Combining two separate global businesses of equal size is never an easy task. Many global M&As struggle to successfully fuse different cultures, approaches to market and brand propositions into a single new power brand and often the stronger company prevails and absorbs the weaker.
On paper, the challenge of combining MEC and Maxus into Wavemaker was no different, the approach wasn’t a matter of gluing the different parts together. The architects that designed Wavemaker started from a clean slate, designing a totally new organisation from the ground up using components from MEC and Maxus.
The end result is GroupM’s largest media agency with nearly 350 staff across Australia and an annual client budget of $1.4 billion.
Recently, AdNews caught up with Wavemaker global CEO Tim Castree to find out more about how difficult it was to build the new business, why Peter Vogel and James Hier were chosen to lead it in this country, how clients have responded to its purchase journey “obsession” and how this new approach can tackle short-termism in marketing and the boardroom.
AdNews: Combining two businesses is never easy, how has it gone and what are some of the benefits?
Tim Castree (TC): On the people side, it’s been reasonably stable. There's always a bit of anxiety around these things but, all things told, it’s been remarkably successful.
One of the goals from the integration was some productivity gains and some efficiency and we've absolutely realised those targets. It probably wouldn't be appropriate to put a dollar figure on it but it's not unsubstantial. It's a meaningful amount of savings in the context of our business. But that's come from structural things that have not really had an impact on our day-to-day staff.
Where it's really had impact has been the elimination of the regional layer. So, we've taken the whole regional layer out of Wavemaker. We didn't feel like that was necessary in the new model and so significant savings were realised out of regional.
The other area where we've saved a bit of money is in the most senior levels. You don't need two CEOs in every market. We operate in 50 countries around the world where there was both an MEC and Maxus CEO, two finance directors and so on. So it's really been in the C-level that's there's been a rationalisation of talent.
AdNews: How have you altered the regional leadership structure?
TC: In addition to having a global team and local market teams, we used to have regional teams in EMEA, Latin America, Asia Pacific, North America. We've eliminated that regional layer, so our top eight markets now report directly into global and then all of our other markets have been organised into 10 smaller sub-hubs.
So, moving to that structure has realised a reasonable amount of efficiency. I think we've got a better set up: we’re more streamlined, better performing and there’s less cost. So, that's been significant.
AdNews: What are the main benefits of removing this regional layer?
TC: Our eight biggest markets (including Australia), count for somewhere between 65% to 75% of our revenue reporting directly into global. Our global management team is now a Global Services Team, and that global team is really about the enablement and support of our people working on the coal face and delivering to clients.
It's flipped it around to put the focus on support and service delivery rather than a top down approach. This results in better performance and a more streamlined, more effective operation while costing less money than it used to.
AdNews: Does this provide local teams with a greater voice globally?
TC: Exactly. I'll give you an example. Say we wanted to launch an initiative. Our chief product officer would pitch it to the regional team and then for the next month, that regional team would be shuttle diplomacy going and trying to convince the market leads to do the same thing.
Today we just bring all those people round the table and say, ‘Here's the problem we want to solve. How can we solve this collectively to the benefit of our clients and let's come up with a common approach to solving this problem’.
James Hier and Peter Vogel.
AdNews: Speaking of leadership, why did you choose Peter Vogel and James Hier to lead the agency?
TC: The decision to bring Peter back (from an APAC role) to lead Australia – given it's one of our top markets – it's something that Peter was exciting and willing to do. That for us was a no-brainer.
Obviously (former Maxus boss) Mark McCraith is fantastic, has a fantastic reputation and has done an amazing job. He moved on with our best wishes and if anyone wants to call me for a reference directly, he'll get a glowing one. He's an amazing talent.
But getting the band back together of Peter and James, they've already proven to be a pretty formidable leadership duo (previously at MEC), so we're excited to have them leading Wavemaker Australia.
AdNews: Wavemaker would be GroupM’s largest agency with some huge blue chip clients like Nestle, Vodafone, Mitsubishi, Colgate Palmolive to name a few. How has your new proposition been received by clients?
TC: We talk to our clients about our obsession with purchase journeys - how we're backing that up with products and how we can use that obsession to help them make better investment choices and decisions for their brands.
So when I sit across from a CMO, I say, ‘It's not about me. It's not about us. It's not about even our capabilities and our agency silos. It's not even about you, Mr CMO or Miss CMO. It's about your customers and how they make their way to your products and how we build around that’. That focus gets our clients really excited.
AdNews: What is it about your approach that excites them?
TC: You'll get comments like, ‘At last, somebody's not talking about themselves, they're talking about our customers’. They love that we're trying to solve their biggest problems.
We live in a low-growth world at the moment. The average tenure of a CMO is a couple of years. They're dealing with incredible complexity in the choices that they have to make. They're under incredible pressure. Advertising’s value to the business is being questioned in the boardrooms around the world, so there's intense pressure on CMOs at the moment.
I can tell you, from our conversations, they are appreciative that we're going to market to be singularly focused on their growth imperative and how we can help enable that as a business and as a partner.
The Wavemaker Australia Sydney team.
AdNews: A lot of agencies talk about mapping the consumer journey – how does the Wavemaker philosophy and execution differ?
TC: For us, it starts with the fact that it's not a construct or a framework for us. It's a data-driven endeavour. It’s a totally different conversation from most marketing services firms who might talk about the path of purchase as one of the things that they think about but, for us, it's underpinning everything about our products and what we're delivering.
We consider things like what's the relative value of the brand in driving choice? How is it different for you, versus your competitors? What's the role of the brand in driving price elasticity? What are the triggers that bring people into market? When people are in market, how long are they in market for?
We also look at what's the sequence and value of all the actions they take when they're researching products in market and what's the ability of that to influence choice? What's the role of every owned, earned and paid channel in having an impact and influence across that path to purchase? What's the role of content and our content marketing initiatives? And what audiences are most valuable to you in delivering, in terms of delivering that growth?
AdNews: And what do you base these insights on?
TC: We’ve built the world's largest single source database (two-times larger than McKinsey’s) into how and why people make purchase decisions, and what is the roles of channels in delivering that. We now have more than 400,000 individual purchase journeys that were studied around the world quantitatively across 65 categories, 30 countries, and that grows every day
AdNews: Does this approach of precisely targeting a consumer journey run the risk of fueling even more short-term marketing activity at the expense of building a brand?
TC: I agree with you completely and we see it in our data all the time. There's definitely been in many cases – not always, but in many cases – an over-investment in digital and an over-investment in short-termism, an over-investment in pricing and short-term tactics at the expense of brand building.
What our models and data are able to help a client understand is what's the next best dollar to spend. Very often, in many cases, the next best dollar to spend is back on building brand preference for when a consumer moves into the category. On average, about 7% of time is what we would call the 'in market' phase. So, 93% of the time people spend not in market for the various products and services that they buy.
The value of the impressions that get created and the preference that gets built in that 93% of the time is enormously valuable in driving decisions at the shelf or in retail channels, and building price elasticity – so making customer's less susceptible to short-term price discounts and other things like that when they're in market.
AdNews: Do you think it is realistic to change this short-term mindset when many business leaders are driven and remunerated on short-term targets?
TC: That's our goal. One of our goals is to restore the boardroom's faith in advertising as not a cost but an economic driver of the future. And it is becoming self-fulfilling, this lack of investment in brands and brand building.
The overdoing of zero-based budgeting, short-termism and cost-cutting – it's not going to work. The problem is, the more you ignore brands, the less you invest in them, the more those things get eroded and the value and role of brands starts to diminish.
So, it's kind of accelerating the commoditisation in a lot of the businesses and categories that we work in. Restoring the primacy of the value of brands in driving purchase choices is one of the goals – an important goal – of what we're doing with our purchase journey focus.
Want to know more about Wavemaker Australia? In our March magazine, AdNews meets the Wavemaker team in an exclusive where we catch up with Vogel, Hier and key leaders across the business.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.