In a shock move GroupM’s heir apparent to John Steedman, Danny Bass, appears to have turned down the Australian CEO role at WPP's media buying giant to become CEO of IPG Mediabrands in Australia.
IPG Mediabrands global CEO and executive chairman of Australia, Henry Tajer, confirmed the move to AdNews. A statement is imminent.
“Danny in our view is the CEO of the future agency,” Tajer said.
Bass’s defection from GroupM to Mediabrands will set the market alight – Bass is currently leading GroupM’s $1 billion fiscal year TV rate negotiations with broadcasters and has already stirred sweeping industry debate with his comments in recent weeks about the coming 12 months being the year the “model breaks” for free-to-air TV networks. Bass this year is opening up GroupM’s $1 billion trading pool for broadcast TV to other digital video players.
His move to IPG Mediabrands - timing is still unknown - will put more pressure on GroupM as it too seeks its first group CEO role in Australia after executive chairman John Steedman announced he was stepping down in June - he will remain as an advisor and non-executive chairman until year’s end at least.
“We’ve spoken to a number of different people locally and internationally and through that process Danny has stood out,” Tajer said. “From a personal perspective, that’s what I assumed. But it was a good process for us to go through that gave me and some of my other stakeholder partners the sort of confidence and clarity that Danny was the right person.”
Asked about Bass’s ability to run a more diversified Mediabrands portfolio of companies in Australia than his remit at GroupM, Tajer said Bass was in the “sweet spot” for future growth for Mediabrands here and globally.
“The role that Danny played at GroupM was a lot broader than I think most people understood. As a Mediabrands team, some of the things that Danny led in some of the new areas, in particular his lead on some of the native advertising-based propositions, was very much in alignment to how we think and the direction in which the industry is going. We’re probably going to be drawing on that at a global level because the Australian business has been very much an incubator market for us as a global networ," he said.
"We’ll continue to use Australia in that manner. In Australia we are now at a point where over the past five years we’ve made very deliberate, focus and aggressive investments in key capabilities and offerings. His remit will also better continue to extend and deepen that capability and to create new capabilities and a new service offering which is a lot more about performance, which is where the world is heading. That is Danny’s sweet spot and that’s a really good thing for us.”
Bass’s agency switch would likely leave negotiations between the biggest buyer of TV airtime in the country and TV broadcasters in limbo – negotiations have now started between the two sides for 2015-16. Broadcasters are known to be pushing aggressive counter arguments to GroupM’s cooling view on broadcast – driven by Bass - that TV rate inflation could be up by double digits this year.
After several years of heavy rate and volume discounting in a massive battle for commercial marketshare in the $4 billion TV ad market – it has played perfectly into advertisers hands - TV networks are now trying to improve their advertising yields at the same time as they have faced significant audience erosion on their primary channels so far this year. Digital video rivals are also making unprecedented efforts to move in on advertising budgets which hitherto have been the exclusive domain of free-to-air networks.
Tajer, who officially took over the global CEO role at IPGMediabrands on 1 May, said he was not in disagreement about Bass’s view on the TV market. “We don’t approach the market that way [annual media group TV deals] but I would argue we are sort of saying the same things. We may choose our words a little differently. The whole marketplace in Australia and globally is experiencing the shift.”
From his international perspective– he was previously global chief operating officer and executive chairman of Australia until 1 May - Tajer said the TV markets that were ahead in their trading sophistication and ability to create “addressable” TV messages – that is, detailed viewer or household profiling beyond traditional TV demographics – have “stronger growth figures” in broadcast.
“The US and UK are markets that are ahead for two different reasons,” he said. “The UK TV sector is ahead on the basis it selling audiences, not TV spots and I think that’s the biggest challenge that the Australian market has in the short term - to reconfigure the trading perspective to one that is about audiences as opposed to maximizing individual [TV] spot costs.”
Tajer said the US market was structured so that digital TV and “advanced addressable TV” was a “bit further down the track”. Pay TV in the US also had a “much stronger footprint” which was helping drive the growth in digital TV.
“I would put to you that a deal between Foxtel and Ten will position Foxtel and Ten in a really, really interesting place to potentially go to that next stage of TV broadcasting and commercialising that audience,” he said.
“The Australian market in its size is challenged because we are a small market and the cost of that content I would argue is a real challenging one for the networks. They need to come together to address the cost of content, which I think is their biggest challenge.”
The New York-based Tajer will step back as executive chairman of the Australian group to chairman after Bass joins.
Henry Tajer and Danny Bass are speakers at next week’s AdNews Media Summit on May 22. Tajer is speaking on the Big Picture panel and Bass is a speaker in the Screen Wars session. Register for tickets here.
Update: In a statement released by IPG, Bass said:
“Both internationally and in this market IPG Mediabrands Australia is known as a top-class and highly effective group with very impressive integrated communications capabilities,” said Bass. “Henry, Reg and the Board of Directors have built a very powerful resource for their clients and it is nothing short of an honour to be asked to lead the Group. It’s an amazing challenge and I am looking forward to it enormously.”
Update: GroupM has announced Sebastian Rennie as Danny Bass' replacement as GroupM chief investment officer, just hours after Bass' resignation - suggesting that succession plans at GroupM were in motion for Bass to take on the CEO role to replace John Steedman. It is still unclear who is now the front runner for that role.
Big Picture panel speakers:
Justin Diddams, director, media and telco equities research, Citi
Mark Fennessy, CEO, Shine Entertainment
Tony Davis, director, Quantium
Neil Ackland, CEO, Sound Alliance
Anthony Fitzgerald, CEO, MCN-Foxtel
Henry Tajer, Global CEO, IPG Mediabrands
Screen Wars panel speakers:
Peter Wiltshire, director, sales and marketing, Nine Entertainment Co
Clive Dickens, chief digital officer, Seven West Media
Mat Baxter, CEO, UM
Rebekah Horne, chief digital officer, Network Ten
Mark Frain, national sales director, MCN-Foxtel
Danny Bass, chief investment officer, GroupM
Toronto-based Chris Hopkins from broadcaster, telco and online publisher, Shaw Media will keynote the afternoon session on “How to build a media tech stack to compete with Google and Facebook”
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