How MediaCom Is Fighting the Commoditization of Agencies

Q&A: Worldwide CEO Stephen Allan on Procurement, Talent and Compensation

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NEW YORK ( -- When Stephen Allan took over WPP's MediaCom as worldwide CEO, Ad Age asked him what he thought the agency could be doing better. "Everything," he said. "There's always room for improvement in everything we do."

Stephen Allan
Stephen Allan
More than a year and a half later, he spoke with Ad Age about his time at the helm so far -- and his thoughts on the three hot-button issues confronting media shops today: procurement, talent and compensation.

Contemporary media shops need to move away from the conventional "buy some spots, run the campaign, evaluate it and run the next campaign" model, Mr. Allan said. "It's about sitting with our clients at the strategic table helping them sell more products and services and grow their businesses," he said.

For Mr. Allan, getting MediaCom a seat at that table and driving business and sales for the agency's clients meant staffing with people from non-media, traditional backgrounds including the airline, package goods and financial services industries. It also meant bringing down the silo housing its digital practice and integrating it into every aspect of the agency. "It's no longer a separate business," he said. "It is our business."

The moves seem to be working; the agency has won more than 300 new accounts in the past year, including Revlon, DirectTV, Allianz, Photoworks, American Greetings and Sargento, Mr. Allan said. The agency was also one of the most nominated shops on this year's Valencia Festival of Media awards shortlist.

Ad Age: What has surprised you most about the marketplace in the past 18 months?

Stephen Allan: I have been surprised by the depth of the handing over that marketing has done to procurement. It's definitely one of the things that keeps me up at night. As long as we can prove to our clients that we do add value, it's important that we do it, because the industry has been in terrible danger of being totally commoditized and just negotiated away like a piece of paper or a desk, which is really not good.

I understand it is being driven by the recession and an understandable need for all client companies to need to save the bucks where they can, but the sheer angle of the fall and the speed at which it has accelerated has been surprising.

Ad Age: What's been your approach to dealing with procurement?

Mr. Allan: What we have to do is demonstrate to clients, new and old, that we bring value to their business. Accountability, showing our clients what in the marketing mix is making a difference, became more and more critical, and it's at the heart of what we do. In terms of MediaCom, I asked our business science group to take tools and systems we developed in certain markets that are working effectively and make sure they are omnipresent for us around the world. And by tools and systems we mean things that actively track campaigns and deliver back to the business and prove returns.

Like many in the industry, we had to change, but it was also about keeping what works and losing what doesn't.

Ad Age: What changes have you implemented to accommodate some of the media shifts that have taken place over the past year?

Mr. Allan: Last year we disbanded the beyond advertising division that we had in the U.S. because digital clearly has to be an integral part of what we do. It's no longer a separate business. It is our business. We have significantly increased the size of our search function internally. We now have 60 people who do nothing all day other than search optimization and organic search.

We really started to drive our social media capabilities, and I see that continuing to grow. In fact some of the best work we did last year was being driven out through the social networks.

Ad Age: You've brought in people from a wide range of backgrounds. How hard is it to staff a media agency in today's landscape and economic environment?

Mr. Allan: Talent has been a long trend and concern for many people, but now more than ever it becomes critical. When I look in the U.S. compared to other mature markets, in relative terms I see a smaller talent pool in the U.S. than in certain other mature media markets. That's a consequence of some years ago when the industry became a little less attractive to some of the better talent who then fled to other industries like financial services. And the industry is paying a bit of a price for that now, because here we are a few years on and it doesn't have the same nursery or pool of talent it might otherwise have had.

It's incumbent upon companies like MediaCom to make our agencies really attractive places for young people to come and work.

Ad Age: Compensation is often seen as the third arm in that trifecta of issues media shops contend with on a regular basis. What's your take on the compensation issue?

Mr. Allan: There has been enormous pressure on compensation by advertisers, and they are in danger of pushing it too far. At the end of the day, what the client wants is the best and most talented people working on their business. But we have to earn enough money to pay the best people. If we can't earn enough money from our clients to pay that talent, they'll go to industries that will.

I was at a school last week doing a career evening, and there were representatives of various different industries. The biggest line of parents and kids was for the media booth.

I don't think it's always about paying people the most money. This is an attractive industry, but we need to protect and make sure that what we deliver our clients is a lot more than just transactional business. It's about sitting with our clients at the strategic table and helping them sell more products and services and grow their businesses.

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