MW: How does 2010 compare to 2009 for MediaCom? Is the worst of the recession over and are clients starting to increase their spend again?
JR: Last year was a flat year for MediaCom - we were happy to hold our own in a market that was in a big decline. But business is growing again this year; I wouldn’t say we are bursting at the seams, but we are working our way out of recession. Our approach is to keep our heads down and do the best work we can for our clients. As the largest UK media agency, our role is to lead the market.
MW: How does this year compare to last year in terms of pitches and new business? You lost some European GSK business to Starcom, for example, but retained the Digital UK account?
JR: In 2009, we had to defend a lot of our biggest accounts, including the COI’s press business, Universal Music and EA. New business is the lifeblood of any media agency, but when you are faced with a severe recession the game-plan is all about holding onto business and consolidating what you have.
This year has been much quieter in terms of pitching, with only a tiny percentage of media accounts changing hands. For example, OMD kept EasyJet, which we pitched for, Carat held on to Arla and UM retained H&M. The bigger clients repitch because they want more for less, and if you are defending, you renegotiate the prices accordingly. So agencies are keeping business but on worse rates.
MW: MediaCom has been picking up more digital business - does this mean the role of specialist digital agencies is redundant?
JR: This year we have won BSkyB’s online strategy and display business and we have picked up digital briefs for Aon and VW. So yes, we are winning more digital work and it is really important to us that we are recognised as a digital leader. We question the role of a digital specialist, as most of the major media agencies can offer an integrated digital proposition to rival that of the specialist companies.
MW: Have the tough times affected staffing levels at MediaCom?
JR: Staff retention is one of the biggest challenges we are facing. The industry has a higher than usual churn at the moment, as people are disillusioned about the career potential in the media and they are battle-weary after two years of redundancies and pay freezes.
We have hired about 110 people but lost about 60 to 70 staff, who have mostly gone into teaching or decided to take time out to travel. I think this is wrong, as there has never been a more exciting time to be working in the media industry. As we move to multiplatform solutions, there is so much more people can do.
MW: How is the structure of the agency changing in response to the fact media owners are now offering multiplatform media solutions?
JR: Last year, we integrated all the buying departments into a single investment floor, and we also launched MediaCom Beyond Advertising (MBA), led by Stefan Bardega. This unit covers social networking, word-of-mouth, events, sponsorship and content - managing content either on the web or on mobile.
For example, for Audi we have a huge amount of content around cars, such as promotional films, and we can seed that online or on mobile in front of target groups. Ad-funded programming (AFP) is another fascinating area. So we are placing new staff in AFP, search, digital strategy, our recruitment division, the MBA unit and our business science and data division.
MW: And are you shifting your revenue model away from the traditional fee/commission-based system?
JR: Our agency model will have to change as we move forward. Digital work is not as cost-efficient, so our business models will have to change to payment by results. We have a blend of commission/fees at the moment, but as media becomes more measurable, payment by results will become the fairest system of remuneration. Each client is currently spending about 15% of their media budget on digital, and we expect this to grow to at least one-third by 2012.
MW: How is this Christmas shaping up for media agencies?
JR: Christmas 2010 will be a very internet-based Christmas; I have never seen so many ads driving people to buy online. There is short-term optimism - a bit of a boom ahead of the VAT rise - and more than ever that will mean consumers buying their gifts on the web. For example, Amazon has cut its ad budget and is instead spending this money on ensuring free delivery to consumers. This is a very interesting approach to driving customers online.
MW: Danny Donovan will join MediaCom on 3 January next year to lead a specialist retail division - what are your plans for expanding your retail proposition after losing the £50m Boots account in 2008?
JR: Retail has always been high on my agenda and I have known Danny for a long time, so this will be a great opportunity. Danny has leadership and vision and he will expand our retail division from our existing clients [Specsavers, KwikFit and DFS] by drawing on our marketing expertise for fast-turnaround clients such as Universal Music. Our retail division will be more comprehensive than just media planning and buying; it will look across business science, recruitment, customer insight and e-tail, all backed up by the scale of our trading teams.
MW: So will 2011 be the year MediaCom wins its first supermarket client?
JR: I would hope so. There are some interesting retail clients out there, so there is an opportunity to grow. Our business has always grown organically with our clients, once we have sufficient learnings to deliver that.
MW: What will be the major issues for media agencies in 2011 and beyond?
JR: Profitability is a concern: media agencies still have to deliver profits to their owners in a world where our fees are being driven ever downwards. Agencies must stand up for the fact that clients must pay for the breadth, depth and expertise of what we offer. We can prove our value and we should be fairly rewarded for that.
Integration is another challenge, as clients want complete solutions. Data will unlock opportunities to understand the customer and segment them, but we need to work hand-in-hand with creative agencies to make the most of this. And media owners have some great technology, so if everyone comes together, it will be win-win for the client. Maybe clients should pay us to work together.