At the end of last week, a series of large swells bashed New Zealand’s shores, while gale-force winds whipped up sand with a ferocity that could lash bare skin.
For anyone in the advertising industry, the inclement weather would’ve seemed a poetic metaphor given the tempestuous onslaught of news that kept pouring in.
Among the torrent of moves and departures, none provoked more intrigue and gossip than the revelation that DDB chief executive Justin Mowday and chief creative officer Damon Stapleton would be leaving their agency to join a consulting firm.
The general question being asked over last Friday’s long lunches was: what the hell are they thinking?
They were essentially giving up a pair of cosy seats at the top of the biggest creative agency in the country to join a firm that doesn’t have an established advertising footing in this market.
The gravity of the move isn’t lost on them.
“I think I’m feeling somewhere between super excited and utterly terrified right now,” Mowday tells the Herald.
“For Damon and I, this was about throwing ourselves into the deep end again and really taking and pushing ourselves in our career.
“It’s super hard to walk away from DDB, a great agency with 270 incredible people, to go off and potentially sit in Garage somewhere, but that’s the point.”
Mowday might be exercising a bit of creative licence in describing their workspace as a garage, but the team is currently only limited to the pair of them. They are yet to announce any additional local hires and, while inevitable rumours abound, no clients have officially signed up yet.
“We don’t have a thing, buddy. We’ve got zilch. And that’s scary and exciting all at once. Accenture obviously has their own clients here, but we’re starting with a blank sheet of paper.”
For now, they’re focusing on setting up the Monkeys in the local market, adding to the offices already in Sydney and Melbourne.
Established in 2006, the Monkeys was acquired by Accenture in 2017 – a significant indication of the intention of the consulting firm to move into creative services. Today the company employs more than 150 staff and the pressure will be on Mowday and Stapleton to replicate that success in this market.
The one advantage the pair has over other executives that go out alone and start their own thing is that they will retain a high salary.
They wouldn’t disclose exactly how much Accenture was paying them, with Mowday only saying “it’s about the same, plus a bit”.
Mowday also confirmed they would become shareholders in Accenture, although he wouldn’t disclose the extent of their stake.
“This wasn’t a move about money or personal wealth.
“This was a move about exploring the future and figuring out a new model and actually re-energising ourselves.”
For Stapleton, there was no existing agency that could offer him that.
“If we were going to leave DDB, it was not to go to another agency.
“It had to be something different. It had to be about us trying to do something different. The questions I’m looking to answer are: Where is advertising going? What is advertising becoming? What do we want to do in the next five years?
“I don’t think those questions would have been answered by going to another ad agency.”
Pressure from the get-go
The salaries may give them financial security, but it also brings the burden of justifying the level of remuneration they’ll be earning.
Asked for his view on the move, industry veteran and commentator Paul Catmur told the Herald the pressure will be on the pair from the beginning.
“Having some initial clients from Australia would really help as those are two major salaries which need to be paid from somewhere, let alone all the others that are needed to make it into an agency, not just two blokes in a shed,” Catmur said.
“They are two very smart operators so I’m sure they’ll know what they’re getting themselves into, though DDB is the polar opposite of a start-up.”
Catmur added there was very little chance of any major clients following the pair out of DDB.
“No doubt there will be a circling of the wagons,” he said.
“I’m sure the DDB legal eagles will be keeping a close eye on proceedings.”
Beyond the potential legal quagmire, Mowday says he has absolutely no desire to pull anything out of DDB.
“We helped build that place [over the last decade],” Mowday says. “We’ve got nothing. We’re starting again.”
The decision by Accenture to hire a pair of executives is unorthodox from the perspective of an expansion strategy. The more well-worn approach would instead be to acquire a fully formed agency and build from there – as the Dentsu Network did with its acquisition of Barnes, Catmur & Friends in 2016.
However, this unconventional strategy is one Accenture has employed before.
Mark Green, The Monkeys founder and Accenture Interactive’s lead for Australia and New Zealand, tells the Herald that when the firm expanded into Melbourne in 2017 it hired some of the best people in the city.
In that instance, the company lured Clemenger BBDO’s chief executive Paul McMillan and planning director Michael Derepas to run the local office.
It had an immediate effect, with clients coming on board and jumping at the opportunity to work closely with some of the best people in the industry.
Whether it works in this market is yet to be seen, but the widespread industry fascination suggests that clients around the country are keeping a close eye on what’s happening at Accenture – and some might be willing to take a gamble on the untested model.
Entering the shadow
In the Netflix fantasy show Shadow and Bone, a dark cloud hangs heavy over the centre of the earth, separating two masses of land from each other. Anyone who enters that shadow faces almost certain death.
Stapleton and Mowday have just walked directly into that liminal space that exists somewhere between consultancies and the creative industry.
To put this into context, consultancies have long been viewed as the efficiency machines of the corporate world, helping business find ways to reduce costs and increase profitability, while advertising has long been seen as a cost-driver.
We now have a melding of these two worlds, with a creative agency being forged in a space long occupied by accountants, MBAs, PhDs and a wide assortment of other business nerds. It’s a cultural clash waiting to happen, but it’s also the setting of one of the most interesting turf wars to hit the advertising industry in decades.
Industry commentator Bob Hoffman tells the Herald that this battle has been firing up for years.
“Consultancies are after agency business and will continue to be,” he says.
“They are buying agencies and/or hiring agency executives – particularly creative and media executives.
“And they have an advantage over agencies because they are often connected to brands at a higher level. Consultancies are often connected at the CEO level while agencies are mostly connected at the CMO [chief marketing officer] level.
“Meanwhile agencies are trying to claim that they are strategic partners but consultancies are better at pretending they’re ad agencies than ad agencies are at pretending they’re consultancies.”
In his book Madison Avenue Manslaughter, Michael Farmer elaborates on this point further, pointing to the key role consultancies have played in large-scale transformation projects within companies after the GFC.
“The consultants exploited the insecurities of CEOs who watched brand growth disappear during the 2008 Financial Crisis and did not have the confidence that their CMOs or IT professionals were on top of the momentous technological changes occurring in the marketplace,” Farmer writes.
“Marketing required a complete overhaul, and the consulting firms seemed to know more about this than anyone else. Accenture and Deloitte had all the necessary credentials; they were already working on large scale projects in most companies, so why not hire them to accelerate the transition to digital and social marketing?”
By 2017, Accenture Interactive’s aggressive acquisition and expansion strategy would see the company managing US$6.5 billion in digital revenue from its clients.
Off the back of more than 30 acquisitions in this space, Accenture Interactive is now considered the biggest digital agency in the world.
The advertising industry hasn’t been sitting still through all this. They’ve also expanded their services and invested heavily in digital and data services to ensure they can do far more than produce a few radio and TV ads. These days, the biggest ad agencies are working across digital, data and customer experience for their clients.
However, their function is still seen as being part of the marketing department – and those budgets haven’t become much bigger in recent years. In many ways, the evolution of ad agencies has been about holding on to the pot of money that’s been spread increasingly thin across a number of disciplines.
In launching creative services, the consultancies meanwhile are going after revenue, which has never fallen into their remit before. The difference here is between an attack and a defence strategy.
Comparing the stock market trajectory of Accenture to those of the Big Four advertising holding companies offers a hint of which narrative investors are more willing to buy into.
In the past five years, Accenture’s stock price has risen from around US$113 in 2017 to more than US$284. Over the same time, advertising giants Omnicom has hovered at around US$83, Publicis at about 55€, WPP has risen slightly from £977 to £988 and Interpublic Group has lifted from US$23 to US$33.
Closing the loop
Accenture New Zealand boss Ben Morgan says the purpose of the move into this space is to enable businesses working with Accenture to deliver on the promise of helping businesses grow.
“We’ve got a serious growth agenda,” says Morgan, who currently employs a staff of around 400 people in New Zealand.
He sees Stapleton and Mowday as playing an integral role in bringing life to the strategies that might be developed on the consulting side of the business.
Morgan says this move is about incorporating creative thinking from the beginning of the strategy process rather than tagging it on right at the end.
This is where the exciting opportunity lies for both Mowday and Stapleton.
“Agencies have always had people and the ability to do more than just the ads,” says Mowday.
“It’s about whether you get access to that bigger playing field, or whether you’re on the B field, out the back on the muddy grass where you just get to do the comms.
“It’s a terrible analogy, but it’s sort of the truth. If I think over my career in the last 25 years, the agency that I started at, Saatchi, used to be right at the top table on every client, every major decision.
“It wasn’t just comms decisions. It was a case of whether we should sponsor this or launch this product. The agency was right there. Now, I don’t think that’s the case, unfortunately.”
Stapleton sees Accenture’s full-blown move into creativity as “completing the circle”.
“The strategy aspect is already there, the information and the data is there. And now it’s a question of execution and how you wrap experiences in what we do. It’s a question of completing the circle and not stopping. If you have all this information and all these insights, then how do you execute? What do you do with it?”
The success of Mowday and Stapleton in answering those questions will ultimately determine how this experiment in career change goes for the pair. No doubt the rest of the industry will be watching closely.
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