Convergence conundrum

Angela Tangas, the former ANZ CEO of Dentsu, now running its UK unit, is not your typical marketing services holding company or ad agency CEO. She’s been client-side for most of her career and deep in tech. But she’s also the architect of Dentsu’s overhaul designed for “convergence” and has plenty of detractors. They’ve now gone. Lots of them. If any remain inside the company, no-one’s saying anything.  

This is the challenge in sizing up the state of Dentsu’s “transformation” here: By many accounts, Tangas’ management style is fairly brutal but is it this or the aggressive overhaul of the local business – complete with new language, structures and a wipeout of nearly 20 operating brands down to a core of five – that has stirred her detractors for the past 18 months? Are those detractors simply not liking the necessary change towards the convergence that Tangas speaks of – how do global marketing services companies stitch together their disparate and usually autonomous media and creative units with technology, customer experience and data to produce better business results for their customers? 

Big holdcos like Dentsu, WPP, Omnicom and Publicis have made plenty of attempts over the past 20 years to integrate the service offers of sometimes dozens of specialist firms in their portfolios. It’s usually been with little material or lasting change. WPP’s Ogilvy was doing it 20 years ago and made another attempt five years ago before, ironically, it hired Deloitte Digital’s global boss Andy Main who blew up the model that blew up the earlier model. “My move was basically an indication that it is much harder to scale creativity than it is to scale technology,” Main has said. “I can acquire a lot of technology to accompany an already scaled creative business.”     

Dentsu ANZ is certainly blowing up its old model. 

“I prefer not to call us a holding company. We like to think of ourselves as a bit of a hybrid,” Tangas told Mi3 in a wide-ranging interview from her new base in London.

So what is Dentsu, what is it trying to become and why?

First the why, per Tangas: “From every conversation that we're having with clients … they're recognising that given the pace of change in the consumer environment, given the pace of change in terms of technology advancement, they're recognising that there's a real convergence here now.” 

Tangas is right on this front – from her customer’s customer standpoint, whether B2B or B2C – they see one company, one brand, one service or one product. Yet beneath the waters is chaos. Armies of specialists in different disciplines inside and outside client organisations are furiously pushing their expertise and solutions, often unproductively and certainly at sub-optimal levels. In the case of traditional agency holding companies, it’s been mostly about marketing communications – or the creation and delivery of messaging across many and any channel – paid, owned or earned.

Been there, done that

It wasn’t until the late 1990s that “full-service” media and creative agencies were broken up by their holdcos. Now they’re all trying to stitch it back together in some way or another – Coles’ recent Smith Street consolidation is a case in point – but with it comes another truckload of complexity. Convergence is not only about how the holdcos do creative and media better, they have to catch up on the CX and tech boat they missed because life was good, profitable and comfortable and at the time deemed marginal. But the rise of marketing automation, customer experience and data has created new, lucrative territory for some consulting firms and an array of new tech specialists – think dedicated Adobe, Google, Salesforce, Microsoft and ServiceNow firms – that the traditional holdcos have been late to, along with many of their client marketers, by the way. 

Deloitte Digital’s Australian lead Esan Tabrizi explained it this way in how the opportunity for his firm materialised over the past decade (he has circa 1400 people doing brand, tech and creative, although the latter has a broader business agenda): “I would argue maybe 10 or 12 years ago, CMOs, at least in Australia, were giving up ground on technology and data and just focusing on creativity, advertising, communications,” he told Mi3 last month. “And even the rise of the Chief Digital Officer and Chief Transformation Officer, and in some organisations that still is a key part of the organisation – I'm not dismissing it – but my personal theory is that the rise of the Chief Digital Officer role was … created where CMOs weren't filling the technology gap. It needed someone that had the creativity, the marketing understanding of customer that's inherent in the CMO, but it also needed someone who understood tech stacks and how to effectively use data.”

Dentsu's next model

Holdcos and their agency networks didn’t take the change seriously enough and Dentsu’s Tangas also gets that bit. “My job is to represent our customers; ultimately we’ve got to solve for how we help them with whatever it is they might need. So how we structure ourselves to deliver on that becomes the most important point because we need to be agile, we need to be flexible and we need to be adaptive to the pace and the responsiveness to change that they require.” 

For Dentsu ANZ it looks like this:

• Agency brands have been slashed from 26 to five.
• Dentsu has three core business units or “service lines” as Tangas calls them: creative (Denstu Creative under Kirsty Muddle), media (led by Danny Bass) and customer experience management (John Riccio).
• An “orchestration” or “solutions layer”. Says Tangas: “If we have a new opportunity from an existing customer, who are the team members that we need to mobilise around that opportunity. What’s the strategy? What are the products and services that we require? How do we package and then take it back to the client?
• Integrated Client Leads: “This is an individual that’s responsible for the portfolio management of a client. Their responsibility is to grow that client horizontally across the group. We have quite a few members of what we call ICLs in the business that then work with Solutions – more broadly they identify where our biggest integrated client opportunities are and then ways in which we need to go to market to create those opportunities. Let’s take Woolworths, Toyota or Medibank as examples."
• Tangas continues: "Each one of those clients have an ICL on them because they’re a portfolio client for us. They’ve got a client lead. However, they might be sitting in Creative looking after Qantas and they would still be responsible for looking at horizontal growth with the support of the Solutions team. They wouldn’t necessarily at that point be an ICL because it’s like a career progression. You start as a client lead and then work up to becoming an ICL. They are quite important roles within our business.” (Side note: Sir Martin Sorrell talked about WPP’s “horizontality” model ad nauseum until he didn’t). 
• Then Dentsu’s “teaming model” kicks in. “From an internal orientation, what are the teaming models that we need to put in place to support that outcome for customers?," per Tangas. "It’s the actual talent and how that talent works together every day. I think it’s really exciting to be honest because it opens up a whole brief, not the brief a customer might think they require when you start to bring the right minds to the table. A media opportunity might present itself, but it won’t just be media members working on responding to that media opportunity," she adds. "This is a fundamentally important shift because as we know, the media landscape is evolving, client expectations around media are evolving and we believe creativity and technology have a really important role to play in driving really awesome media outcomes for a customer.”  

And finally on this, when asked, Tangas gives a live example of this approach on the ground with an unnamed client: “We’re working with a well known Australian brand and they've had a pretty interesting time over the last three years, as many brands have. And that really started out being a very traditional creative client. What we've been able to do, particularly over the last year, is start to look at how are we helping them with more of their CX strategy and the digital transformation strategy within that." Moreover, she says, "How are we helping them think differently around their pricing strategies? Because pricing has an impact on how we then think about packaging and promotion, which links back to the work that we're doing in the more traditional creative side of the business.

"And then how do we think differently around the ways in which we need to activate the products and services within their business to help their customers understand that there's much more to that business than what they've been typically known for? So it's been quite exciting, because we've gone from the inside of their business out again and are really helping them better monetise the products and services that they have.”

New-world, old-world clients

It all sounds snappy but the new ways of working throws up a challenge for Dentsu – not all clients or companies are equal, equally progressive or up for new-world models. And again, like perhaps some of Dentsu’s former execs, there are companies that don’t want the change.     

“I think that’s right,” says Tangas. “We’ve got to meet our clients where they are and then work together on what the evolution of our partnership could look like. And that means different things for different clients. So there will always be clients out there that are looking for more traditional led media services, for example, whereas there will be others that are looking for something a little more innovative and future focused. And so that's part and parcel of how we need to shape-shift to deliver against any one of those products, if you like, that they're seeking to buy from us.” 

Ultimately though, Dentsu, says Tangas, is looking at what future customers will need and how the firm sees “around corners ahead of time and helps them navigate that change … we’re looking at what are the types of customers that want to win and grow with a business like Dentsu. But more importantly, who are the types of customers that we feel we can actively make a really material difference to, [in terms of] their business over the long term? That’s got to be our focus.”

Tangas says for Dentsu to get there, the firm has a “clear acquisition plan” to build more capabilities and it’s not “just specific to customer experience management”.  

We’re all but out of attention on this one but two final points. Dentsu New Zealand has gone to a fast-forward model of Dentsu Australia under a structure tagged Dentsu One. In that instance, the brands are bundled together with their service offerings elevated. There a very mixed signals coming out of that smoke stack so far. 

The new boss

But that’s a job for new CEO Patricio De Matteis, currently Chief Digital Officer at Cognizant after a long tenure at Accenture Interactive, now Accenture Song, and a shorter stint at PwC. De Matteis was APAC Managing Director at Accenture Interactive and co-led the $60 million acquisition of The Monkeys, so clearly on paper he has some appreciation for creative chops. His background though is deep in customer experience management and like Tangas, is probably not enthralled by the dark arts of media, which remains a significant part of Dentsu’s business.

But De Matteis will bring some new management consulting discipline to the business, which is clearly where Dentsu wants to lift some more process and thinking from. The traffic has certainly been going the other way for a few years – consulting firms from KPMG to Deloitte, Accenture, PwC and EY are stacked with former agency types.        

De Matteis will have to figure out how far he takes the agency business into the ways of consulting firms and it will be fascinating to follow. He is widely considered as approachable, which is probably welcome inside the business but on the rest, the cliché holds: time will tell. 

Dentsu’s intent is right. In 18 months time we’ll see whether this transformation program is brave, brash, beautiful or busted.