Initiative's Mat Baxter: Accenture should beware the 'pain' of media planning and buying

Initiative's global chief executive Mat Baxter on the agency's fightback in 2017, why he welcomes competition from the consultancies, and a crucial 12 months for the UK business.

Initiative's Mat Baxter: Accenture should beware the 'pain' of media planning and buying

On a sweltering day at Cannes Lions 2018, and as the initial spring in attendees’ steps down the Croisette fade to a weary trudge, Initiative’s Mat Baxter (pictured) is in buoyant mood.

He has every right to be. Since taking over as global chief executive of the IPG Mediabrands network in mid-2016, the Australian has transformed an anaemic agency brand into a new business force to be reckoned with, winning global business from Carlsberg, Lego and Converse, and retaining the all-important Amazon account, estimated to be worth in excess of $1bn (£750m).

After starting out at Zenith and subsequently co-founding the Asia Pacific arm of Naked Communications, Baxter made his name with an impressive five-year stint leading UM in Australia. Compatriot Henry Tajer appointed him as global chief strategy officer during his frenetic two-year tenure at the helm of IPG Mediabrands, before he was handed what appeared a hospital pass at Initiative.

Yet, against the odds, 2017 proved to be the best year for Initiative in as long as anyone can remember. Baxter attributes the revival to finding a "point of difference" to retain and attract clients. "The agency had lost its way a bit and the product was a bit homogenous. It has been a two-year effort to get us back on track, and that is starting to pay dividends now," he says.

At a Cannes Lions dominated by debate over the respective values of data and creativity, Baxter argues that Initiative’s increased focus on talent has paid dividends: "The pendulum has swung too far towards analytics at the expense of creativity. There is a human being at the end of the communication, often motivated by the irrational and emotional. You still need great ideas.

"While data and analytics offer a springboard to get to those things, to a degree it is replicable by anybody. Where the real magic happens in an agency is the intangible; the talent war is still the war you’ve got to win. A lot of agencies have spent money building up the infrastructure and systems, funded through cutting headcount in strategic areas around the business, and that has created a brain drain. It’s a risky exchange."

‘Bullet-proof vest’

For Baxter, agencies’ inherently creative cultures remain the "bullet-proof vest" that will help them to survive any incursions by consultancies, including the recent news that Accenture plans to launch its own programmatic media planning and buying unit.

Agencies, Baxter insists, must continue to nurture their "creative streak" over data and analytics capabilities, because it is a battle he believes they cannot win.

"You remember a great creative idea with a shitty media plan over a shitty creative idea with a great media plan every single time. If you try to out-data and tech Accenture or Google, you are going to struggle, but if you bring your creative smarts and understanding of audience to the table, then you are in a more defensible position," he says.

Aside from fundamental "questions" the firm must answer around a potential conflict of interest in its role as an auditor, Baxter remains sceptical that Accenture will be able to stomach the "pain" that is sometimes attached with the media planning and buying business: "The grass always looks greener on the other side until you climb the fence and realise the grass isn’t very green, in fact it’s brown!

"There’s a lot of stuff agencies have learned as muscle memory that big professional services firms haven’t had to. When it’s a Friday night, and a client expects you to change 50 things for them, and the professional services firm has packed up and gone home for the night, that is where agencies come into their own."

He also believes the entrance of consultancies will offer a "fast-track to price re-calibration" and reverse the downward spiral of agency fees that has accelerated over the past few years. The likes of Accenture, EY and PwC are unlikely to accept "McDonald’s prices", Baxter says, and clients have realised they had been handed "cheap, young teams" without the experience and skills to cope with an ever-changing market landscape.

"I think you’re starting to see the market swing a little bit back. The market bottomed out six- to 12 months ago and a lot of clients in ‘Mediapalooza’ that shopped on price, guess what, they are back at the table now and they are shopping on service," he says.

"In the last 12 months there has been way more price tolerance for senior, quality teams than there was 12 months prior, and that is only going to increase."

‘Reckoning period’

Having instigated Initiative’s global turnaround, one of Baxter’s next priorities was the revival of its troubled UK agency.

After receiving scores of two and three in the 2016 and 2017 Campaign School Reports ("pretty accurate," Baxter admits), in the wake of losing its flagship Tesco account, Initiative shook up its leadership team with the recruitment of Dentsu Aegis Network’s Richard Morris as UK chief executive and Mindshare’s Jed Hallam as chief strategy officer.

A more respectable score of six in the 2018 Campaign School Report hints at an improved performance, and Baxter claims he has "never felt better" about the network’s UK operation than he has in the past three months. "Richard has done an amazing job re-energising the office and senior leadership team," he says.

While the agency has been bolstered by chunks of UK-based global business for Carlsberg and Lego, Baxter insists the time has come for Initiative to start punching its weight in its domestic market, and has instructed Morris to deliver up to 60% of total UK revenue from locally-sourced clients: "The lifeblood of an agency is winning – if you’re not growing and winning, then you’re going backwards. There’s no such thing as standing still anymore.

"[The Carlsberg and Lego wins] have given the brand a bit of polish. They’ve now got to start winning some sizeable local accounts, but Richard knows that. Agency networks that rely on global accounts to survive are doomed. In the UK you want to be able to compete with the7stars and Goodstuff, and all the indies. If you can’t, and you’re living off freebies, then you’re in trouble.

"The pipeline is good but next six to 12 months is the reckoning period, really," he adds.

Alongside the revitalisation of the UK office and the acquisition of another "scaled global account", Baxter is prioritising an improvement in Initiative’s output over the coming 12 months.

While optimistic about the quality of upcoming work for the networks latest clients, and having recently picked up gold at the Campaign Media Awards for its Amazon Echo "Moments" campaign, he is hungry for greater recognition at next year’s Cannes Lions.

"I don’t want to be at Cannes as a hanger-on going to events and dinners; I want to be here because we have work being celebrated and has a chance of winning. That is a big milestone. I want to be a work-driven network that’s about the product we produce for clients," he adds.