data and content. These newcomers worked cheaply, arriving with impeccable social-media profiles and well-honed skills in soundbite management. But the big bosses hadn’t established whether these new arrivals knew about media or could run businesses so the storm clouds gathered.
Sensing weakness, the pesky clients started to get the upper hand, especially when they broke all the rules by bringing in the sniffer dogs. The groups had become hooked on the media contributions, but had become careless. Hidden treasures hadn’t been well-enough concealed by the new breeds and the game was up. Cries of "It wasn’t us, guv!" were heard across the land.
The end, when it came, was swift. The media disciples returned to their original owners, who mourned the passing of the old order. Nostalgia for the previous commercial gains achieved during the period – now known as the Time of Plenty – was palpable. None missed them more than the group chief executives, who were below target by unprecedented amounts. They consoled themselves with talk (through gritted teeth) of the benefits of a "new land", where creative was joined with media once again. The future was uncertain but would inevitably have data and content at its core.
I was part of the Time of Plenty. And now it’s over. It was a lot of fun and I enjoyed almost every minute.
The author is a former leader of a UK media agency