Brands and agencies will need to change their models to work in a similar way to management consultants if they are to build integrated solutions, Margaret Jobling, group chief marketing officer at Centrica, has said.
Jobling was speaking to Campaign in an exclusive interview after the end of the hotly contested pitch process where Centrica brought together creative, media, CRM, data, content and PR for the first time and awarded it to WPP.
The industry "is not as developed as I would have originally thought" when it comes to building fully integrated agency solutions, she said.
Jobling expects more brands to demand marketing integration, although it will depend on their needs and the maturity of their businesses.
"I passionately believe it’s the future and everyone needs to figure how they get there," she said.
Jobling suggested that bringing people together to work on common problems for a period of time and then moving apart on a flexible basis is "the way forward".
She explained: "The big agency networks are going have to figure out how they operate more like a McKinsey, where they ship in a team of experts for that client’s problem and then they disband them and send them off.
"It’s going to become more fluid and agile in terms of how the agencies need to operate.
"And if they can’t do that and they’re too fixed and too centred around delivering their individual P&Ls for their individual agencies, then they will have a problem."
Jobling also outlined how the energy group conducted its global integrated review and why it chose a WPP-led group of agencies.
She praised all the agency groups, including Publicis Groupe and Interpublic, which took part in the pitch for "demonstrating the art of the possible as we went through the process".
"We came from a place where we want to transform how we operate. We want to be data-led, fully integrated and standardised across the group," Jobling said.
She explained that Centrica, the owner of brands including British Gas and Hive in the UK, Direct Energy in the US and Bord Gáis Energy in Ireland, has been "a series of individual business units" that "operate in isolation" across different markets and it was looking for "one common approach" and "to step-change how we operate".
Jobling insisted that cost savings was not the chief priority of Centrica's review, despite the parent company telling shareholders in May that it needs to make cuts.
Although Centrica wanted "efficiencies" from its marketing services review, "we didn't go into the process saying this was an efficiency play," she said. "It wasn't 'We want cheap'. It was 'We want effective'."
And Centrica saw the move to one agency holding company as "a catalyst for internal change", according to Jobling.
"We wanted someone with us for the long term to help us transform" and "to help bring the components part together", she said.
Ultimately, Centrica wanted an agency partner that could support "how we grow our business" – "that is our real, big challenge," she said, referring to digital disruption and new entrants.
How the process worked
Centrica kicked off the process in January with the support of pitch consultancy ID Comms and Jobling said she didn’t think it could have been run any faster.
It is understood that WPP and Publicis Groupe, the final two teams in the shoot-out, ended up taking part in as many as three dozen meetings with the client over six months and presenting to group chief executive Iain Conn.
The pitch involved two key stages, starting with "prove to us you can deliver a data-driven model" and "help us, end to end, figure out how we can leverage the data we have", Jobling said.
Then her team asked agency groups to devise "a new creative platform that we can execute consistently across the whole of Centrica" and show how it would work in a "new, data-driven model".
Centrica is pushing for greater personalisation in its digital communications and agency groups had to demonstrate that they could manage data securely and use it to "segment, target and power creativity", she said.
The agencies also had to show how they would "share [creative] assets across the group", "standardise" and develop "best practice" for the client.
Jobling said: "The [agency review] process itself has really helped bring the internal team together."
WPP’s Team Nucleus
WPP is creating a new "bespoke" agency team, including The & Partnership, Wunderman Thompson and MediaCom, that will be "fully integrated" to help Centrica "to transform internally to drive better outcomes for our customers and for our marketing agenda", she said.
The team has been named "Nucleus" because it is "a living organism" that is "at the centre" of the marketing operation. "We want to put data at the centre," Jobling added.
Agency staff will be based in one location in each market – with members of Centrica’s marketing team spending about half their time at the WPP site and the remainder in the client’s office.
She said Centrica "talked a lot about co-location" and discussed the relative merits of bringing external agency staff into the client’s office or putting Centrica staff in an agency group’s office, but decided on "a hybrid" because every model comes with its own challenges.
WPP had existing relationships with Centrica, particularly in the UK, where The & Partnership (a joint venture in which WPP has a 49% stake) has looked after creative since 2003.
However, Jobling maintained the review will mean a lot of change for Centrica on a global basis – with around "20% the same, 80% different" when it comes to incumbents versus new agency teams and people, she said.
WPP will operate one P&L and Centrica has changed the incentives to include "the right behaviours and right outcomes".
For Jobling, the remuneration model is part of what is driving integration between the agencies. "I don’t care how you divvy it up – in the nicest possible way – at your end," she said.
Similarly, Centrica wants to refer to the agencies collectively as "Nucleus", rather than as separate shops, each with its own "core discipline".
She said: "The start point is this is an extension of our Centrica team, really."
The need for integration
"I think this is the future," Jobling said, explaining why Centrica wanted to integrate different marketing disciplines, rather than using many different agencies in different markets as it has done previously.
"The role of channels and everybody operating in splendid isolation is well gone, particularly in businesses like ours, where we know our customers, we know where they live, we know their product holdings."
Centrica also has to think about the different challenges when it comes to CRM in relation to its 10m existing UK customers, representing about 30% market share, and finding new customers.
Over time, Centrica could consider bringing some marketing services in-house as it strengthens its internal team and Jobling said there was "a lot of discussion about in-sourcing", but that is not on the immediate agenda.
She believes "there’s going to be more integration" across the marketing sector, describing how the solution needs to be "fluid" and "agile", and is likely to be more "T-shaped", with both breadth and deep expertise in some areas.
Getting creative about data and customer experience
"A real challenge for marketers is how do we leverage data and how do we use it to drive creativity," Jobling said. "Much as I love digital, I think we’ve forgotten some of the basics of context and content."
Harnessing data and technology to fuel creativity is key and requires "a different skillset", she said, noting how agency groups have responded to that need with Publicis Groupe buying Epsilon and Interpublic acquiring Acxiom.
Jobling went on: "Suddenly, my new best friend is IT. If you’d have asked me five years ago who I needed at the table for a media and creative pitch, you wouldn’t have said your IT department."
She added that another learning from the review has been that an end-to-end "customer experience is a critical part" of doing business: "We need to think of an entire ecosystem versus the old world, where you’ve got the marketing department doing its own thing to generate demand. That’s not how it works any more."
How do agency groups need to change?
On the need for agencies to change, Jobling said: "The challenge they’ve got is they are working with multiple clients who are all very different and increasingly clients are saying: ‘How do you give me solutions against my needs in the most effective way?’"
Giving a client a "holistic" solution is more important than focusing on individual channels, because it is no longer clear where, for example, "media and content creation start and stop", she said.
Jobling pointed out that breaking down separate agency P&Ls and melding different agency cultures has been a challenge for at least a decade.
However, it was only once the pitch process got under way that she realised that few, if any, brands have undertaken an integrated pitch of such scale before.
Most brands that have set up such a team have tended to build it in piecemeal fashion, starting with one agency discipline first and adding to it, according to Jobling.
Creativity was still key
Despite the breadth of Centrica’s review, Jobling said of the WPP-led team: "If you asked what is their je ne sais quoi, it’s creativity and chemistry."
All of the big agency groups are investing in data and talent with the right skillsets, meaning creativity still matters as a differentiator, she said.
Sarah Golding, the chief executive of The & Partnership London, led the WPP team.
"Ultimately, we’re an industry powered by creativity and people," Jobling said. "If I look at the thing that swung it, it’s creativity and people."