Tim Castree, Global CEO of Wavemaker, is on his maiden India visit after the formation of Wavemaker. India is one of the top markets for the agency and Castree believes that he's trying to build the agency of the future through Wavemaker.
Castree said the kind of efficiency that has been achieved after MEC and Maxus was merged into one as Wavemaker is significant and the agency has become much more client-focused. "It is the opportunity to look at the value proposition afresh and to see where the industry is going and what clients need," he told BestMediaInfo in an interview.
Highlighting the growing dissatisfaction and impatience shown by the clients, Castree said that a lot of marketers are looking at going to look for newer agencies every two to four years, putting a lot of stress on agency business and margins.
Though he hopes that the loyalty returns to the media agency business, he also says agencies should look at modernising in these challenging times and should be ready to innovate and provide best solutions to clients.
Itâ€™s been almost six months since â€˜Wavemaker came into existence in India. Are you getting the desired output?
Itâ€™s going generally well globally and specifically well for India. We had a few objectives with the merger and all were centred around accelerating growth, increasing our differentiation and value proposition to clients. In India, in particular, he have had excellent performance with the new business wins and excellent client retention. It is an excellent growth story in India.
What are your growth plans for India and what kind of efficiency have you achieved post the merger?
We certainly plan to grow more than the market growth. India has a healthy growth rate of 13% and we want to grow to beat that. We have also realised pretty significant efficiency savings from the merger. A lot of it has come from the regional and global overhead. It is the opportunity to look at value proposition afresh and to see where the industry is going and what clients need. More than everything else, the merger for us is like having that blank sheet of a paper to decide what we want to do to build the agency of the future.
You led MEC for about a year before it was merged into Wavemaker and spent over 20 years in the industry. What were the best parts of MEC that were retained in Wavemaker and the corresponding strong points of Maxus which are still there?
A lot of bright things, but itâ€™s hard to pick. The thing that was most brought out of Maxus is the entrepreneurial culture and that is what set Maxus apart and it was interesting to transfer that to the new company. While MEC was a little deeper in the tool set that it had, so, in the area of our purchase journey work, we have retained a lot of these tools that MEC had.
While merging MEC and Maxus, you removed a couple of hierarchical layers and a regional layer. What was the purpose behind it and how has it worked out?
Itâ€™s worked right, because everybody we had in those roles was talented but I felt like the structure wasnâ€™t what I wanted it to be. Too many layers between the market leaders were getting in the way of client access. We had the direct market head to report directly to me. And then we created 10 sub-hubs around the world, which were organised more locally. So, Ajit (Varghese), who used to run Maxus regionally (Asia Pacific CEO), is now running all of those hubs. So, itâ€™s just direct access by taking the regional layer out and much more unfiltered access to our biggest markets, thereby connecting them more effectively to the global markets. A lot of cross-pollination of ideas is happening between India, Germany, Australia, China and the US within the network. That decision has been a big success. I have no regret about it.
Everyone seems to be obsessed with RoIs and cost-cutting these days, especially the marketers. How do you then ensure that your plans and solutions for the brands are not compromised?
I understand the focus on cost-cutting. They have too much focus on RoI, but many are not thinking about the RoI in the right way. They have been thinking about RoI based on the digital attribution, and this has started to cost them the long-term health of their businesses. We feel clients are absolutely right to be obsessed about the efficiency and effectiveness of every dollar that they spend but the key to that is that they have to look at it from a wider time horizon and they need to understand that they need to have proper digital attribution so that they make good decisions. They also need to be on the understanding of the effects that brand preference has on purchase choices. While having focus on performance, they have to also make sure that they are measuring it in the right way. If you know all these things and handle these holistically, then you would be able to make better medium to long-term optimisation decisions that'll overall help the business and its growth.
Are there situations where you as an agency partner have to explain a lot of things to the clients, as to how far can one should go for cutting costs?
Yes, we certainly have to operationalise their decisions. But some clients are quite smart and I describe to them what I just described to you and they say yes of course that's what we want to do. Today, the job of the agencies is to lead our clients towards connected measurement systems and to help them make those better choices. The job is not really about getting clients to agree that they understand the role of brand and channels and measure the right period of time in terms of optimisation. That they will eventually do.
It's more about giving them tools and approaches, while enabling and operationalising that they really want and to show them how we will do it for them.
While Wavemakerâ€™s obsession with the purchase journey is quite popular, donâ€™t you think that over-targeting or overtly sharp targeting is also not always good for a brand? I mean, certain amount of spill-over is also healthy for the brandâ€™s growth.
It exactly is. That's precisely what I meant about attributing appropriately to all channels while driving an outcome. When we talk about our purchase journey obsession, it includes everything from brand preference to awareness.
Often, the right thing to do is to spend money to make the brand and the relationship between the brand and the customers stronger throughout 365 days.
If all the focus is on consumer acquisition through this journey, then how do brands focus on brand building and brand recall?
You start with correctly evaluating the worth of the brand preference on the shelf or on the website. What's the value of that. And itâ€™s not the same for all brands, we see the range. Strong brand preference creates better conversion anywhere between 3 and 77 times better performance. If you are 77 times more likely, then thatâ€™s how you better build brands. If you are 3 times more likely, then you need to build slightly more balanced mix from building strong brand equity and preference to building the triggers to being very good active stage marketing/ performance marketing. Everything has a role to play, itâ€™s just about the right amount and what are the tactics to use to maximise growth for the advertiser/ marketer. How much of everything is the right amount? In many cases, I need to spend more time and effort in building brand preference and it can be a valuable thing to do.
While you say that everything plays a vital role, how important are the traditional media platforms?
They are very important in todayâ€™s time. TV advertising is still a great medium. The vast majority of the RoI strategic work I have seen in this space still speaks of the power of TV. It might not be making up the absolute best RoI in dollar for dollar but at that scale, the volume, the size attributed to this platform is still massive. So, one of the challenges in the purchase journey is whatâ€™s the right amount of â€˜tied and provedâ€™ versus â€˜try the newâ€™. There are a lot of tried and proved channels, that I know a lot would work and then, there are many emerging new things to try and as I said, all these ingredients are important. Itâ€™s just a matter of how much of each one for any specific recipe. So, if we feel that for a certain client, the best thing to do is to spend 100% of the money on television, thatâ€™s what we will recommend you to do. We donâ€™t pay attention to fads or trends, rather, our focus is completely on â€˜whatâ€™s the right thing to drive growthâ€™ and we do that for clients.
Do TV and print have similar importance around the globe? In India, we see that TV and print are the biggest media platforms.
They work differently from each other but they have similar impact around the world as channels. What I find around the world is that if TV is at X scale, one of the most efficient mediums for the brands to drive growth, digital video is even better since it has two things â€“ direct impact on your preference (ARPU) and it can have a better and instant conversion on the online channels. Print tends to work a little differently. It is a very good consideration driver. It doesnâ€™t tend to have that much impact on your consideration. Averaging a lot of stuff, these are the conclusions, though different advertisers work differently in different markets.
A lot of big clients are increasingly becoming doubtful and dissatisfied. On the creative side we see much more project-based work happening. Why is that so? Are agencies not focusing much on client satisfaction? Are clients not interested in long-term relationships?
I wish there was the same loyalty in the media agency business as there used to be. But thatâ€™s definitely moved to become a little more transactional with time and it is just a fact of life that we are having to contain with. But I also think that when we get a business, there is loyalty, the clients arenâ€™t dissatisfied for the sake of it.
This increase in the frequency of pitches is putting pressure on the agency business and pulling the margins down.
It is doing that. Itâ€™s stressing for resources, it is definitely pressing down the margin pressure. Thatâ€™s true. The response to that from us is to continue to modernise the business, in foundation of media planning and buying with every bit of pressure that is on margin. It is incumbent on us to build new services, new capabilities and newer approaches to offer to the clients, which will help us to grow margins on the other side. This forces commoditisation, but we also have to have things that we can differentiate and put the pricing pressure back into the business and we can bring the combination of those things to grow the toplines and bottom lines, both. Thatâ€™s the job.
The publishers are getting mere 40% of the total monies spent on programmatic advertising, while the agency on record is getting about 5%. The rest is all going to the DMPs, trade desks and other entities. Who are these other entities? Also, while all the digital drive was about healthy margins for agencies, they are getting just 5%.
Obviously, a lot of work that we have been doing in last two years is to clean up the opacity in the digital supply chain. So there was a time when it was too opaque. The tax and fees taken between the publisher and the SSP, DSP, DMP into the advertiser, everyone taking their pennies along the way, it was definitely a significant thing thatâ€™s moving into a process of cleaning up. There is a certain amount of value, the right amount of money to pay for the data and technology that support programmatic ad buying and execution. The key for us is to make sure that I am aware of the things in that value chain that shouldnâ€™t be there. A lot happened between the publisher and SSP and then the SSP and the agency side. We are doing everything that we can to clean up the supply chain, taking everyone in the account to have an open and clean supply chain and understand everything that we are paying on behalf of our clients. We are doing this work thoroughly, globally as GroupM.
The second thing is to understand that where you are paying for technology and data to improve the targeting and advertising, making sure itâ€™s worth it. It all goes into the mix of RoI and effectiveness and performance. In some cases, the highly targeted advertising is extremely worth the extra fees you pay for technology. But sometimes itâ€™s not. Itâ€™s just important to know when the juice isnâ€™t worth the squeeze.