Feature

World Leaders: It's time to talk the language of finance

In the latest in Campaign's series on adland's global chiefs, PHD's Mike Cooper says why the media agency is becoming less a supplier, more a marketing partner.

It is important not to lose sight of the fact that the media agency is still only two to three decades old. By comparison to other professional services such as accountancy and law, the media agency is an infant - but maturing fast. This is being driven by the agencies, but also by our environment - as in the client or customer. Many of our customers have been reorganising themselves over recent years into centrally steered global companies. And, of course, they then look to have globally aligned suppliers.

Clearly, an immediate benefit for major companies is cost savings - in reduced fees and amortising the creative-production costs across multiple markets. However, these major companies have also been driven by a need for consistency - to have similar brands across the world. Consistency is the key benefit a global creative agency offers. This was a need that is well satisfied; consider Apple and TBWA or Wieden & Kennedy and Nike. The global media agency can also deliver on this need in its ability to negotiate major global deals with media owners and other media and technology-based companies. But media agencies can also satiate an emerging need that seems to spring up after the need of consistency has been answered. That is control.

Control of how much is being spent across which channels in which markets with which media owners and when. Most of the major media networks now have sophisticated reporting systems with powerful dashboard software that provides clients with fingertip access to the detail of their global media investment. At best, this can provide investment software for that smarter budget setting and allocation. For franchised or not centrally controlled businesses, it can provide powerful evidence that can be cascaded throughout all markets - so the central marketing team becomes seen as an essential resource by each of the local offices. This level of control allows the global client to engage in true strategic planning on how to optimise its global marketing investment. However, there are many more companies that are utilising these emerging benefits of control.

This is changing the nature of relationships that global media agencies are having with global clients - where the systems of the media agencies are more deeply embedded into the clients' systems. Less like a supplier, the media agency becomes more like a marketing partner. This level of control of the investment and payback that the media agency is now providing is one of the major reasons why the marketing team is starting to talk the language of finance.

Marketing has been labelled the new finance and this is primarily down to enhanced reporting of marketing investment and the projected payback to the business. This is the territory of the media agency, but the home of the global media agency - as is the specific value-add of aligning various media agencies under one roof. And the benefit of control and reporting will increase as the percentage of the media investment in digital increases.

The real-time reporting that digital offers is even more powerful when combined together into a global reporting standard. By 2014, most of the developed markets will have home broadband speeds of 100mbps. TV content will be streamed, not broadcasted. And, therefore, TV will become a true digital channel - planned more like the internet than the TV. And radio is likely to have evolved beyond digital radio into IP-radio. By 2014, we estimate more than 60 per cent of all media investment will be made within channels where there is an opportunity for real-time reporting on performance - at present, the figure is primarily limited to internet and mobile and so less than 10 per cent (and it is not centrally managed). Imagine how much control this will provide if the 60 per cent is centrally managed - with this the ability to extract tens of millions of dollars of additional profit-return of investment just by some simple refinements of media investment. We will also be able to make business investment cases for different global investment strategies, from simple recommendations such as what should be the global marketing budget to the more exotic such as which third-party companies we should partner. In each case, having the facility to project the payback to the business.

This will elevate marketing beyond its earlier ambitions of getting a seat on the board. Marketers will be the most suited candidates for the role of chief executive.

Twenty-first century global marketing directors are now thinking way beyond the four Ps. Global marketing directors are starting to use concepts such as net present value and discounted cash flow analysis. Some are even modelling the effects of marketing communication on share price and, therefore, the intangible assets column on the balance sheet. This is a new emerging breed. And they are in an outstanding position within whatever organisation they work in to take the top job. This is an emerging trend that will be caused by many factors - one will be the increasing sophistication of the global media agency as it enters adulthood in the middle of the next decade.

- Mike Cooper is the chief executive of PHD Worldwide

COOPER'S MANIFESTO

- Partner ambitious global brands in migrating investment from established marketing to new model marketing

- Maximise this once-in-a-generation opportunity for our clients to leapfrog competitors by exploiting the blurring world of communications

- Devise risk-management forecasting that helps predict success in reallocating investment for the most efficient growth

- Build the most diverse assemblage of strategic creative talent from different parts of the content and entertainment world

- Accelerate PHD's evolution into broader areas: brand, content and digital strategy, IP, R&D through media

- Take our communications planning framework ETNA into the next 5,000 days of the web (thank you, Kevin Kelly)

- Be the world's most open marketing services company

- Motto for the next decade: "Who shares gains."

HOW COOPER SEES THE FUTURE OF MARCOMS

- Is there a long-term future for the big network with hundreds of offices? And why (not)?

PHD Has 62 offices worldwide and that gives us very comprehensive global coverage.

I think it depends on who, or what, you aspire to be. Full-service global media clients want to work with networks that have representation and depth of capability in their local markets. To many clients, being serviced in emerging markets is particularly important as that's where their growth is coming from. You cannot provide insight and expertise in India unless you have a presence and real talent on the ground. Pretending otherwise or attempting to service from elsewhere is a fast track to pain and failure.

- Is the world becoming more uniform in its approach to advertising?

Yes and no. Large multinational companies commonly utilise global communication platforms, but the art is in how you execute locally to succeed. It's about having the winning combination of the very best local talent with an effective and flexible centrally driven strategy. It's a real art; lots of opportunities to get it wrong but outstandingly efficient when you get it right. It's hard!

- What are your three biggest challenges over the next three years?

1. PHD has a track record for doing brave work for our clients. In the UK, recent work for Sage where we brought back The Krypton Factor to ITV, Cadbury's and the Make Poverty History work are all good examples. A key challenge for us will be continuing to do great work like this against a very tough economic background. 2. Globalising our brand and heritage while maintaining the special and unique is also a major ongoing challenge. We've made huge strides over the past 12 months but it requires hourly commitment. 3. Staying on top of the technology and the NSEs (next step effects) for media agencies.

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