New Marketforce CEO stirs the pot

11/09/2017 - 15:31


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Advertising agencies are rapidly evolving as traditional creative agencies, digital specialists, media buyers and other players bump up against each other in unexpected ways.

New Marketforce CEO stirs the pot
Paul Everingham (left) with Marketforce colleagues Nicole Cikarela and Pat Lennox, and OMD WA managing director Angela Nutton. Photo: Attila Csaszar

Advertising agencies are rapidly evolving as traditional creative agencies, digital specialists, media buyers and other players bump up against each other in unexpected ways.

Paul Everingham readily admits he has a lot to learn about the advertising industry, but the new Marketforce chief executive sees that as an advantage.

“It’s an interesting time to have a look at the industry with a completely independent, objective set of eyes like I’ve got,” Mr Everingham told Business News.

“Agencies across the world, their revenue growth has been diminishing, so whatever the incumbents have been doing hasn’t been all that successful.”

The former boss of lobbying firm GRA Everingham, and now successor to advertising veteran John Driscoll, is aiming to spark change in the local industry.

“A lot of the agencies I’ve seen around Perth are stuck in siloed thinking,” Mr Everingham said.

“They think they can hide their digital fees from customers, when really they are marking up their man-hours by 20 per cent, or they’re not telling the government the whole truth about the cost of their digital.

“Being an outsider, I can flush that sort of rubbish out of the system and bring transparency.”

Mr Everingham has joined the industry at a time of rapid change for both the agencies and their advertising channels.

The larger ‘creative’ agencies are continuing to develop full-service offerings.

As well as competing with each other, they face competition from media agencies such as Carat, Initiative, and OMD, which handle buying and strategy, and increasingly offer a suite of add-on services.

There is also competition from digital specialists such as Bonfire and others including Clarity Communications, which has come from a public relations background.

Disentangling all of this is complicated by the industry’s fondness for impenetrable jargon.

Hands up if you’ve ever visited a ‘performance and experience agency’ or understand ‘programmatic’?

The Brand Agency is Perth’s largest advertising agency, with 90 local staff, according to updated data on 54 firms listed in the BNiQ Search Engine.

That’s not counting the firm’s Melbourne, Auckland and London offices, which look after the Bunnings account.

General manager Nick Bayes said last year was one of the best ever for growth, with major Perth clients including Kleenheat, TAB, and the Road Safety Commission.

“Our growth has come from new services and major clients,” he said.

“We’re not just an advertising agency.”

Mr Bayes said digital accounted for about 40 per cent of revenue, with media buying and content also growth areas.

“We book media for about 90 per cent of our clients,” he said.

“It’s an integrated model, we have a collection of specialists.”

303 MullenLowe labels its strategy as a ‘hyperbundled’ model, enabling it to bring together the best talent across all disciplines.

This means tapping into 62 people in Perth, a similar number in its Sydney office, and the global MullenLowe network.

The latest step in this strategy was 303 MullenLowe joining forces with its global media agency to form 303 MullenLowe Mediahub Australia.

303 group managing director Derry Simpson said this put the agency’s media offer on steroids.

“Our media division looks entirely different to how it did six months ago,” she said.

“Our alignment with Mediahub gives us access to a global network of talent, tools and insights, so our resources are bigger and better than ever before.”

Ms Simpson believes clients increasingly see value in a fully integrated agency that is able to develop creative and media strategies in tandem.

Mr Everingham said Marketforce and its sister agency, OMD, had a similar value proposition.

He added that OMD would continue with a separate board and separate people, led in Western Australia by managing director Angela Nutton, so it could also act as an independent media agency.

While digital media, led by Facebook and Google, have transformed the industry, Mr Everingham believes traditional media will remain important.

“I’ve got a big soft spot for TV,” he said.

“It’s held onto about 35 per cent of spend and it isn’t going away.

“And radio has had a bit of a renaissance; a few years ago people said it was dead, but it’s very cost effective.”

Mr Everingham also has a back-to-basics focus on creatives and strategy.

“If you strip away all the different channels and methods of communicating, the only intellectual property in an advertising agency is the quality of your ideas, and they come from great creative people,” Mr Everingham said.

Marketforce has the biggest creative team by far and the most awarded.”

303 MullenLowe group managing director Derry Simpson

Media agencies

The focus on media by the big creative agencies presents an interesting challenge for the likes of Carat and Initiative.

Carat’s Perth managing director, Adam Marshall, estimated his firm handles about two thirds of all media buying in the WA market, with billings of $150 million last year and at least $75 million so far this year.

It handles media buying for more than 30 WA creative agencies, including clients that use the big agencies, such as Lotterywest and the Road Safety Commission.

“These tend to be large advertisers who prefer an independent media service alongside their creative,” Mr Marshall said.

Carat is one of seven Dentsu Aegis Network brands in the Perth market, with others including performance and experience agency Columbus, outdoor agency Posterscope, and content producer The Story Lab.

Together, they have 65 staff in Perth.

Mr Marshall characterised Dentsu’s approach as the ‘Hollywood model’, with specialists drawn in as needed.

“We’re very collaborative, there is no separation,” he said.

One brand that will be less visible is media agency Dentsu Mitchell, with most clients understood to be moving over to Carat.

Initiative managing director Clive Bingwa said his client list included the likes of RAC and P&N Bank, which had creative agencies but also engaged his firm.

He said that as part of the IPG Media stable – incidentally, the same group that owns 303’s Mediahub – Initiative could offer clients access to a portfolio of specialist brands, including in areas such as search, activations, and social media.

“Our job is to make sure we deliver compelling connections that are measurable and actionable,” Mr Bingwa said.

Independent operator

While many agencies promote their international links, one industry success story that has remained independent is Bonfire, which has grown to have 35 staff.

It’s a digital performance agency specialising in SEO, Google adwords management, remarketing, Facebook advertising and web design.

The business is led by chief executive and 40under40 award winner Clay Cook, who has been working in the internet search field since 1996.

“It’s our strong belief that digital is an important channel that requires a specialist agency to hit the desired goals,” Mr Cook told Business News.

“We have the most experienced team in our industry and manage all our services in house with no outsourcing or using of international offices.”

Mr Cook said the firm had about 200 clients, including Betts, REIWA and the Water Corporation.

Another competitor from a very different background is Clarity Communications.

Managing director Anthony Hasluck said his firm started in 1999 with a unique hybrid between public relations, marketing, and graphic design.

He said its in-house creative skills meant it was able to quickly move into digital services in the early 2000s, followed by creating social media content.

More recently, Clarity has moved into social media advertising, as platforms such as Facebook and Instagram have evolved commercially, along with search engine marketing and SEO.

“I’m now increasingly as much a competitor to the advertising agencies as I am to the PR agencies,” Mr Hasluck said.

Yet another competitor making inroads in WA is global giant J Walter Thompson, which opened a Perth office five years ago after winning RAC’s creative account.

Perth general manager Doni Savvides said the group had been very focused on recruiting local people to support its long-term plans, and had a team of 14 in Perth.

“We’re part of the landscape and we’re here to stay,” he said.

It added Murdoch University to its client list this year, joining clients including the WA Police Union, Dale Alcock Homes, The Homebuyers Centre, and Alinta Energy.


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