Mi3's top Agency & Consulting stories of 2023: Pitch rage, talent raids, job cuts, restructures, measuring contests, AI's remuneration crunch, big wins... and the return of the Mat
Another year packed with reviews, pivots, and positioning as agencies and consulting firms move deeper into each other's turf – but this year with the spectre of generative AI finally pulling the pin on remuneration models, or "hours based extraction", per one agency boss. Some smart takes from disruptive independents jostle with the strategic capability of the large holdcos but almost all are working through the implications of a tech-regulatory-business model crunch – and for many a generation reluctant to get back into the office.
30.
It’s been five years since we advertised price – you’ve got to hold your nerve.
Kia Australia marketing lead Dean Norbiato and Havas Media CEO Virginia Hyland
Kia Motors reviews $19m media account as Australia's automotive battle for the top three heats up
News that Havas Media was defending the $19m Kia account in Australia as the carmaker called a review picked up traffic. The move came as Ford sales accelerated, with the US manufacturer then setting its sights on Kia's place on Australia's automotive podium. It's since roared past as sales soar and Kia's level out after a couple of very strong years. Meanwhile, the account went from Havas to Melbourne independent Advertising Associates.
29.
Creativity thrives under duress and change, and I think that this is a necessary thing for us to find the next version of what creativity can add. Gen AI is basically a problem solver – I just worry about when it decides that we're the problem.
David Droga in conversation with Sunita Gloster at SxSW Sydney
'I want to be the next Prime Minister of Australia' – David Droga says Gen AI should destroy mediocre ads and can write the next Fast & Furious; creatives either embrace tech or get out
Arguably Australia’s greatest advertising export reckons the industry needs to kick its anxiety about Gen AI and focus on how machines can enhance, rather than hinder, the creative industry. Accenture Song CEO David Droga used his SXSW platform to urge creatives to take off the rose-tinted glasses and embrace how tech can power their roles. If not, they should leave advertising. He also called out the “self-inflicted” damage of “garbage” TV advertising and reckons that Gen AI will weed out mediocrity, but also elevate the need for distinctive creativity. Meanwhile, Droga also mooted a run for PM.
28.
Anyone who in-houses is questioning it. There's a lot of saving face.
L-R: Tumbleturn Media's Dan Johns and Jen Davidson: “Too many brands are spraying out generic retargeting...their CX has improved at the customer journey level but there is a disconnect between performance media and CX," says Davidson.
Dan Johns swaps Havas Media for Tumbleturn Media as pitch consultancy warns brands, agencies failing to align performance media and CX, in-housing underperforming
At the start of the year former Havas Media, Mediabrands and Ikon boss Dan Johns joined Tumbleturn Media to lead agency review programs as marketing teams groan under rising workloads, static headcounts and outdated operating structures which turn agency reviews into an "information gathering exercise ... while the client is trying to work out what they want". Founder Jen Davidson warns in-housing deployments for many are misfiring, becoming a "face-saving" exercise for some, while CX and performance media activities are misaligned – and that needs to change. The two are busy changing it – and now with another former agency boss leading the creative aspect.
27.
The traditional model which views agencies as a cost may be easy to balance from a procurement and operations perspective, but ultimately it drives both sides to act against the interests of growth, unintentionally or otherwise.
From top left, clockwise: Michael Rebelo, Jaime Morgan, Jimmy Hyett, Wesley ter Haar, Mat Baxter and Claire Fenner.
‘AI will drive hourly rates up, not down’: Atomic, Media.Monks, Publicis, Thinkerbell, This is Flow chiefs on why Huge’s Mat Baxter is right – but wrong – on rethinking how agencies get paid
The old agency model – and money – question: Huge global CEO Mat Baxter reckons advances in AI will give client procurement teams all the ammo they need to turn the screw, eating margin as billable hours become less relevant. But some agency bosses told Mi3 the opposite may be true, while others said they are already flipping how they get paid – and in some cases making better money. Publicis boss Michael Rebelo, Atomic 212 chief Claire Fenner, This is Flow CEo Jimmy Hyett, Media.Monks co-founder Wesley ter Haar and Thinkerbell's Jaime Morgan weigh in.
26.
[Clients have been] cautious and very much focused on the short term.
Sir Martin Sorrell, the executive chairman of S4 Capital.
Sorrell’s S4 Capital cuts staff, outlook as tech reliance bites, share-price plunges
In September S4 Capital's share price tumbled more than 25 per cent on weak demand as tech firms pull-in horns. The firm said 500 jobs had gone, and signalled more were likely as firm pins hopes on bumper Christmas. Analysts suggested it will need one.
25.
My goal will be an entire fluid workforce, not only across WPP but even to try and make some of the boundaries more porous. So the consultants that we work with outside of WPP, I want to be able to leverage that capacity and capability in a much smarter, more fluid way.
Nearly rocket science: "We can optimise individual agencies but the Holy Grail is to have this fluid workforce that essentially can be used across all of the different agencies in a much more utilised way," says WPP's global AI boss Daniel Hulme.
‘An entirely fluid workforce’: WPP plans AI-allocated talent across 120,000 workforce plus external partners – with skills to trump job spec per holdco’s global AI chief
WPP is using AI to allocate agency staff based on skills, not job specs – and is working on a rollout across not just its 120,000-strong workforce, but to external partners too. The holding company's AI chief Daniel Hulme modelled bumblebee brains as a PHD student. Now he's applying it to the workforce, after honing it on distribution for Tesco trucks and PwC's auditors in the UK. He thinks AI can make a much smarter fist of workforce optimisation than humans, provided the humans set the right parameters. Optimising to one metric, he warns, risks a major backfire.
24.
Cashrewards has an in-house performance team, so we’ve been able to quantify business outcomes from the brand investment to leads, sales and acquisition. That’s one example, but it’s a hot topic. You have to be able to measure that brand investment [in terms of its revenue contribution], but we are starting to see that swing into brand [investment over performance].
ROI cubism: After a push by big media agencies to become all things to all marketers, Zenith CEO Jason Tonelli thinks there's counter demand for a media purist. Now he has to prove the theory.
'What will we do differently? Media, really well': Zenith CEO Jason Tonelli zigs as market zags on consulting, diversification, bolt-ons; backs return of research, insight-driven buys to win; lands Modibodi
After taking the helm at the start of the year, Zenith CEO Jason Tonelli outlined the agency's new proposition: insight and research-powered media. He sees a gap in the market for an agency that's not trying to be something else. The former Performics and Razorfish boss and Publicis Media digital-tech supremo also sees a swing back to brand investment over short-term performance spend as marketers realise they can get a double hit amid consumer belt-tightening.
23.
No comment.
Succession: Woolworths and Dentsu have forged a two-decade dynasty under agency bosses including Danny Bass, Sue Squillace, Simon Ryan and Harold Mitchell Pic: Mi3
Woolworths backs Dentsu to continue $100m media duties in 'multi-year' deal
After long rumours of a pitch, Woolworths and Dentsu in June solidified their relationship while avoiding a drawn out competitive review experienced by rival Coles last year. The multi-year contract extension is a coup for Dentsu Media chief Danny Bass, and keeps intact a bloodline stretching back to Harold Mitchell.
22.
Retailer media is starting to be a significant driver of automation and AI within digital production. To unlock the potential of those channels, it forces you to use them.
Hogarth ANZ boss Justin Ricketts: "There is a skill in operating these generative AI tools. We now have to brief these platforms."
Hogarth CEO: Retailer media stretching production limits, only automation, AI can deliver volumes – 'making ads without humans is only months away'
Only AI and automation can deliver an explosion in digital ad volumes further fuelled by retailer media's rise – and the next step is getting machines to make the ads entirely. WPP-owned Hogarth is already using AI to "predict which ads will work and the performance they will deliver based on past learning," according to CEO Justin Ricketts. "That is live globally and will be live in Australia within weeks." He claims "generating ads without humans" using ChatGPT and DALL.E "is only months away." That was at the start of the year. Hogarth is now doing just that with the likes of L'Oreal.
21.
I guess the party line for most organisations is [AI] is going to create jobs because they don’t want to sound dystopian. The fact is that nobody knows. But it is within our gift to create that future. I genuinely believe that architected in the right way, used in the right way, [AI] will just augment and enable people to thrive.
WPP's global AI chief Daniel Hulme says holdco building client 'brand brains' to ‘glue’ data to ChatGPT in bid to make AI powered ads – and first one is months away
Marketers are scrambling to work out how to use AI. WPP may have a solution. It's building "brand brains", according to Chief AI Officer Daniel Hulme – and plans to "glue" those troves of individual brand assets and data to generative AIs such as ChatGPT to create ads and content that doesn't require staff to sit there prompting eternally. The first brain is months away. If it works – Hulme is pretty confident in the concept – a brand brain factory may be the next addition to the multinational holdco's scope of work. (It is, with slides presented at SXSW suggesting the firm is working on 'brains' for the likes of Big W, Coca-Cola, Country Road, Dyson, Ford, Kraft Heinz, Mondelez, Nestlé and Woolworths.)
20.
We’re looking forward to playing our part in their future growth.
$20m worth of wings: Atomic 212 swoops for Red Rooster, Oporto, Chicken Treat
At the start of the year, Atomic 212 carried on its hot streak, landing the Craveable Brands account, thought to be worth $20-$25m in annual billings. Tasty.
19.
Our scope of work with our agencies will be changing and we are working through those changes with them.
Ring of fire: Telstra reviews creative roster 12 months after CMO Brent Smart lands
Telstra's creativity-loving CMO Brent Smart ran the rule over his creative agency roster in a closed review back in September. The former Saatchi & Saatchi New York CEO has been vocal in his ambition to prove smashing creativity is a business growth lever, particularly for a listed blue chip. He ultimately opted for a bespoke set-up, +61, pairing independent hot shop Bear Meets Eagle on Fire with Omnicom-owned TBWA and OMD.
18.
I want to do what I love doing, which isn’t really operationalising 600 people and the second largest agency in the country. I want to get back on the tools.
New boss, big boss, old boss: Incoming EssenceMediacom CEO Pippa Berlocher, GroupM ANZ CEO Aimee Buchanan, EssenceMediacom Managing Partner Pat Crowley.
‘Back on the tools’: EssenceMediacom CEO Pat Crowley steps down, GroupM makes second raid on Mediabrands Reprise unit as APAC boss Pippa Berlocher takes over
Months of conjecture over Pat Crowley’s tenure as CEO of EssenceMediacom ANZ came to an end at the start of the year with GroupM making a second raid on Mediabrands’ performance unit Reprise for an agency boss, parachuting in APAC President, Pippa Berlocher as ANZ CEO. Crowley, after overseeing a second successive agency merger, stepped back to get more hands on with long-term client Commbank – before finally joining the bank la few months later.
17.
If you're trying to implement a digital transformation as an enterprise, but actually your leaders don't understand the capability or the skill set to you require for every part of that journey, you're not going to get there.
Damon Rees, ex-CEO, Service NSW, now Managing Principal & CEO at Better As Usual.
Prioritise or die: Damon Rees on how putting CX at the heart of Service NSW remodelled digital service delivery – a transformational tale for agencies, consulting firms hunting contracts
Damon Rees had 36 hours notice to build a border permit system for NSW. 37 hours later, he says, 100,000 permits had been issued. The former Service NSW CEO unpacks how an agile culture that put customer experience at the heart of the operating model helped the state government to roll out and iterate new programs at breakneck speed. For the army of agencies and consulting firms now piling into CX and digital transformation, the former Woolworths CIO and Macquarie digital supremo offers some fundamental lessons: CEOs must own customer experience culture; prioritise or die and understand exactly the skill sets required to deliver.
16.
We didn't go out and spend billions of dollars on cookie-based solutions or PII data as some of our competitors have done ... Some [businesses] are sitting on the razor's edge of whether they're going to be compliant or not.
Everything comes back to measurement: GroupM global boss and ANZ chief Aimee Buchanan on linear TV's decline, Netflix's opportunity, incoming privacy headwinds, building new metrics – and getting people back in the office.
GroupM’s global boss Christian Juhl, ANZ CEO Aimee Buchanan on Netflix ads, linear TV’s end game and why measurement sits at the heart of all marketer conundrums
GroupM global boss Christian Juhl says rival holdcos may now regret spending “billions of dollars on cookie-based solutions or personally identifiable information” as privacy moves dead centre in regulatory affairs. In the meantime, he says a key challenge facing marketers across every facet of their business, and fundamentally “how they justify these massive budgets to their CEOs” comes down to measurement. But building post-privacy metrics and proxies, per Juhl, is probably the most “dynamic” – read challenging – part of his business. GroupM is building its own econometric or “full funnel” models for brands because, says ANZ CEO Aimee Buchanan, market mix models focused on shorter-term campaign metrics no longer cut it. Meanwhile, both Juhl and Buchanan have been pushing hard on carbon-based trading. Culling low performing, high emitting inventory is the easiest first step, says Buchanan, followed by stripping out digital weight from creative assets. But both bosses are less aggressive than previous statements around moving ad dollars based on emissions. Plus, Juhl is unsure how long brands will “pay more for less” on linear TV – and the world’s biggest media buyer thinks the world’s biggest streaming service, Netflix, has an opportunity to start integrating brands.
15.
I’m just after the best outcomes.
Each way bet: Tabcorp splits agency remit handing WPP's Ogilvy customer, Accenture Song creative, brand, platform
Tabcorp's overhaul under customer chief Jenni Barnett continues. At the start of the year the firm hedged its bets on agency partners, with WPP's Ogilvy scooping CX duties and Accenture Song taking on brand strategy and creative. That outcome raised eyebrows in some quarters, given both firms tout end-to-end capability, though Barnett had previously indicated she was open to splitting the business. Both, firms she said, are "world class".
14.
We're spending money with Google to advertise. We're using Google ads to optimise. And we're using an attribution model that we don't understand – because we can't see it to report on success. You're totally entrusting [everything to Google].
Google's clear out of attribution tools risk further reliance on Google marking its own homework, agencies warn.
Google culls attribution tools – agencies fear swing back to last click, raise transparency fears
Google's decision to abandon first click, linear, time decay and position-based attribution will make it harder for advertisers without larger data sets to validate Google's findings, warn agencies, and may force advertisers back to last click attribution.
13.
We are moving really quickly around Generative AI specifically, but it's not from the standing start.
Kellie Nuttall, Strategy and Business Design Leader at Deloitte Australia says current AI skills translate naturally into the generative AI field
Deloitte launches generative AI practice, says existing AI capabilities up to the task
After what Deloitte describes as a decade's worth of investment in AI, the firm is now scaling up a generative AI practice, and says skills needed are based around a core of data capabilities.
12.
This result is consistent with RECMA’s February 2023 Qualitative Report and the most recent Media i survey capturing media owners’ feedback on the strategic quality, transparency and delivery of media agency holding groups. Against all of these measures, OMG was placed number one in the market.
Top three: Omnicom Media Group, GroupM and IPG Mediabrands are on the podium in RECMA's latest Aussie rankings
RECMA rankings: OMG, OMD hold top spot as billings contrast recent (and vanished) COMvergence report that pushed GroupM to top
Omnicom Media Group (OMG) has the biggest media billings in Australia, per August's RECMA agency rankings; its fifth straight year at the summit. GroupM and IPG Mediabrands were the next largest groups. The report contrasts a recent (and seemingly redacted) COMvergence report that placed GroupM on top, a result that had stunned – and riled – some. RECMA's results also show OMD well ahead on the agency list, though one independent agency has been powering up the growth charts for three years running.
11.
There isn’t [one Australian] client I’m talking to that can fill their bench with the right people. It's not just tier one people – it’s just kind of fill the bench. So if we’re not looking at developing and acquiring that talent, and it’s a low priority in this market where we’re losing people by the droves, that does suggest a problem.
Art, analytics and ideas: Deloitte Digital's Global head Sam Roddick and Global Commerce and Marketing Practice Lead Nick Garrett. "It turns out that it's pretty hard to blend creativity with technology," says Roddick.
‘I’ve never made a client cry’: Deloitte Digital Global head Sam Roddick’s mission with ex-ad agency boss Nick Garrett to mimic Apple’s creativity, design and engineering for digital restructuring programs – and why the ‘majority’ still fail
During a high-level pitch to the CEO of a leading but unnamed global consumer packaged goods firm hunting 25 per cent growth in a mature category, “the eyes lit up” at the combined code, creative and culture components being proposed by the “cold, hard analytical” consulting firm Deloitte Digital, as Global CEO Sam Roddick recounts. The pitch involved a top Deloitte Digital team unveiling the blueprint for a new direct-to-consumer (DTC) business unit to deliver on the CEO’s ambitious growth remit. Roddick hopes it’s a benchmark-in-the-making as his firm accelerates to “mimic” Apple-like design and creative capabilities with engineering and systems prowess. The new ‘X’ factor for Deloitte Digital though is the nod to creativity and the business contribution it makes as a “value multiplier” for its industrial-grade customers. Part of Roddick’s global plan to help institutionalise creative thinking within the $16bn firm involves a former BBDO ad agency network CEO in Australia and New Zealand, Nick Garrett. But can the cold, hard, analytical firm really pull this off?
10.
The benefits are well proven: Better mental health, staff wellbeing, less absenteeism – just giving people time to do their personal admin. Now they have 23 days extra to do that and use as they like. It’s also about preparing our operating model for what is to come in the next 12-18 months with AI starting to change the way we work. Hours-based extraction of workforces will become redundant.
Taking your job? No, AI disruption actually means extra days off as firms move to "value-based output" and away from "hours-based extraction of workforces", reckon This is Flow's Jimmy Hyett and Catherine Rushton.
23 days more leave: This is Flow moves to nine day fortnight in bid for scalable, ‘value-based’ operating model in age of AI
This is Flow in April shifted to a nine-day fortnight. CEO Jimmy Hyett and CSO Catherine Rushton said staff – who asked for the shift – won't find hours squeezed into fewer days as the agency moves to a value-based operating model. Now its crew get an extra 23 days off a year. "Hours-based extraction of workforces" will become redundant sooner than some think, per the duo.
9.
Our teams are stretched and we’re supposed to keep the account wheels spinning while being wheeled into unnecessary reviews. It’s not sustainable.
Pitch Palooza becomes Pitchageddon: Review slew across VW, Unilever, Nestlé, BMW, Kia, McCain and more have agencies stretched, raging at procurement as consultants predict demise of village model
Another year another load of pitches. Some agency bosses were feeling the heat as their clients called reviews, with the usual gripes about time wasting, rate-squeezing and enemy of the people procurement. But pitch consultants said it was more of post-Covid correction and push for consolidation than anything to get too excited about.
8.
If we weren't working towards a roadmap you would have people being made redundant over time because the market is fundamentally changing… you're still going to have people doing the trading function but we are going to be upskilling them in the investment strategy side.
Team transformation - OMD's new leadership appointments (L-R): Marelle Salib; Alison Costello; Nicholas Chin; Jane Combes; Tom Kirkham and Taylor Svarc.
Future proofed: OMD flicks digital titles, trading structure, doubles down on CX and martech with client transformation unit in overhaul after Mel Hey exit to GroupM; Programmatic video lags global peers because of publisher ‘blockages’
Australia’s biggest media agency OMD made a sweeping overhaul of its structure, people and business strategy at the start of the year. It has appointed six new leaders from inside the firm that will continue its “agnostic” media and platform approach. The firm is now going deeper into client transformation programs in which customer experience, martech and market mix modelling [MMM] become core services – not add-ons – in all client scopes of work. Co-CEO Sian Whitnall also nodded to the pioneering “omnichannel work” of former Chief Investment Officer Melissa Hey who “was incredible” – Whitnall said OMD had no desire to block Hey's rise to a Group Chief Investment Officer role at GroupM which Omnicom Media Group [OMG] couldn’t offer – Kristiaan Kroon has that gig.
7.
Yeah, I'm happy with where we're at. Has it gone as far as I would like? No, but it never would have.
Old friends, new foes: Omnicom Media Group CEO Peter Horgan and GroupM CEO Aimee Buchanan: “I'm pretty impatient and I always want things to move faster than they're moving,” says Buchanan.
‘I’m pretty impatient’: Aimee Buchanan on client losses and 16 months into GroupM overhaul; OMG’s Peter Horgan calls former lieutenant’s talent raids ‘irritating flattery’
Just over a year after defecting from Omnicom-owned OMD to take the helm at GroupM after a tumultuous period at the WPP-owned operation, GroupM chief Aimee Buchanan in February reflected on a work in progress. Talent raids on her former stomping ground – and other rivals – irked their bosses. But such is life. Turnarounds require smart operators.
6.
In classic Fletch style, yesterday when doctors explained Fletcher’s strict rehab regime for the next five months and to always remember his patient number, he responded with ‘Bloody hell. I feel like I’m going to juvie’.
Humour and resilience: Pat, Nicky, Fletcher and Levi Crowley.
‘Resilience inspiring’: Industry rallies behind former EssenceMediacom CEO, current Commbank media boss Pat Crowley and family with GoFundMe effort
The family of widely regarded media agency veteran Pat Crowley, who led the Commbank business for nearly two decades at GroupM before joining the bank in June, is facing a “shit show”, in their own words. Pat's son Fletch suffered a spinal injury in September, spurring Pat's sister Aine to start a fundraiser aiming for $500k to help modify their home. Industry rallied and the fund has since reached two thirds of that target. Would be great to hit it. Click here to give/go again.
5.
This is a corporate conscious uncoupling, but to quote the song ‘every new beginning comes from some other new beginning's end.
Taxing times: Ingram, Ferrier, Reid and Couzens have severed ownership ties with PwC
‘A corporate conscious uncoupling’ - Thinkerbell buys back PwC stake in wake of tax leaks scandal
One of the region's fastest growing creative shops decided to part ways with shareholder PwC following a national scandal involving the professional services firm.
4.
If you think scale is important, you don't know how an auction works.
A bridge too far? Media by Mother founder David Gaines says most media agency specialists are too narrow to see the bigger picture. He KPIs staff to learn context outside of their remits – because media buying is "just data entry" and scale "redundant".
Even a shrink couldn’t fix media agencies’ narrow mindset: Why Dave Gaines ditched GroupM to build Media by Mother, takes no mark-ups on media buying – 'just data entry' – KPIs staff on learning, plots Apac launch
After two decades at GroupM, Dave Gaines quit to launch Media by Mother, an offshoot of London creative hot shop Mother that he only half jokes may ultimately subsume its progeny. A major frustration with US holdcos, per Gaines, was the inability for swathes of their people to think laterally, critically and stay curious. He hired a shrink to try and fix the problem, and then tried to take a creative-agency led approach to media within WPP. Ultimately, neither worked. Now Media by Mother staff – many arts grads – are KPI’d to read, listen and learn outside of their remits to better grasp the bigger picture. If they do, they get up to 15 per cent more salary. If they don’t, “there are plenty of other places they can work.” The agency doesn’t make any money from trading media, “the money flows through their pipes, not ours”, and Gaines says media buying is a misnomer: “It’s just data entry”. Meanwhile, those arguing over Recma billings rankings are akin to bald men fighting over a comb: “If you think scale is important, you don't know how an auction works.” After hitting its five-year growth targets in two years, Media by Mother is now mulling an Apac office, and a Naked 2.0 model – except with execution, which Gaines reckons was Naked’s downfall. Its precise Apac location will be determined by finding curious, T-shaped contextual operators – and he reckons Australians are less fearful of competence than their US peers.
3.
One of the things that overwhelmingly comes through with younger people is they say they want remote working and flexibility - tick, we give that to them. And then interestingly … they say they feel a lack of engagement and connection with the company. I and my colleagues actually say okay, cool, well then come into an office.
Mat Baxter: "Did the pendulum swing too far too quickly on remote working after Covid? I think the answer is yes. Were we one of the companies that did that? The answer is yes."
‘We swung too far’: IPG’s Mat Baxter returns to Australia to run Huge globally as remote working proves an experiment in lost culture, capability and connection - next gen not ‘joining the dots’
Part one: After nine years in New York, the perpetually provocative expat and former global CEO of Initiative Media, Mat Baxter, now running IPG’s experience, tech and design firm Huge, returned permanently to Sydney in August to run the global operation that went fully remote – until Baxter realised it wasn’t entirely working. Now he’s bringing back office life, sort of – and wasting little time throwing the proverbial cat amongst the junior media pigeons.
2.
We’re not immune to the macro-economic situation that we all currently live in and we do need to address this so we're coming out the other side stronger. This has unfortunately meant that we've seen some impacts on our people, which any leader will know is never an easy decision to make.
Patricio De Matteis: “Like many other businesses, we’re not immune to the macro-economic situation that we all currently live in and we do need to address this so we're coming out the other side stronger"
Shakeout: Dentsu makes dozens of staff redundant; blames tough macros
Heading into the fourth quarter Dentsu shed staff as the holding group cuts costs. Although Dentsu would not confirm the total number or individual names, Mi3 at the time (September) understood it had made at least 40 people across all parts of its business, with some suggestions the final number was much higher. In the past few years Dentsu, under previous boss Angela Tangas, made dozens of executives redundant as it embarked on a business transformation reducing its number of agency brands from 25 to five in this market. Current Dentsu ANZ CEO Patricio De Matteis blamed macro-economic conditions for the latest round of cuts.
1.
If you're an agency and you sell 100 [head] hours today, you might only be able to sell 80 hours tomorrow because AI removes 20 of those hours from the process. So now you've got a business that's got 20 per cent less potential from a monetisation standpoint.
Mat Baxter: "We're not doing the award thing. We're not shouting PR in our campaign work…clients think we're a bunch of idiots patting ourselves on the back with awards, talking about how many things we’re winning. We can be a bit more refined."
‘AI is a really big problem’: IPG’s Huge global CEO Mat Baxter drops agency model selling people for consulting sector’s products and templates, margins up - and no awards, less PR puff and posturing
Part two: Mat Baxter used to be a walking headline but he pledges less of it. He’s headlong into a sometimes ‘painful’ reinvention of his global tech, design, ‘creative growth’ and innovation business which unashamedly has swung to the big consulting firms over agencies for its future as AI takes an initial 20 per cent of the agency workload off humans. Baxter’s parent company IPG generates circa US$11bn in revenues, mostly from its agency networks selling their people on a head hours basis. But he says that’s a doomsday scenario thanks to a killer combo for agencies of AI-led automation and margin killing procurement teams. More automation means fewer people that can be charged out on an hourly basis – and those that remain will be razored by corporate cutters. Instead, building advisory-based products and templates – or “productisation” – is one alternative Baxter says every traditional agency will have to consider to beat the machines and the number crunchers. Some already are – Dentsu and parts of WPP included.
