Earlier this year, when IPG’s CEO Michael Roth picked Matt Seiler to lead Mediabrands, a new roadmap was carved for the likes of UM, Initiative and various other marketing services companies from the group... Seiler’s vision manifested into seven pillars, which he believes will lead the company to a brighter future...
From managing one of the operating units and therefore being a key participant in what Mediabrands was, to running Mediabrands itself – that is a big opportunity.” With that statement, Matt Seiler, the CEO of Interpublic Group’s Mediabrands outlines how he views IPG’s decision to entrust him with the task of leading its sub-holding company Mediabrands into a new future.
In 2008, IPG had announced a proposition, which was expected to change the game for its media assets including the likes of UM and Initiative, apart from the more specialist units such as Reprise, Geomomentum, Shopper Sciences, MagnaGlobal and others. The proposition, Mediabrands Worldwide, had seen an important change when in 2010 IPG restructured Mediabrands’ leadership structure from a single leader to a leadership team reporting to the CEO’s office. Even if that structure connected the operating companies directly to the Holding Company’s CEO, it clearly was not growing Mediabrands or ensuring that the combined might of IPG’s media assets was leveraged.
Hence, in January 2011, IPG revisited this decision, and the company’s CEO Michael Roth placed the responsibility of accomplishing Mediabrands’ original vision on Matt Seiler, who was then the global CEO of UM. In a statement at the time, Michael Roth said, “Matt Seiler’s leadership role with clients, in winning new business and in attracting some of the best talent into our organisation, made the decision to promote him a logical next step for the business.”
And since then, Seiler has not wasted a single second in reorganising Mediabrands in a manner that would support its operating companies to offer the best to their clients. Seiler crafted a sevenpillared structure that would define the new Mediabrands.
An All-New Avatar
Mediabrands is the equivalent of an Intel that equips its assets with knowledge, processes and access to data and analytics that enable the company’s agencies to provide relevant solutions to its clients. On the face of it, the thought is not very different from what other similar kinds of companies, which include the likes of GroupM, Omnicom Media Group or VivaKi, are doing for their agencies. But for Seiler, the foundation was already set.
He says, “That was the fantastic thing -- a lot of what Mediabrands was about was bringing the two agencies together. Creating synergies between them, back-office efficiencies, buying and all that good stuff was done. The opportunity then was to look at all that Mediabrands had, from the perspective of how can this be useful to clients. And that is what I have the great fortune of doing. Everything we are doing is evaluating what is in there and how can it be of utility to clients.” In the new structure, Matt Seiler is supported by Richard Beaven, Global CEO for Initiative and Jacki Kelley, Global CEO for UM. The first Pillar in the new structure was forming new Clusters. Seiler explains, “Creating Clusters was to reorient the global structure around the markets that matter the most to clients. These are markets that have the most in common with each other. It is not where they are from but what they do for clients. We have North America that contributes 50 per cent of revenues roughly, the G-14 markets that bring about 30 per cent and the world markets are around 20 percent.” For the new Mediabrands, the G-14 markets become significant, and India was included in the G-14.
India in the G-14
Much like most others in Seiler’s position, he emphasizes on the important role that he expects India to play in Mediabrands future growth. In the new structure, Eric Bader was the chosen head for the G-14 markets for Initiative. His counterpart in UM was Jim Hytner. The India teams are now working with Bader and Hytner. The G14 has four markets from Asia Pacific, the other three being China, Japan and Australia, two markets in Latin America and eight markets in Europe. Both North America and G14 are built so that data and analytics are delivered to each of these markets encouraging them to move to the Pay-for-Performance model, which is Seiler’s second Pillar. Measuring effectiveness is the most important contributor to move in the direction of Pay-for-Performance.
Elaborating on why the G-14 and North America would see special attention in moving towards the Payfor- Performance model, Seiler says, “The markets that are most alike, that matter most to clients and therefore matter most to us can totally align with client’s business in terms of their ultimate goal, which is selling products. They also align in being measured for their effectiveness in selling products and our alignment to that.”
He informs that at present Mediabrands is following a Pay-for- Performance model for a few clients, but only for some of their businesses, and not all of it. Reiterating on the importance of this pillar, Seiler observes, “I believe that much like we have moved from commission to fee as an industry, we would eventually move to a Pay for Performance model, and Mediabrands would be the ones to lead that movement. I am sure we would be the poster agency group for restructuring how compensation works.”
The Pay-For-Performance Focus
Pay-For-Performance is one of the parameters for Mediabrands to view the success of the new structure. This model implies Mediabrands would take its compensation based solely on how successful its clients are. IPG hired McKinsey & Company last year and worked with them on how to make a Pay-for-Performance model work in the communication industry and focus on aspects such as how to assess risks and how to determine what the riskreward ratios ought to be.
Giving some background here, Seiler explains, “Procter & Gamble (P&G) had asked for this 30 years ago.
Back then there were just agencies without any differentiation of the types of agencies. P&G had said that they would like agencies to sign up for the outcome of their business, and all the agencies had said that they cannot do that because agencies cannot be responsible for pricing or promotion or competitor activity or any of that.”
Agencies had told P&G at the time that they only made the ads, so P&G couldn’t pay them on any kind of a business-outcome-related structure. “Miraculously, the industry has gotten away with that for 30 years. As we have created more silos within the organisation, there is more rationale on why an agency cannot take total responsibility for the client’s business because they do that one part only,” adds Seiler. Mediabrands, according to him, is at the right altitude to take responsibility for the marketer’s business. “We have so many assets available to us and we have the client’s money to invest with media or with partners, who also invest with us in the Pay-for-Performance model. We can take responsibility of the client’s business outcome even though we know that we don’t impact all of it. However, if the advertiser is running a creative or something of that nature, and we don’t think that it would help us in achieving the business outcome, we would point it out,” asserts Seiler.
Many of the G-14 markets are already following the Pay-for-Performance model in some form, and Mediabrands is encouraging this more.
The Lab Face
One of the most interesting Pillars is the evolved role of IPG MediaLabs. As Seiler puts it, the lab will move to the literal and figurative centre of Mediabrands and would become the front face for the company. “After September 6, when the lab opens, if you had to come see me in New York, you would have to come through the lab. The Physical Lab would have tons of interactivity, everything that has the potential to build the client’s business in the new technology, software, hardware, entertainment spaces – all customized for clients – would all be there,” informs Seiler.
The function of this Physical Lab would be to enable technology to work together with consumer insights to give marketers the best possible solutions. However, it is the Virtual Lab that allows Mediabrands to offer more to marketers.
The Virtual Lab forms Seiler’s next pillar – Menuisation. “If there is a technology driven service that can in fact deliver what it claims to deliver and has a business utility, then we take it, vet it and then input into a searchable database. The input mechanism classifies these services in a manner that makes it easier to recommend these to clients, based on their business needs.”
This move allows Mediabrands to almost become a sales force for technology providers and entertainment providers and serves as a mutually beneficial mechanism. The Virtual Lab is expected to launch on August 1, 2011.
I Am Here... I Am Here Now...
The fifth pillar is Benefit Bundles, that has already seen a name change to ‘I Am Here ’. “Most people in my team hated the name!” quips Seiler but more than what the cluster is termed, it is the role that it plays that makes all the difference to Mediabrands. There were two ways in which Mediabrands was thinking of clustering services. The first was the ‘One, Some and Most’ way – essentially meaning targeting the consumer directly or through influencers or talking to a Mass. The second way was ‘I am, I am here, I am here now’.
Referring to a conversation with Federated Media Publishing founder John Battelle, Seiler explains that the evolution of technology and entertainment was around ‘I am, I am here, I am here now’. He says, “It bundles the same operating units from Mediabrands but the order reverses. ‘I am’ is cohort, social, identification of people that matter, who raise their hand and say I am someone who is going to buy your product. ‘I am here’ is something that Geomomentum and Shopper Sciences would throw. And ‘I am here Now’ would come from mobile and search, and is an indication of where people are.”
The sixth pillar once again is about audiences. TAP – The Audience Platform – which is present across all of IPG and is the collection of digitally based audiences that are exactly what marketers are looking for. “It tends to be a bit of a long tail rather than the big aggregated audiences,” adds Seiler. The seventh pillar would take shape in the form of a third agency network that Seiler admits would be North American focussed in the beginning. He said, “It would have a technology orientation, and that is why we believe it would be a very exciting prospect.”
With these seven pillars that Mediabrands is inculcating in the everyday approach of its operating companies, Seiler sees the company at the forefront of leading a new thought process in the communication services industry. But will IPG see a change in its leadership before things take off once again? One will know soon enough...
PAY ON BASIS OF PERFORMANCE WORKS FOR US
Matt Seiler, CEO, Mediabrands, has the tough job of operating from a holding company position, and yet ensuring that Mediabrands clients are content with the company. In this interview with Noor Fathima Warsia, he speaks on his expectations from Mediabrands’ new structure. Excerpts:
On challenges of the Pay for Performance model...
First is lack of predictability. If you are used to paying an agency on commission or the number of people it takes to manage your business, you know what your monthly outlay is going to be. In a Pay for Performance model, because you don’t know what the “performance” is until you have some measurable result in markets, the “pay” could be anything from paying nothing for several months until you are can start calculating the delivery. And if the agency is outperforming, the payment can be higher than expected. You need to be flexible to be able to handle this.
On marketers’ feedback...
There is no client who doesn’t wish for greater integration than they have today. They all feel that they are spending too much time and resources in managing different entities and silos and related P&L. All of them want somebody to take responsibility and own business outcome, so every client we speak to is up for Pay for Performance.
On educating operating agencies on the pillars...
My job is to repeat them, prove them, support them, demonstrate the effectiveness of them, all the time. A leader has to communicate the same message repeatedly. They have to be said often enough so that each of the operating company heads manages to consistently follow them.
On holding companies not being client-facing...
It is our job to really understand what clients’ needs are and deliver to support to the front-facing agencies. Jacky (Kelley) and Richard (Beaven) cannot be, and should not be, thinking what else they could deliver other than what their core is. We need to be helping them to figure that out to ensure they have a better offer and that gets populated into the virtual labs and benefit bundles.
On Mediabrands in India...
In every organisation that has hierarchy, there is a challenge in not having many layers that confuse people and are inward-looking. There are enough examples where the organization has become much more about the success of the organisation than focus on client’s business. We would want to minimise what we have structurally and maximise what the client-facing offers are. When you think about it in practical terms, when there is a Mediabrands also in a market, the aspiration of UM or Initiative heads would be to graduate to Mediabrands. We don’t want that – the aspiration should be rock it at Initiative or UM – perhaps, leave Initiative and go to UM or Geomomentum but the movement should be within the operating units, not from operating units to sub-holding company.
You have it in some markets though
Largely out of legacy or the need of the market. France, for instance, is an awesome example of where Mediabrands works really well. That market didn’t have strength in just UM or Initiative, so they were working together, and now there is leadership in both UM and Initiative – the companies are doing well and eventually they will become the way they are everywhere else.
On measuring whether the seven pillars delivered...
I would know this is working when Richard and Jacky feel that it is serving their clients well. The other way of knowing is from clients directly on whether we are delivering what they want, and how much. The best way to know would be from how much Payfor- Performance we would have – how much clients believe we can take part in the success of their business. I am sure we would be the poster agency group for restructuring how compensation works. I am tired of listening to people on industry platforms that it is really not fair, the business is devalued and procurement is everything. We have to educate clients and ourselves on why Pay-for-Performance works and why accepting the unpredictability of it is for everyone’s advantage.
Feedback: noorw@exchange4media.com
