The Challengers
The A&M industry celebrated women’s day with much aplomb a few days ago. Interestingly, this week our cover story is about a global network which has two women leaders helming it, one at a global level and the other in India. And this, even in this age of inclusivity and diversity, is quite a rarity. We are talking about Philippa Brown, Worldwide CEO, and Monaz Todywalla, CEO, India of PHD. We’re going to the market cautiously optimistic: PHD Worldwide CEO Phillipa Brown, Worldwide CEO, and Monaz Todywalla, CEO, India of PHD discuss changing client-agency dynamics, tech layoffs, and the great return, along with PHD’s 2023 goals and offerings with Neeta Nair. Q] A lot has changed since your last visit to India. For the first time last year, we had Digital AdEx overtaking the Television AdEx. From a media agency perspective, would you say it is more prestigious to have a client who is investing more on TV in India versus one who is spending a lot of money on Digital today? And what is your forte in India- traditional or Digital? Q] Just when the world was reeling from the pandemic, the market in Europe was impacted by a slowdown. How did that affect PHD’s revenues globally? Q] Omnicom closed 2022 with $14.29 billion in revenue and organic growth of 9.4%, WPP saw a strong performance and Publicis Groupe registered double digit organic growth. And all this with the slowdown, war, and tech lay-offs happening. What were the factors that kept the media agencies afloat and allowed them to grow? Q] What kind of growth has PHD seen in India and globally last year? Q] I understand Omnicom has tried to remain cautious in its outlook for 2023; predicting a 5% growth. Will it be the same for PHD in India? Q] The tech sector has witnessed massive layoffs. Did it work out in favour of the agencies? Did you see good talent returning? Q] Are you satisfied with the India team as far as their new business wins are concerned – namely Acko General Insurance, and Bajaj Consumer Care last year? Q] Conversely, while going through the RECMA local agency rankings, I found that PHD didn’t get a place in the top 10 in India in the ranking that came out last year, even though it appeared on number 8 in terms of growth rate for the last three years. Is scale a problem? Q] The coming together of digital and traditional agencies is another big trend in the creative space. We’ve seen something similar happening very recently in the media space where Essence and Mediacom came together. Do you think that’s the way forward? Q] When you say 50% of your billings are on the Digital side, does that hold for India as well, or only globally?
In an interview with IMPACT, Brown who was the first woman global CEO of a network agency at Omnicom Media Group speaks about how the industry has come a long way from the time she first set foot in what was then an ‘unequal world.’ Today, amongst others, the Worldwide CEO, Chief Talent Officer, and India CEO at PHD are portfolios held by women. Brown explains, “I started out in the industry in the late eighties when it was much more biased in favour of men. There weren’t many senior women leaders at that time. There were times when I did feel that I was being overlooked. But things have changed. We’ve pushed really well, a lot has been done and now boards around the world look much more balanced. However, the job is far from done in terms of diversity. As a global woman CEO at Omnicom, it’s always on the top of my mind and top of my agenda. There are many global CEOs within the whole of Omnicom who are women, which is great. But we have to keep on pushing and we have to make sure that we give women and men equal opportunities to grow their careers at Omnicom and PHD.”
Brown who has clocked over 15 years with the holding company, was running the Omnicom Media Group in the UK roughly three years ago, when she was given the opportunity to be PHD’s Worldwide CEO. “I was very excited and I imagined myself going to see the 6,000 staff that I have across the world. But then, six months later, the pandemic hit. And, I basically ran the network from my bedroom in London, which was more than disappointing. So, it was quite a difficult start, but didn’t stop us from doing great work. We had just won Diageo, then Chanel and Ekaterra in that period. We had brilliant retention rates and also became the Media Network at the festival at Cannes in 2021.” While Brown is absolutely delighted to be meeting top clients like Volkswagen, Diageo, etc., face to face, in her first big India visit post the pandemic, she can’t stop reminiscing about her ‘two very successful years’ during the pandemic.
Looking back, PHD India’s 2022 new business wins in a nutshell comprise Acko General Insurance and Bajaj Consumer Care, even as their relationship with clients like VW Group, Diageo, etc., remains rock solid. PHD may not have come on top in the industry ranking of media agencies in India on new business wins or size of business, but Todywalla is quick to say that they are ‘seeing more opportunities for a seat at the table at pitches’ owing to their diverse offerings and investment in talent.
Highlighting the changing relationship between clients and media agencies, Brown says, “Today it has become important to go beyond media buying and talking to clients about how we can help them achieve their objectives and grow their businesses – be it overcoming their e-commerce challenges or developing a new operating model for them, what should they do in-house and what should be done offshore. Our development programme called PHD Learn aids that. Also, we are actively approaching our clients not just as Omnicom Media Group, but as a ‘collective’, including our Creative agencies, Retail agencies, PR agencies, etc. Many clients nowadays handle some part of commerce, SEO, etc., in house.” Without mincing words she adds, “So, yes, we do agree that certain things that are part of the marketing mix should actually be managed in-house; it’s simply more efficient.”
At a time when many big creative ideas are jointly coming from media and creative agencies and have even gone on to win at Cannes, one can’t help but wonder if lines are getting blurred. Just the way consultancies are encroaching into the media agency space, media agencies are establishing themselves on creative turfs. Does it translate into collaboration or competition? Brown responds, “I don’t think so, we’re very different in terms of our starting points. What I’d like to see is us working more closely with the creative agencies, especially the Omnicom creative agencies. In fact, our platform ‘Omni’ was set up for creative and media to work closely together. And that’s going to be our big objective in 2023 - using Omni to work together on exploring audience insights, idea generation, decoding briefs, and more.”
Talking about the new efficiencies that PHD is arming itself with, Brown says, “We have a commerce offering called Transact, which will bring together all the different retail marketing elements of Omnicom with our e-commerce opportunities. It’s not just a consultancy, but an end-to-end customer journey in terms of retail. Then there is ‘TRKKN’ and a critical offering called ‘OMG Momentum’. A lot of our clients are looking at progressive media sustainability. From a consultancy perspective, our product will help them in identifying the optimal future strategy in these areas.”
In a fast-changing environment where humans and agencies both need to constantly evolve to be relevant, Todywalla is confident that PHD’s ‘superpowers’ will make it stand out. She says, “PHD’s research suggests that origination will become the most dominant function again. The result of marketing science-based studies typically clarifies the role of creativity in achieving a disproportionate return. The data seems to suggest that there is going to be some form of a renaissance in creativity in our industry and when it arrives, PHD and its arsenal of creative talent and tech will be there alongside our clients and partners to make the leap with our superpowers.”
Brown: The way we look at it is not one or the other. It’s really about what is the best mix to deliver the objectives of your client’s business. And we have a brilliant tool called ‘investment planner,’ which sits within our platform Omni. It helps us understand how much we’ll be spending on TV versus other channels like Digital. So, we never really focus on whether it should be TV or Digital. We really do focus on what’s best for our clients to reach their target market. We’re very media-neutral with regard to which way we should go.
Todywalla: Right from the very beginning, we have been a full-service media agency catering to the breadth of our client’s needs – across the board, from traditional to Digital. PHD is a client-first, consumer-first agency, and depending on the life cycle and goals of the brand, we recommend a wide array of solutions that help them move beyond incremental improvements and are critical to success. The brands we work with find this potent mix of buying power, exceptional planning, and creative credentials a compelling proposition, and I am confident this will only help us lead the narrative with even more vigour in the years to come.
Brown: It is such a good question; we are in fact grappling with it at the moment. Having discussed it internally, I believe it is not just about reach anymore but about attentive reach. We’ve built this algorithm into Omni, which allows us to measure attentive reach, not just plain reach. We spend a lot of time understanding which channels will give us the best attentive reach. If we can blend the two, then we will be looking at the sweet spot.
Brown: Yes, there were some markets that had to face a slowdown. Obviously, it wasn’t just about the pandemic; we also had the Russia-Ukraine war, which had an impact on Europe. But the UK’s still spending. For some of our clients it was less about ‘how much’, and more about how they were spending. For example, our commerce revenue and billings grew massively while e-commerce during that period was huge for us. There was a shift in the way clients spent as opposed to not spending at all. Having learnt from the previous recessions, they know that when you stop spending on your brand, it takes longer to recover. So, they kept the ad stock going and were consistent with that. They also kept the brand equity growing and stable. There wasn’t a complete drop-off at all.
PHD started in London, but our biggest office is in America and we have been growing hugely in APAC as well, including India. We had brilliant billings growth in 2022 and are much more balanced as a network now. Overall, our global billings grew and so did our revenue across 2022. So, the fact that we’ve become less Europe-based as a network and more Latin America and APAC led, has really helped us. The impact was less than you’d have thought, all because we’ve grown so much in the other regions.
Brown: We’ve really grown our capabilities and created products that our clients want. Our data and tech products like Omni and Omni Studio have caught the attention of our clients who are also investing in them. Our e-commerce, content and sponsorship division saw a huge growth. These divisions are truly at the forefront of not just media, but are also offering complete marketing and commerce solutions for our clients and that has really driven our revenue growth.
The other thing is that clients are coming to us now, seeking help with new operating models. So, all our consultancy products and services are becoming really important to them. We are now delivering a lot more than media planning and buying, it’s a much bigger suite of products and services and that’s why we’re growing so much.
Brown: Well, I can’t give any specific numbers on markets, but it’s a plus. It’s a strong performance. India is one of our top ten markets. From Volkswagen Group here, which is also one of our largest clients globally, to Diageo, Royal Enfield, Vivo, etc., we have diverse clients.
Brown: It’s all aligned. We’re going to the market ‘cautiously optimistic’. There’s a lot of talk about there being an economic downturn, but actually, when you look at our revenue forecast and that of our clients, we’re not seeing that come through. In fact, we are seeing growth in our clients’ spends in 2023. So, whilst there is quite a lot of caution around the world, at the moment we’re still seeing positive growth forecasts for 2023.
However, I do think that we will have to keep on monitoring it, also to see the impact of the war. There are still some supply issues and an impact of inflation in different markets. So, we will have to keep trying to understand what that means.
Brown: We had the great resignation, which happened at the beginning of COVID, wherein people were switching to other roles, mostly in tech companies. What we’re seeing now is ‘the great return’. We’ve been seeing a lot of people, which translates into a pool of resources, coming back to us from the tech sector. It has been great for us because we’ve got real capability and talent coming back into the industry, and agencies have always been a very attractive place to work, after all, we work on different types of clients, which helps people to develop a diversified skill set.
Todywalla: At large, agencies in India, at the moment, are having it better off than their tech counterparts. Creative, tech and Digital enablement specialists are in demand across the world of Advertising. Now would be a good time to bring some need-of-the-hour talent on board into the industry.
Brown: The pitch slate is massive at the moment. Obviously, the number one priority is going to be client retention, but we always have to look for new business to drive growth. But overall, yes, the new business performance in India has been fantastic and globally, we’re actually at the top of the new business league, the net new billings. So, the way it works out on Comvergence rankings is that it looks at the difference between gross billings - new gross billings and the losses - and PHD is right at the top - the number one in net new billings, which is great globally.
Brown: No, I don’t think scale is a problem. Now we have to double down on what makes PHD different - the thought leadership, our approach to creativity and innovation. We’ve got a really talented senior leadership team here. We had some turnover issues, but now I would say the team is settled. I think 2023 could actually be our best year ever. I really do believe that. With everything in place, there’s no reason why it shouldn’t be.
Todywalla: The last couple of years have been critical for us in terms of setting our vision for PHD, onboarding future-ready people capabilities and stabilizing the businesses, and I’m happy to say that we’ve done a good job of it over the past three years. From the second half of 2020 to the end of 2022, we added nearly 800 crores of new business to our portfolio and have some exciting new wins in India across a diverse set of categories that contributed to an increase in revenue – from both existing clients and new business wins.
As we’re on the topic of rankings, if number one or top three ranking is about the size of the agency, then there is no better time than the present to say that size doesn’t matter. Yes, validating agency trust from leading global authoritative sources is vital to the overall ecosystem, but it’s also essential to know that today, the industry, right from clients to partners and everyone in between is looking to buy into a unique proposition, not into the status of being #1. It’s the differentiation an agency brings to the table and the long-sustained strategy that brands have their eyes fixed on and agencies need to invest in better products to this effect.
Brown: No, I don’t think so. Rather, what we should be better at is packaging our Digital offerings, because if you look at our total billings, 50% of it is from Digital, globally. So, we have a good amount of Digital - people and billings. What we don’t do as well as the Digital specialists is packaging and marketing enough to tell our clients about the brilliant work that we are doing in performance marketing. So even when we are doing the exact same specialisms, we are seen as generalists, which is also an obvious fallout of doing so many things. We have a large number of performance clients and yet we are not packaging it in the way we should because we’re more focused on creativity and strategy. It would be very important for me in 2023 to make our clients understand our capabilities in Digital and data better.
Brown: In India, the contribution of digital is about 25 -30%.
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