Baxter buries the Big Boutique as UM reboots business model
UM is shifting its focus from being the Big Boutique to the Creative Connections Agency. CEO Mat Baxter and chief strategy officer Sophie Price sat down with Nic Christensen to explain why the new positioning is more than just semantic, how it has torn up its remuneration model and why the traditional media agency focus on paid media is broken.
Say what you want about Mat Baxter, the iconoclastic CEO of UM knows how to generate a headline.
“The big boutique is dead,” says Baxter as we sit down for the interview, referring to the positioning the agency has used to define itself over almost four years.
In that time, and under Baxter’s stewardship it has become one of Australia’s most successful agencies, with a string of new business wins and a plethora of local and international awards to its name. So why change now?
“It’s dead for a couple of reasons,” he expands. “One is that we are no longer the only big boutique in town – so that’s a kind of a big issue.
“When we first landed that positioning, three and half years ago, the gap in the market was for someone to scale up boutique and do it well. Back then people like (independent agencies) Bohemia and Match Media were new entrants, relatively, and they hadn’t scaled to the extent they have now.”
“We are still very much the biggest boutique but we are not the only big boutique,” he explains. “And one of the key rules of brand positioning is making sure your brand positioning is differentiated, ownable, motivating and credible.
“Big boutique is no longer ownable, nor is it differentiated. So we have killed it. That’s not to say we will throw the baby out with the bathwater but we have decided we need to find a new uncontested positioning in market.
Our new positioning is ‘The Creative Connections Agency’.”
The case for change
Whilst it has had a stellar rise the last 12 months have been testing for UM, with high profile wins like the $30m Coca-Cola media account, which it took from Ikon last April, tempered by a number of notable losses including Microsoft, Mastercard and Brown Forman. But the biggest blow was the loss of the $137m Federal Government master media account, which went to Mitchell and Partners.
Baxter is his usual candid self about the impact of those losses on the business, and how they picked themselves up.
“Yes we lost a lot of stuff. I take the Federal Government loss as my responsibility. I’m CEO it’s a local pitch, we didn’t win it, that’s on me,” he admits.
“If I’m being blunt we also lost three global accounts, Mastercard, Brown Forman and Microsoft now they were all global losses but they had huge revenue implications but the test of a great agency is how it picks itself up after a loss and how it does some internal navel gazing for what clients are looking for.”
But Baxter says those losses also gave the agency latitude to shift its shape, and look at what it was doing.
“What the losses did do was give us some resource scope, some freedom to redeploy talent and to focus it on a pretty important client, which is UM,” he says.
“We constantly give our clients advice on how they should be strategically focused but then we turned a little bit of that on ourselves.”
Rethinking the media agency model
However, the changes did not just stop at shifting around some staff.
In a market where media agencies struggle to differentiate themselves Baxter argues the ‘Creative Connections Agency’ positioning is more than a “change in language”, pointing to a reorganising of the business away from traditional channels towards earned and owned media.
“The media agency is still built to transact around paid media,” he argues. “Anyone with a budget can buy stuff.”
“Guess what – you don’t need to be a relationships expert or a negotiations guru when you have a million dollars – everyone wants to talk to you when you have a million dollars.
“And while they might pay lip service to owned and earned, the truth of it is that the structures those businesses have got, and the way that they operate is still about a paid media transaction.”
To back up the change the agency has also torn up the traditional commission-based remuneration structure, earning money off the back of the client’s media spend, moving nearly all of its clients to a retainer model.
“Anything that has the capacity to connect with the consumer in a meaningful, engaging and efficient way we are interested in. If it takes us into things that don’t necessarily require us to go into things that don’t require us to give money over, i.e. pay for media, that’s fine we’ll consider those things.”
To that end the 36-year-old CEO says by the end of the year the agency will not produce media plans. “That is a tangible proof. We are calling it consumer currents. You need a tool that lets you see how the idea travels through the system, a media plan is just a list of the paid media you have bought,” he says.
“As for remuneration we have also built a system that allows us to put owned and earned media on an equal footing. It is a truly channel neutral planning tool.
“Commission used to be how we got paid but not anymore. So we have successfully migrated almost every single client off commission,” Baxter says, admitting there are still two smaller Brisbane clients on the commission model who will transition to retainer by the end of June.
Price
Bringing creative into the media connections equation
For Sophie Price, the newly installed strategy director of UM, who recently joined the agency from creative agency The Hallway the idea of joining a “creative connections agency” was attractive.
“What exactly does a creative connections agency do?,” she asks. “We design the optimum connections ecosystem to spread an idea through culture, people and media.”
“Creativity has always been at the heart of UM’s DNA but now, more than ever, we think ideas are the currency of an effective connections plan. With lower attention spans, the audience is only willing to spend their time on contagious ideas.”
Baxter cites UM’s work on Coca-Cola’s Colour Your Summer campaign as an example of what he wants the new proposition to look like.”Coke were the first. We won it with the idea that is now in market at the moment,” he says, referring to the media-driven campaign which has seen the brand take the risky move of changing its cans from the iconic red to a variety of other colours.
“Most media agencies are very bad at having a creative sensibility but there is sometimes a creative imperative to doing something as opposed to a cost imperative. We want to be the place that creative agencies want to come to do awesome connections work and who respect their creative ideas.
“The relationship we have built with Ogilvy through Coke is a fantastic relationship, it’s a relationship that is done on a true equals basis and the work we have been producing has been the best work we have produced to date and there is greater work in the pipeline.”
Baxter argues relationships between media and creative agencies have broken down in recent years because creative ideas are not brought at the right stage or given adequate input.
“This is where creative agencies have been massively underserviced by media agencies,” he explains. “Why? In my opinion a lot of creative agencies have just given up and just decided to go about doing media themselves.”
One of the agency’s new stated aims is to be the preferred partner for creative agencies, and is investing in a way to track creative agency reputation, similar to Media-I’s tracking of preferred media agency by media owners.
Could creative agencies see the move to “creative connections agency” as a threat? Particularly when Baxter is citing the likes of Soap Creative, R\GA or even public relations agency One Green Bean as competitors.
“We don’t want to be an aggressor or threat to creative agencies,” he says, playing down any risk. “I think they are crying out for creatively minded connections companies. We can do things that creative agencies can’t do because of our heritage.”
We are a business that has a suite of capabilities that the creative agencies don’t generally have, but I’m sure some will see it that way (as a threat).”
Baxter
Gold collar workers
So what will success look like? And will Baxter be there to see the new plan through?
“We want to be the media owner’s most preferred agency to work with, which by the way we already are, so we want to maintain and improve that,” Baxter says.
“So we have got the media owner relationship, the creative agency relationship and of course the client relationship which we are managing day-to-day, and then you have internal business.
“And the commitment I’ve made to my staff is to turn every single person from a white collar worker to a gold collar worker – people who will be in demand in the future.”
Baxter says key to the repositioning will be whether or not the agency can reskill its staff for a world where paid media – with its spots and dots, paid transactions etc – is not at the centre.
“We want people who have a digital centre, who understand the world of owned and earned, who are in demand and have a skillset that will be enduring for 15, 20, 30 years.
Right now the media set they have will not be enduring. Unless they skill up, the younger ones, they are going to be struggling to have a career that will last their lifetimes,” he says pointing to the risks from both automation and broader digital disruption.
The agency has already restructured to redefine key roles. For example, the traditional Investment arm becomes Partnerships, focused on more than just the buying of paid media, while Client Service becomes about client advice and management and a new division called Connections Design is charged with driving not just implementation but adjusting strategy throughout the campaign.
Baxter insists “we don’t necessarily need to invest to create partnerships”, giving an example theoretical tie up between clients Lego and News Corp in a bid to sell more toys and newspapers. “That doesn’t need a media budget attached to it but can still deliver on sales outcome of both businesses.”
Griffiths
The reorganisation also brings with it title changes, with national investment director Sev Griffiths becoming chief partnerships officer, while David Haddad will head client advice & management and former director of projects & integration Timo Kugler takes over the new 14 person connections design team.
“A large part of this repositioning is ensuring that we can provide those services, so its not just about paid media – that we can provide advice to a client about how to manage programmatic media or build out an ability to do community management,” adds Baxter.
Baxter insists the new plan is about growth by reinventing the media agency model.
“If the paid media market is only going one way which is down and your whole business is focused on paid media, guess where your business is going to go,” he says.
“In order to grow your business you have to divest your energy from just being about paid media to being about more than that. The young guys get that. They are excited about this.”
But what of Baxter, who has been consistently linked with a move to Mediabrands’ head office in New York to join his boss Henry Tajer.
“Every pitch I’ve been in for the last two years it’s the first question I get: ‘we hear you’re going to New York Mat’,” he acknowledges.
“I don’t know which of our competitors trump that out at the beginning of every pitch.”
Will he still be in Sydney in three years? “I have no idea. But I have no plans to go anywhere and am committed to seeing out the execution of this.”
Nic Christensen is deputy editor of Mumbrella
The Big Boutique is not dead, but well alive and thriving in Melbourne…
… unless I’m running the wrong company!!
http://www.thebigboutique.com.au
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Moving to a customer/outcome centric model as opposed to a cost per service/product/commission is applaudable (I’m not just saying that because it’s what my company does, I believe it) . However, I’m definitely interested in understanding the integrity of the move, and how deep it actually goes (ie at what point does the politics of being part of a global network of companies with different agendas and models, compromise their model). Temptations will come plentiful as they leave certain commission and other dollars on the table – over time they’ll add up, and someone up the food chain will ask , ‘why don’t we just take a bit?’. The transformation would have to be absolute (I’ve emailed Matt , hopefully getting some feedback on this point). Regardless , at least his got the foresight to see the company needs to pivot and they’re done something about it. #my2centsoftheday
This is what it’s all about, and a model we have seen developing in the UK. Integration is a word that’s been thrown around for years but this is subjective and can range from combined decks (deck stitching), integrated comms and user flow, right through to technical integration.
Paid Owned and Earned must be given equal footing to achieve true integration as the digital ecosystem natively operates in owned and earned sphere whether you like it or not.
Good move Mat and team.
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Good article, and it was refreshing to see him have the courage to take the hits (losses of accounts) and then turn it into a positive. Well done
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Interesting to see that UM Worldwide’s posting on LinkedIn this week trumpeted the fact that UM Australia is in the world’s top ten media agencies according to WARC. Is there something that Mat isn’t telling his global bosses?
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