When Mat Baxter became global CEO of Initiative in 2016, the network hadn’t won a new account in eight years. He knew he had a big job at hand and didn’t waste time overhauling the media agency, replacing a large majority of the leadership team and introducing a new positioning.
Almost two years later and Initiative is gaining momentum, picking up the global media accounts for Carlsberg, Converse, Revlon and Lego, which stills works with UM in Australia. It has also retained the Amazon since 2008 and built a new division to service the burgeoning $1bn e-commerce client.
If you ask Baxter, these wins show his “radical redesign” has reenergised Initiative and it's now reaping the benefits.
“It's fair to say, we've reached the turning point now in terms of realising the ambition that we set almost two years ago and we're starting to see some of the fruits of our efforts play out in market,” he said, speaking to AdNews at Cannes Lions.
“I'm feeling good about where we're at. We've still got a long way to go. I mean, you're never done, right, anymore? The industry changes so quickly that you can never say you’re done.”
Prior to the overhaul, Initiative suffered from “stagnancy” Baxter admitted, but clients are now responding to its ‘Cultural Branding’ positioning, which replaced it its former ‘Make Great Happen’ tagline.
Baxter defines Cultural Branding as “creating engagement rather than paying for it” and measures a brand's success on its “cultural velocity”.
“Paying for it - that's the lazy way. Stick a TV ad on. Put a poster up somewhere. Anyone can do that and so any brand can do that. It's much harder for a brand to create an engagement through something other than by buying that attention,” he said.
“Paid advertising is only going one way and it’s not up in terms of its relative performance. It's incumbent upon us, not only as an agency, but the industry, and also on clients who market products, to find new and interesting ways to make themselves relevant for consumers and it's not always about buying that attention and that relevance.”
It has also meant shifting to a performance-based model, which Baxter said is more work for the agency, but ultimately delivers better results.
“We've been able to prove that when you increase cultural velocity and guess what happens? Sales grow. And we've been able to prove that the causational effect of increases in cultural velocity equal increases in sales performance,” he said.
Initiative has only been able to achieve this performance-based model by sophisticating its measurement capabilities beyond “soft metrics”, such as reach, likes and impressions, Baxter said.
Measurement is one of his gripes in the industry and it’s something he believes consultancies, which focus on growth rather than vanity metrics, could help media agencies better understand.
Transparency conversation has benefited Initiative
Another factor that has driven the resurgence of Initiative has been the industry’s transparency woes, Baxter explained, as they’ve driven the review of major media accounts across the globe.
“If you can't trust your agency, they shouldn't be your agency and that's the reason why so many pitches are going on. There are a lot of clients with agencies that they don’t trust,” he said, adding Initiative has benefited from the transparency conversation.
He also recognised the disadvantages that surround media agency scrutiny and said it’s a hard battle for the industry to earn back the trust they once had from clients.
Initiative and IPG exits
Baxter’s bold plan for Initiative meant existing leadership was booted as he staffed up with new capabilities.
Mel Fein replaced former CEO Lee Leggett in Australia, IPG veteran Amy Armstrong is now at the helm of the US business in a newly created CEO role and Richard Morris was tasked with overturning the UK business.
“The old line up was rightly so because that was the product we were offering. The old line up was a media line up. And that's fine but that's not what our Initiative is about now,” he said.
“I had to bring people into the team that were going to complement and build on the skills and capabilities we were trying to deliver under the new Initiative and, as a result, it was a swap out event to be able to get all those skills in.”
Armstrong joined the US business in 2017, which Baxter described as a “tanker” at 600 people. Unlike the Australian business, which Baxter said can move relatively quickly compared the global network, the American business has taken time and is yet to reach its full potential.
“When you set down a new plan and a new vision, the American office is going to take the longest to get there because of the sheer size of those operations. And the entire incumbency that comes with the existing client base,” he said.
Around the same time Initiative has overhauled its leadership teams, IPG was going through a shake up of its own. Its global CEO Henry Tajer was booted, which set off a string of Australian exits with John Sintras, Di Richardson and Travis Johnson also departing.
Baxter, who doesn't often hold back with his opinions, had little to say about the departures. He did say, however, the changes didn’t impact Initiative’s progress.
“IPG does what IPG does and I run Initiative. So, what I'm not going to do is speculate or talk about what IPG does because that's IPG's business. I'm the CEO of Initiative and that's what I'm accountable for and that's what I focus on,” he said.
Australia will always be home
While he may not have put in place a five-year plan, admitting that these day’s they’re redundant as the industry moves too fast, Baxter said Australia will always be home and he will one day return.
“I want to see this through and I have a really simple ambition for the agency which is I want it to be the best media agency in the world. Not by billings or size but by quality of work, by growth, by some of the more real measures of success and quality. I really believe we can achieve that and that's the journey that I'm committed to completing,” he said.
“When that journey is complete I'll look at what I want to do. Australia's home. Am I going to be in the US forever? Probably not. I will at some point decide I'll come back but when that is, that's a bit of an open question.”
He keeps a close eye on the Australian business, taking pride in his hometown. Under the new leadership of Mel Fein, he said the business is starting to gain momentum.
Are they pacing in the way that I would like? Absolutely. I think all the early signs of success are there. I take a particular interest in Australia because it's close to my heart and I understand the market and I know people over there still obviously,” he said.
“It's probably a little unfair on Mel because I probably interfere with the Australian market more than I do in some of the others.”
Among the new hires, Initiative hired its first chief creative solutions officer, Michael Stanford, in 2017, signaling a stronger creative focus for the agency.
Baxter, when at the helm of UM, overhauled the media agency to be more creatively driven dubbing it the ‘creative connections’ agency and moving towards a full service model.
While there’s a big trend in the industry to claim your agency is full service, Baxter said Initiative wouldn’t be creating content anytime soon and is comfortable doing what it does best – media.
“We are a creative business. We want to design in channels creatively. We want to do great creative thinking. We want to be able to bring fresh perspectives to our clients that have innovation and technology embedded throughout, but we don't necessarily want to go and create the content. We don't want to do the creative and there's a difference,” he said.
“I don't think we want to be full service…. You can't be great at everything anymore. There's just too much ground to cover. The notion of a full-service agency, where does it begin and end.
“You become so spread and so thinly spread that your capacity to be outstanding in any one thing just gets completely comprised.”
Would IPG ever chase horizontality?
Just like agencies chasing the full service model, there’s a trend of holding groups building bespoke teams for clients, pulling specific capabilities from various agencies under their umbrella. WPP used to call it horizontality and Publicis calls it their ‘Power of One’ model.
Just last week in Australia Dentsu Aegis Network (DAN) created Woolworths@DAN, a new bespoke offering madee up of members from across the network including Carat, Amplifi, Amnet, iProspect, Columbus and Posterscope.
So would IPG follow in these competitors footsteps and also chase wider group integration? No - according to Baxter, who believes in the power of the individual brands.
He gave the example of cereal; people don’t buy Kellogg, they buy Coco Pop or Cornflakes.
“Clients buy agencies. They want the endorsement and the credibility of the holding company like Kellogg gives the cereal brand, but they're not buying the holding company. They're buying the agency. They're buying the people in the agency and the agency service the clients,” he said.
He said he’s “not a believer” in the moves made by Publicis or WPP.
“When you start to bring things together from lots of different places it can get messy; to be really truly agile and fast moving, and it can become highly bureaucratic,” he said.
“It can get bogged down with the politics. It can get bogged down with who controls what P&L and decision making slows down and it can get really difficult to navigate."
Baxter isn't the only global exec to speak out against Publicis' strategy, with TBWA global CEO Troy Ruhanen also criticising its new model and AI platform, Marcel.
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