It has been one of the slowest years for the advertising industry across the globe. Things for IPG Mediabrands have been no different. The company’s APAC region has reported significantly slower growth compared to its other parts. Perhaps, that’s what brought the company’s 2023 global board meeting to APAC. On the sidelines of the meeting, Eileen Kiernan, Global CEO, IPG Mediabrands in a candid conversation with IMPACT, expressed her excitement about her first visit to India and her belief in the country’s potential as a significant market. She also acknowledged APAC’s slower growth, attributing it to a combination of macroeconomic factors and a lack of scale in some markets. She was upfront about admitting that ‘poor remunerations for agencies’ is a global issue. Read on to find out more, below are the edited excerpts of the interview:
Q] This is your first visit to India. How has the experience been? What is the agenda for your visit?
It’s a dream come true. I have wanted to come to India for years, so I am very excited to be here. I have only been here for 24 hours so my expectations are still high. It’s great to be here during Diwali. I am excited to learn and experience much more.
Talking of business, we feel very optimistic about India. It’s a big, scaled and powerful market for us. It’s among the top seven markets and a big economy in the world. More importantly, it’s the second-most populous country that is the second-largest in terms of employee numbers globally. We are placing a big bet on the role that India will play and how we can continue to innovate and create in the Digital and technological space.
Coming to ‘Why India?’, well, it’s my first year in the role and we are doing business planning for the year. My commitment to the team globally was that every business planning cycle would be done somewhere in the world. The last one was in Mexico City. This is obviously in India, and the next one will be in Canada, and so on.
Q] Going by your latest results, APAC has shown maximum degrowth in the last quarter (-3.3%). What factors worked against the region in particular, and how do you plan to address it?
What you are talking about is on the IPG level. Ours was a bit better. That being said, it’s true that APAC was our slowest-growing region this year.
There are many factors. It’s fair to say that the macroeconomic environment globally has impacted every region and usually in a business of our scale, there’s always one region that goes up and down, but the rest of the world compensates.
This year, every region has been a little bit difficult. For APAC specifically, it’s a combination of both scale and innovation. I think scale is choppy for us. We have large markets in Australia and India, and then we have a lot of smaller markets. So, when you don’t have a lot of scale, you have less resiliency at difficult times. The insight for us is that we have to innovate faster to make sure that during those times, we have newer solutions to bring to market to offset the dip.
Q] Philippe Krakowsky, CEO of IPG, spoke about several factors that weighed down on your growth in the last quarter. He mentioned a decrease in client activity in the tech and telecom sector, and increased concern among marketers about the macroeconomic conditions, which caused delays in projects and sales cycles. These are largely external factors that are beyond your control. As an agency, what can you do in these circumstances to enhance growth?
I give that a lot of thought because obviously, given the leverage that we have, we needed to be scaled, especially during times of macroeconomic and social disruption like we see today. Right now, we have a two-pronged strategy. It simplifies and streamlines the way that we do business in order to bring more accuracy, efficiency, speed, and agility, which makes our complicated media process easier to work with.
With streamlined and simplified infrastructure, your ability to innovate speeds up, which can offset the volatility that we experience in the future.
Q] How has the last year been for the Indian market? In what areas do you see the country leading?
India is very much a Digital-first market for us. The rate of transformation that we can expect out of India is tremendous. We also learn a lot from India because it’s one of those unique markets where the local business footprint is large, and it’s about 80-20 local to global, which is unusual for my profile.
It’s interesting what we can learn from India’s innovation and bring to the rest of the world; it’s obviously in the technology sector. We are relying heavily on what India can do for us as a partner in driving change and transformation across our businesses. We are investing heavily in India and we know that the country will give us tremendous yields in the future.
Q] In continuation to the last question, where do you think there is scope for improvement?
There are a lot of amazing new skill sets in our Indian teams across the market. I think, how we bring them together in new and integrated ways to work for clients is the real opportunity. So, I’m pushing the India team hard to make that a reality in 2024.
Q] Can we expect any major acquisitions or expansions to be announced during your visit?
No big announcements. We’ve made some big announcements recently, like structural change across IPG Mediabrands to simplify our offerings, bring all of our performance units together, and create a more simplified end-to-end workflow that will transform all of our businesses. That was the most recent announcement. We are constantly looking at what we will invest in next. But I have nothing to report as of now.
Q] Globally, there was a significant merger announced by IPG recently. Kinesso was formed to build technology to improve network productivity. How has its launch helped enhance the overall business?
It’s already proving to be impactful for our clients. The rationale behind the change is that clients are demanding simplification. There is no longer a divide between performance media and media; they are one. With those two realities in place, it was obvious that we unite our performance units into one. No matter which unit you’re in, you’re working in one singular optimised end-to-end workflow, more importantly, underpinned by one media brand, one P&L and one management structure, where all teams are motivated and KPIs against the same goals.
Clients are beginning to feel that simplification in our process. Things should be moving much faster with fewer breakdowns or handoffs that cause slowdowns, or inaccuracies in data. So, we’re betting hard on our ability to really simplify how we work in this complex landscape and how that simplicity can drive tremendous value for our clients.
Q] During the industry’s most prominent media agency event called the e4m Confluence last week, the main topic of discussion was the significant gap in services and remunerations when it comes to agencies. Many respected figures in the industry said that there is currently a significant trust deficit between clients and agencies. What is your take on it? Is it an Indian problem or a global one? How do you think we can resolve it?
It’s interesting. I think the pressure on remuneration has been around for decades and it has taken different forms in different chapters of our history. The fact of the matter is in a highly competitive, highly mature and rapidly changing space like media, everything has to be reinvented constantly, including the commercial models that underpin the relationship between us and our clients and what constitutes value changes all the time.
Another challenge we face is benchmarking value. You have to draw on models from the past and when you have to deal with so much new data and new platforms, the harder the benchmark gets.
That being said, I have faith that there is a mutual interest between clients and agencies to make sure they value the same thing. It is definitely a global problem that has been there for decades. The opportunity is to reconcile the disconnect we have right now.
Q] What kind of challenges does the Google-Meta duopoly present for you?
They are great partners of ours. If you are in this business, you are in business with Google and Meta. In that regard, I embrace them as an important part of our ecosystem. It’s always a challenge when there are businesses that are enormous but get a disproportionate amount of share for many reasons.
It means that innovation does not get supported the way it needs to, and dollar diversification to support diverse platforms or publishers gets more squeezed.
Clients get so dependent on ROI models that they become used in their MMMs. So, making change from those platforms becomes difficult. That being said, they are already being challenged because the rate of change around us is inevitable. Much like what’s happening with TikTok. It is a mega entry into the space and is quickly stealing shares from Google and Facebook. Then look what’s happening with Twitter. So, change happens all the time. While we make sure that we work with the market space in a democratic way, we deal with the big guys as we have to. I expect ongoing innovation and change just to be there in the normal course of business.
Q] According to you, what does the future hold for traditional media companies?
We are in the business of connecting brands with consumers. To do that, you have to be where consumers are consuming media and content. The fact of the matter is that they are consuming content in all places, primarily in the Digital ecosystem. Therefore, to be avoidant of those places feels like a very bad business strategy. Today’s traditional media agencies are Digital, social, performance-based, tech-enabled and data-centric, and they should carry on being so.
Q] Besides leading IPG, you are also one of the most experienced leaders in the media industry. What are some of the challenges you believe the industry is facing, and how can it overcome them?
The biggest challenge we are all facing is the extraordinary speed at which we have to innovate in our business. To do that we have to radically simplify how we work, which is a statement when you look at the complexity of the fragmentation and the landscape. The amount of data and tech we are enabled with, we have to radically simplify to rapidly innovate.
Q] You said India is the seventh largest market right now. What are your expectations from India in the next five years?
I also said that India is the number two market in terms of employees. I think with the way that India is changing, in terms of its growth, different industries and the technology sector, I expect India to keep growing and be in the top five markets or even in the top 3 in the next 3 years.
