What you need to know:

• CHEP has posted record revenue and profit for 2021 after its lauded former CEO Chris Howatson defected to start his own shop
• New CEO Justin Hind and Chief Creative Officer Gavin McLeod have unveiled an overhaul which sees 11 core services unbundled but remain under one P&L
• CHEP remains a full service agency and will seek more partners like Samsung, which it figures is the single biggest integrated marketing contract in Australia covering 10 of CHEP’s 11 core capabilities – PR is the only CHEP service Samsung doesn’t use
• But to chase growth, CHEP will push “single point solutions” alongside its integrated offer
• Hind and McLeod say CHEP has far from peaked but “the proof is in the pudding” – the next few months, they say, will see new business and new work to be judged on. 

Fork in the road

The once fancied new world ad agency CHE Proximity (CHEP) has challenged broad market perceptions that its best days are behind it under a new leadership team which yesterday unveiled a new identity, CHEP Network, and a new positioning: 'new economy creativity'.

A year on from Justin Hind being announced as CHEP CEO after the architects of the agency’s power run over the past decade, Chris Howatson and creative partner Ant White left with now thwarted ambitions to start their own hot shop, CHEP appears to have emerged in much better shape than most market expectations.

Hind told Mi3 CHEP Network revenues increased by “a good single digit increase” for calendar 2021 – approaching $85 million – with headcount sitting around 380 people.

“We’ve delivered I think the best result that CHEP’s ever had in terms of revenue and profit," said Hind. "Better than 2020, better than 2019.”

Howatson’s ghost

That’s a not so subtle reference to the final two years of Chris Howatson’s near-decade of power at CHEP before starting indie shop Howatson + White, which quickly saw the founder partnership implode and was rebadged Howatson+Company after White left the start-up abruptly mid-last year.

Howatson is seen as a talented, next generation but polarising advertising figure who drove CHEP from a loss-making retail agency in the Clemenger Group when he took over in 2012, aged 27, to become Clemenger’s data, tech and creative show pony. Revenues were circa $10m when Howatson was first appointed managing partner 10 years ago and rocketed to around $80m when he left in late 2020.  

Many still expect a Howatson+Company raid on CHEP’s client portfolio as soon as non-compete restrictions lift. But so far, CHEP’s new CEO and widely regarded new Chief Creative Officer, Gavin McLeod, seem to have steadied the ship.

Peak CHEP?

So, has CHEP peaked? “It’s a totally valid question,” says McLeod, who joined CHEP in March last year from Ogilvy and before that AKQA San Francisco, where he was Executive Creative Director.

“When I started here, someone said to me, ‘look I get there’s a fork in the road, you need to tell us which fork you’re going down’. Today we’ve put a stake in the ground on that. I don’t want to think of us having peaked but the proof is in the pudding. We’ll need to see the work over the next couple of months – and hopefully that will change people’s perceptions.”

The stake McLeod speaks of is a complete makeover on how CHEP goes to market. The old CHEP was seen as a full service shop from creative, CX, tech, media and communications – but hard to access for specific capabilities.

The new CHEP Network has unbundled 11 core services which can be tapped individually. They are: media, consulting, PR, creative, research, social, data & business intelligence, tech, experience, design and content. 

Unbundled, rebundled

Hind said about 35 per cent of CHEP Network’s revenues were from “single point solutions” with additional growth from the new structure enabling those capabilities to stand alone in the market. A single P&L for CHEP Network remains. 

The new CHEP is still driving integrated services contracts for larger enterprise-size clients like Samsung and FlyBuys, he added, but breaking up the 11 core capabilities for easier access to brands seeking a single service or a custom combination is intended to facilitate the agency’s growth.   

“What we’re really trying to do is be really responsive to both sides of the market,” Hind said. “For those scaled clients, the larger ones, we want to continue that. If they want to come in where we thread the needle through five, six or 10 plus disciplines, we’ll do that all day long. But if there are other clients who want us just for media or martech for example, then we’ll happily take that on board as well.”

New economy creativity

So what’s behind CHEP Network’s 'new economy creativity” positioning?

“We strongly believe that story and system need to work together to make meaningful impacts for brands,” said Hind. “One won't work without the other. New Economy Creativity is about the fusion of creativity, tech, data and media to make an impact in a strategic and purposeful way.

“We see marketers now wanting more creativity infused across every touchpoint, it’s the multiplier of impact and differentiation," he suggested. "They want their tech investments to deliver more and we're increasingly seeing that centre around creative ideas built purposefully for bespoke channel-based engagement.”

Brand campaigns versus brand experience

McLeod acknowledges the resurgence of marketer interest in brand investments through advertising and marketing campaigns but says there is huge demand from companies to carry that through to customer and digital experiences.

“I always use the analogy of a bank,” he said. “I can't even think of the last time I saw a bank ad on TV but I can interact with my bank and I do every day through the app. So people are becoming much more conscious of the brand experience.”

He said CHEP’s tech engagement for ANZ in New Zealand had “rebuilt the entire banking experience”. “I would argue that is probably more likely to shift the brand perception of ANZ than just a marketing campaign. It’s having an agency that comes in that can do that work. Everyone says they can do it, but not everyone has the capability to truly do it.”

Creativity returns

'New economy creativity' taps the rhetorical allegiance many brands are now making around creativity and creative thinking.

The Iconic’s just departed CMO Alexander Meyer, who left for Canada to join Saks Fifth Avenue parent, Hudson Bay Company, told Mi3 last month that creativity was replacing tech as a key business differentiator. Tech, Meyer said, remains critically important but is now just table stakes, citing TBWA\Worldwide chairman Lee Clow: “The art of storytelling, the art of the idea is ultimately going to come back after everyone is over this infatuation with the technology that allows us to deliver the ideas.”

McLeod concurs. “I fervently believe that we are stepping into a new golden age of creativity,” he says. “What excites me is that the form of storytelling, the art of the idea, that Lee references will be much more varied and creative than ever before. Our ideas are being shaped in exciting new ways by both the platforms that the story appears in and the technology that enables it. For example storytelling on a platform like TikTok is vastly different to a brand story that appears as an ad on free-to-air TV, or one that comes to life through VR in the metaverse.”

CHEP is making a new play for all of it.