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Meet the new breed of ad agency chiefs

A new wave of first-time CEOs are opting to do things differently in an evolving landscape. They discuss the business model of the future with Jeremy Lee.

Meet the new breed of ad agency chiefs

So is it a mere coincidence that more than ten London ad agencies have seen new chief executives all parachuted in within a period of months? Or is this testament to the unprecedented levels of change that the creative sector is going through?

Change is certainly in the air. Advertisers are increasingly looking for "bundled" solutions to their needs, perhaps rendering the agency brand obsolete. Agencies now have to produce "content", whether that be advertising or not, in an increasingly short time-frame. Management consultants have spied an opportunity to join the fray. Some marketers are even taking their resources in-house. And all this against a backdrop of a squeeze on agencies’ profit margins.

To some, this has been interpreted as an industry in crisis – not just of identity but of its future business model. Our 11 chief executives, assembled at the Century Club, dispute this doomsday scenario. In fact, rather than being the hospital pass the doom-mongers would have us believe, their collective appointments simply reflect an evolutionary passing of the flame in order to navigate the new times in which we live. And this doesn’t faze them.

James Whitehead, chief executive of J Walter Thompson London, says of the current agency landscape: "It’s never been more dynamic and it’s not broken. So it’s not surprising there are more leaders."

Jason Gonsalves, chief executive of Mcgarrybowen, agrees and even suggests the change to date hasn’t been profound enough. "We’re an industry that needs to be transformed – it’s been in a stable state for a long time," he says. "The leaders prior to us were focused on managing profitability. The skills they had were about maintenance and bringing the same people in, and it was all about succession management and stability. We’ve got to transform."

It’s a theme echoed by Mel Exon, group chief executive of Sunshine: "If this was really radical change, we’d all be 25 years old. I mean, look at us – we’re all an old bunch of fuckers." 

The reality of what agencies are expected to deliver these days requires a change in mindset, skills and priorities. Exon adds that being comfortable with change and ambiguity is a pre-requisite for all new leaders. But isn’t that something that has always been required?

Not necessarily, according to Bill Scott, chief executive of Droga5 London: "I think attitude to risk would be part of it – there’s so much uncertainty. You have to be prepared to deal with risk that our forebears didn’t."

For Jon Sharpe, chief executive of Y&R London, the advertising industry is only reacting to changes that its clients are going through: "Our clients are feeling the disruption the most – our model isn’t broken but needs adapting." He too is confident that it can manage to traverse the challenges in technology, production and proving the power of creativity. "Advertising does things that are more relevant than ever," Sharpe adds. "When you look at the competitive set, no-one else can tell stories with emotional power – it’s not something that KPMG or Accenture do amazingly. We need to regain confidence."

The march of the consultants

The issue of management consultants proves to be an interesting talking point. With Accenture having parked a smallish tank on the industry’s lawn with its acquisition of Karmarama (and, more recently, Sydney-based The Monkeys), some soul-searching is in order as our chief executives consider advertising’s place in the supply chain. 

Whitehead is relatively sanguine. "It’s a cultural challenge. I think Karmarama might not survive and get crushed by the [management consultant] culture," he says. How-ever, Jo Coombs, chief executive of OgilvyOne, isn’t so sure – she thinks that by ignoring the threat, "we run a risk of not seeing what’s eating our breakfast". Leo Rayman, chief executive of Grey London, suggests it might force the industry to change its game.

Given that Accenture’s 2016 revenues dwarfed that of even WPP, the threat seems real enough. But that doesn’t mean the management consultants will necessarily be able to attract or retain the right talent. And that’s where advertising has the advantage, Coombs believes.

Xavier Rees, chief executive of Havas London, thinks the solution lies in proving advertising’s worth: "We need to start having more impact again. I think that’s why we are at an interesting moment."

Exon points out that creative companies have shied away from describing themselves as consultants when that is in fact exactly what they do. "If you are a consultant, you can charge a completely different rate. You are often invited into C-suite conversations and you’re listened to," she says. "I don’t think we should decry consultants coming in and making a few people in adland quite rich and say that’s a disaster – it could be the future of that particular industry."

Upstream advertising 

Moving advertising upstream isn’t a particularly new theme or challenge. However, the grab for data provides an opportunity to do so, according to Scott, while Whitehead says that one of the biggest issues the industry needs to overcome is its inherent insularity. "Historically, as an industry, we have been lots of insular businesses – I think back to previous managements and they have been running a company that had to work on being quite insular," he says. "Now we have to knock down the walls and be completely confident about our own difference."

Mat Goff, joint chief executive of Adam & Eve/DDB, isn’t too worried. "The truth is there’s never been a more exciting time to use creativity to come up with relevant and engaging solutions – where they live and where they go doesn’t matter," he says. "The levels of skills are essentially the same – how we apply them, where they go, how fast we have to do that and who is going to respond will change."

But don’t forget it is not just management consultants that are in danger of eating agencies’ lunches, Sharp says: "Our competitive set is not just management consultants – it’s publishers, influencers, media agencies, production companies… the list goes on and on. The big issue is the massive broadening of the competitive set."

Future-proofing the industry 

With this risk in mind, how best can the industry equip itself for the future? Innovation and collaboration are two things that crop up frequently. 

For Coombs, the need for chief executives to set the direction of their agency remains key. Rees adds: "Our job is to lead people who, unashamedly, we don’t know what they do – we’re not expert in what they do. We’re having to grow up and, as leaders, understand that it’s OK not to understand what every single person does – and that changes the nature of how we have to lead."

Flexibility in employment practices is also important. "It’s not just about acquiring different talent," Coombs says. "It’s about: how do we let people be more flexible in the way they work?" 

Charlie Rudd, chief executive of Ogilvy & Mather London, agrees. "The biggest challenge on talent is that it’s not going to come into the industry like when we were growing up," he explains. "You have to adapt and have a culture that attracts people – but don’t be sad when they move on to something else. Be an attractive place – some people will stay but a lot won’t, and that will help our diversity. Agencies aren’t very well-set-up – we think we shape people’s careers for the long term and it’s wrong."

Diverse recruitment

Diversity is an issue that has dominated the headlines for the past two years but the chief executives are unanimous that all this hot air has yet to be transformed into action. The "London bubble" is often used to describe how the advertising industry is isolated from large swathes of the country. But Gonsalves thinks this is a misnomer: "Our industry doesn’t even remotely represent the population of London. It doesn’t scratch the surface." 

The need for advertising to look outside its traditional and easily accessed talent pools is a clear theme – as is the need to put some fun back into the industry if it is to stem the flow of people to technology and entertainment companies. 

Rayman talks of the frustration he encountered when he put out a brief for a job. "What came back were 49 slides of white male faces. What’s incumbent on us as leaders is how hard you’re prepared to push [the diversity agenda]."

Rees concurs: "We should all be ashamed at the way the industry has failed to adapt – there’s been a lot of talk and some action. For 40 years, we have hired from our own. We have to look somewhere else. The industry has got an image problem."

Given that holding companies are increasingly pitching bundled, multi-agency solutions, diminishing the identity of individual shops, is this part of the image problem? Not so, the chief executives say. In fact, they believe the shift allows them to compose any number of collectives to meet the challenges of media fragmentation. And "bundles" are not the only solution – there are also the possibilities of bringing fluid working practices and different talent into the process.

The return of swagger

The general consensus is that the work that agencies are producing just isn’t cutting through now as it did in the past. Swagger, another attribute often associated with the past, is also seen to be lacking and it is something that the chief executives seem keen to rekindle.

For Rayman, the industry (and, by extension, advertisers) has become too focused on short-term metrics, even if this isn’t necessarily where advertising should be heading. "Our biggest impact is long-term brand-building that works," he says. "That doesn’t mean we shouldn’t do brilliant short-term conversion-driving activities but, if we end up just doing what Accenture is offering, I feel that imperils the value of what we really can offer."

Tammy Einav, joint chief executive of Adam & Eve/DDB, continues: "It goes back to creativity and the output. Consumers have a fixed bandwidth and, if we confuse volume of content with creativity, that’s where there’s a danger. We must ensure that the creative output is brilliant."

Making more work that has an impact on popular culture is an ambition that all seek to achieve. And while there’s nothing new in that, what does offer new opportunities is the chance to create a new model that includes the creation and ownership of intellectual property. Getting rid of the old hours-based remuneration system would be a start in the broader application of creativity. This is something that Sunshine is already doing, Exon says.

Shifting the dial

So what does success look like for these leaders? Einav says: "I think there’s something powerful in momentum – keeping momentum, growing talent while continuing to do brilliant work. It’s about seeking opportunities in business growth and talent pool."

If our chief executives are to be believed, the future is therefore about using more diverse talent to create more diverse revenue streams, while ensuring that advertising’s contribution – in whatever form that takes – receives the accolades from the wider business community that it should.

A shift in the dial is required but the business has gone through similar change in the past – and there’s no reason why it can’t successfully do so again. A diversified business with improved creative standards will fend off the challenges that it faces – and these 11 new chief executives are optimistic that they are up to the job. The evidence of their labours will be eagerly anticipated.

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