Deep Dive

NRMA aims to build world leading customer experience and create intergenerational brand loyalty, having wrapped its entire marketing, customer experience and relations, comms, regulatory and transformation functions into a single combined operation in a bid to deliver. Accenture Song wants to prove its end-to-end brand, CX, and digital transformation capability – and boss David Droga thinks NRMA can be a global proof point. Both parties will be held to matching ambition with results – and are now moving in earnest into first stage delivery ahead of the Paris Olympics. Droga, IAG Chief Customer & Marketing Officer Michelle Klein, Accenture Song Creative Chair Nick Law and ANZ Lead Mark Green unpack the plan. Plus how AI is already shaping the marketing industry's future – and where the top end of town is placing its investment bets. Hint: less advertising.

Meta’s News Media Bargaining Code rug-pull lit up the media sector and has government, regulatory and lobbyist wheels belatedly spinning. Upwards of $70m in publisher cash is about to evaporate, leaving Google the only game in town for an already stressed news media sector. Smaller publishers fear Meta pulling news from its feeds in Australia – as it did when Canada attempted to strong-arm the social media giant into paying news publishers – will lead to potentially existential audience and revenue hits. Not to mention a "bin fire" of disinformation. And there could be widespread carnage if the Federal Treasurer ‘designates’ Meta, as is probable, forcing the tech giant into an independent arbitration process which by law means it will have to pay what the arbitrator rules between one of two fixed bids from Meta and media companies. And it would likely have to pay more media companies. Some argue Meta’s concerns for Australian designation means it will set international precedent for other countries to hunt billions more for news media – triggering a full-scale exit of Facebook and Instagram in Australia rather than pay and kick-start a costly global movement. That could cause chaos for small businesses – and the economy. News Corp chief Michael Miller, Nine publishing boss Tory Maguire, Private Media CEO Will Hayward, Capital Brief chief Chris Janz and the co-architect of the news media bargaining code, former comms minister Paul Fletcher, unpack where Australia heads next.

When it comes to principal-based media trading, AKA arbitrage, “we can argue about the pros and cons but collectively [marketers] are saying that they kind of accept, if not sometimes prefer, that model,” says Madison and Wall founder and one-time WPP global business intelligence chief Brian Wieser. It’s no coincidence that two of the “most aggressive” proponents of buying ad inventory from media owners and on-selling it to clients with handsome markups saw their respective media businesses notch double-digit growth in 2023. Publicis and Omnicom also have the most bullish growth forecasts for 2024. Yet their broader business strategies and models are almost polar opposites and Wieser sees a structural fault line widening across the major holdcos – unified businesses that sideline individual agency brands at Publicis and Dentsu versus traditional multi-brand models at WPP, IPG and Omnicom. Both can work, says Wieser, but he thinks those with fewer silos are “more likely to thrive” and suggests very few marketers still care about conflict, one of the original reasons for holdcos running lots of agencies. Dentsu is tracking closer to Publicis on consolidation but the Japanese firm hasn’t executed like the French. One positive for Dentsu, per Wieser, is “it’s hard to imagine it getting any worse”. Regardless of model, he sees a single key differentiator in determining holdco winners as IT services firms streak ahead and the big platforms use generative AI to eat further into agency turf: Investment ambition, or lack thereof.

Some media companies are feeling the heat on what they describe as a tightening advertising market, particularly linear TV. But there's a very different story coming out of investor briefings in recent weeks at some of the world's biggest brands. Many are increasing their advertising and promotion and much bigger overall marketing budgets. Some of these listed CFOs and CEOs apparently agree with marketing’s brand building champions – at least at face value. L'Oreal's overall advertising and promotion budgets, for example, pumped 11 per cent in 2023. Unilever, Diageo, Kellogg’s, Gucci, Mondelez, Ford and big insurance companies all told investors they're upping advertising and marketing budgets. But Brian Wieser, a long-time US-based equities analyst who founded Madison and Wall thinks most are piling into performance for short-term hits that "helps them justify their existence for another year". Long or short, they are unmistakably pulling further away from the zero-based budgeting ethos that saw Kraft Heinz "explode". Ironically, the big walled gardens now hoovering up all that increased investment from brands are now looking seriously at zero-based budgeting, per Wieser, with potential fallout for media's supply chain.

Some bosses think the work-home-flexibility balance is “out of whack”, crunching productivity and profitability and allowing people to ‘take the piss’ – especially at agencies. Others insist those who put in the office hours and face time will get promoted faster and get paid more – particularly younger staff because “human economics” always prevail. Yet for every frustrated CEO, there’s a story of success and an advocate for a two-way model between employer and employee.  So how far should agencies and corporates return to an old Gen X way of working – often brutal hours and fostering presenteeism – versus building a new future of work? And if we are stuck in limbo, and are required to cope with a generation preferring screens over phones and physical contact, what gaps must we fill in capability building, productivity, efficiency, culture and profitability to actually make it sustainable? Agency leaders and consultants have some answers – and some genuine fears.

At one point “the performance marketing [team’s] main KPI was actually how much investment they could deploy,” says Uber APAC marketing boss Andy Morley. “The mandate was spend, spend, spend … It was getting crazy.” But then they realised it wasn’t actually working. Then they flipped hard to brand – well above Binet & Field’s 60:40 heuristic – and powered to delivery market leader. Today Morley says both Uber’s rideshare and food business has seen no slowdown despite squeezed wallets. Now it’s driving into grocery and beyond with another brand-powered push: “Pianos delivered in one hour” is the CEO’s mission. For its rides business, removing 1 million of Australia’s second cars within five years is the target and Morley says growth – and consumer behaviour change – is rapidly underway. Uber’s moves into trains, planes and buses in the UK could signal the shape of things to come. Meanwhile Uber’s ads business is starting to motor. Drinks and entertainment advertisers in particular are tapping people on the way to bars and on their way home. Morley thinks a shift to attention over increasingly challenged reach and frequency metrics will shape both Uber’s own spend – and the media dollars it seeks from advertisers.

50 Australian CMOs have just been briefed on a “massive opportunity” for marketers to increase influence and impact with executive leadership colleagues via ‘humanised growth'. How? By offering their strategy and insights nous to help build out divisional and all-of-company stakeholder-employee management blueprints and programs. But it’s crucial to avoid making those cross-departmental overtures appear a land-grab, says former Unilever marketer turned Institute for Real Growth (IRG) co-founder Marc de Swaan Arons. In town with the IRG’s latest study across 475 CEOs, CFOs, CCOs, CMOs and HR chiefs, he rejected the idea that marketers are too crunched by exploding remits to drive higher order value creation by breaking down silos – they have teams to do the tactical legwork, he suggests. He’s also scathing on misguided purpose and ESG, which has trapped his former employer in the past and is acquiring “Voldemort” status among boards. Corporate purpose, he says, is not social purpose – and is a cornerstone of the IRG’s five-point plan to drive ‘Humanised Growth’. The likes of Suncorp and CMO Mim Haysom, reckons de Swaan Arons, are nailing it. 

The ANA’s latest transparency report looks ugly for agencies, the ad tech supply chain, marketers and their procurement departments. Probably why its findings – just 36 cents on the programmatic dollar stand a chance of being seen by audiences – have been met with deafening silence. None of the big agency holdcos have piped up, while Google, Yahoo, The Trade Desk, Pubmatic and other major adtech players didn’t allow the ANA into their systems. Not even P&G played ball. Nick Manning, who co-authored the ANA’s scoping brief, says even 36 cents on the programmatic dollar is optimistic – because the investigation spanned sophisticated advertisers and because it doesn’t factor-in things like agency commissions while its calculations are based off feeble viewabilty metrics. “We are talking about a massive global marketplace and it is out of control,” says Manning. “Nobody wants to derail the gravy train.” But the report differs from myriad predecessors because it spells out exactly how advertisers, their procurement departments and agencies can regain control. Here’s what’s going wrong in the $88bn marketplace, and for those with appetite, how to fix it… Before the open web money gets rechanneled from publishers to walled gardens and retail media.