How to avoid a mEssence

A month ago GroupM announced it would merge two of its key media agencies Essence and Mediacom globally. Calum Jaspan looks at the local implications and challenges facing a merged EssenceMediacom and asks how it can avoid becoming, what some in the industry have already named, ‘mEssence’.

In a global move, WPP announced in late April its media investment arm GroupM would merge two key media agencies, Essence and Mediacom, to create EssenceMediacom.

Locally, the decision will have major implications for both GroupM and the wider media agency landscape creating a new 530-person agency, with billings of $839m. This places the merged entity well behind OMD ($1431m) but importantly in the Australian market just ahead of UM ($819m) in the number two spot.

Among its most high-profile clients will be the Commonwealth Bank, Mars, Google (shared with PHD) Coca-Cola, Uber, and KFC, and it is worth noting this is now the third agency merger Essence has seen in just over a year, with WPP initially merging AKQA Media and Ikon Communications in February last year, then merging the new AKQA Media with Essence.

GroupM returns to three brands

This all comes at a time when both Mediacom and Essence contracted in client billings across 2021 in Australia, with a combined list that still falls short of Mediacom’s dominance just seven years ago, so it will be looking to turn the tide with a new combined solution.

The changes are part of a wider WPP trend over years past, reducing its brands by often combining its upstart digital agencies with its traditional shops on both the creative and media side of things. Think back to the creation of Wunderman Thompson, AKQA Group, VMLY&R, and to a lesser extent, Wavemaker.

The question which has ruminated for many in the industry now is, as one agency rival poses, “what do they really stand for?”, further asking how the new entity intends to differentiate itself from its counterparts Mindshare and Wavemaker.

Crowley: the man to helm the new agency in Australia has a task on his hands

Settling the EssenceMediacom ship after a period of such change will be a challenge. Here are some of the key ones facing its CEO Pat Crowley:

Challenge one: Defining a Clear Client Proposition

The first challenge for EssenceMediacom, is providing a clear proposition for its clients.

When sister agencies Maxus and MEC merged to create Wavemaker in 2017 it was not MaxusMEC, or some other iteration of the two agencies, but rather it was given its own clear brand identity and proposition for the brands entrusting the agency with their media planning.

At the time, then global CEO of Wavemaker Tim Castree told Mumbrella that  a new brand was one crucial step forwards as GroupM sought to remove itself from the constraints of “commoditisation”.

This time around GroupM management has chosen a different course.

While many agency mergers hold onto their legacy names, typically this decision is driven by a rationale that decides the two combined will be better than one.

At the time of the global announcement, local industry figures quickly began to voice displeasure and confusion with a potential move away from the Mediacom brand name, which has a long history in Australia.

Last month, a former executive at Mediacom told Mumbrella, “taking a co-ventured name would never have happened in the past”, taking into account the agency being GroupM’s top-performing brand over the last decade.

Essence, which only launched in 2005, and in Australia in 2016, has instead been given first-billing suggesting to some in the industry that it is their client proposition, built around “use of analytics and technology to create valuable, relevant, and trustworthy advertising” which is the future of the agency.

In Australia more specifically, the brand describes itself as being pretty easygoing: “Building brands and hitting beaches in the ad capital of Australia.”

Mediacom, on the other hand, looks to something a little larger, and less market specific-focused: “We help our clients See the Bigger Picture to accelerate their growth.”

Mediacom has previously been about looking at the bigger picture

“One of the main challenges will be making one and one equal two-plus”, adds another industry figure. “Being able to take the best bits from both, and blend them in a way that is better for clients and its people, as opposed to simply being a financial play”, they continued.

“The fact that we’re maintaining names, in its purest sense a reflection that it is a complete integration of two businesses”, says Crowley. “It’s a new business, but keeping the best bits of both.”

“I look at it and go it’s a media and ideas based business at the high end with Mediacom, combined with a data and tech business at the bottom. Essentially when we pull it off, it’s going to allow our clients to navigate the new world, which we know we’re heading for,” he continues.

“At a time of change, we don’t need a new thing, we need the best of both things.”

GroupM CEO Aimee Buchanan also reaffirms a point global CEO Christian Juhl made, that with the combined capabilities “with this proposition, there is no more compromise” for clients, in choosing between a full-service media agency and a high-end digital technology specialist.

Buchanan: ‘No more compromises’ for clients to make

An agency executive remarked that an Essence client, when commenting on the merger of AKQA Media and Ikon last year, told them that at the time they were yet to see a material change in the combined offering. So the challenge for the agency now is to show an improvement, without having to look at its invoice to notice one.

Ultimately the merger was a global play with GroupM local management forced to make the best of the hand they have been dealt. However, the risk in a merger such as this is that EssenceMediacom turns inwards as it looks to make it work and fails to clearly articulate its client proposition for both its existing and new clients.

Challenge two: The Risks of Scale

An executive that departed shortly after one of last year’s mergers told Mumbrella the “single biggest challenge” for EssenceMediacom is scale.

“I was always a firm believer that top smarts and agility outplays scale,” says the executive, describing the move as a “big cumbersome smashing together of two brands”.

Another industry veteran, also an ex-Ikon executive, says the agency “only has a small window to get things right”, otherwise there is the risk of losing its key and influential talent “like sand between your fingers”.

The combined make-up of 250 Essence staff and 280 Mediacom staff “is big enough to dilute everything” but for the lack of a purpose or vision.

“The longer you wait to provide clarity on the purpose or structure, the longer you go with a vacuum that informs people of their meaningful role there. Especially at a time of (industry) talent shortage. Don’t make it easy for people to pick up the phone.”

Campaign UK’s editor, Gideon Spanier recently wrote the agency could become a “formidable force”, should MediaCom bring its street-fighting skills and Essence the tech brains, however, the framing of both agencies’ success remains slightly different in a market here in Australia.

How do Mediacom’s “street fighting” skills stand up these days?

“Observers say MediaCom has taken time to build its digital capabilities and struggled to hang on to some digital talent while Essence has a strong technology offer but relatively few significant clients, a much smaller global footprint and less bench strength at a leadership level,” writes Spanier.

He continues: “MediaCom has more “superstars” who can win pitches and wow clients, according to one person who has seen the agencies in action. Industry sources also have questions about how the two cultures will gel, because they are organised differently around clients and disciplines.”

How can the new agency under Crowley bring together both agencies and turn it into something better? In April, GroupM told Mumbrella there would be no job losses as a result of the move.

Crowley says now that building an agency of this scale, “isn’t something that you can flick a switch and turn on overnight”.

“We’re preparing this for the short to medium term, so things will happen over time.”

Creating that culture locally will be another mark of EssenceMediacom’s success.

“I think if there is a tougher job to do,” Crowley continues, it’s the cultural piece and we know that takes a bit more time. So in the short term, the focus is bringing the people together and understanding the culture and how we operate to deliver the pragmatic outcome the clients need.”

Challenge three: Turning Around Client Momentum

Essence’s client list has experienced little movement so far in 2022, as the agency has likely looked to focus on implementing the-then new proposition, and expansion as the fourth equal footer in the GroupM stable.

According to RECMA figures seen by Mumbrella, 2021 was not as kind of a year for the combined three agencies that made up Essence on January 1, 2022, as it was for Mediacom.

RECMA’s client portfolio growth list as of January 2022 lists Essence’s total billings at $330 million, a decline from $415m the year prior (combined billings of AKQA Media, Ikon, and Essence). Over this period, this represented a contraction of 20% overall in billings, the largest change of any holdco agency across the Australian market.

Mediacom also experienced a slight contraction over this period, beginning the year at $546m and then starting 2022 with $509m in billings, a dip of 7%. In comparison, sister agencies Wavemaker grew by 7% and Mindshare dipped by 10% in overall portfolio value.

GroupM disputes the accuracy of the RECMA figures.

For comparison, seven years ago, Mediacom ranked as the third-largest agency in the country with billings of $1.23bn, and staffing of 348. Five years prior, the agency trailed just Mitchell & Partners as the largest agency by client billings with $818m.

The figures this time around are bloated for Mediacom though, with the key loss of the $110m Victorian Government to OMD skewing an otherwise strong year, featuring wins for Coca-Cola ($45m), Bayer ($30m), Star Entertainment ($8m), Trilogy Funds ($7m), and others.

The Vic Gov account skewed Mediacom’s 2021

One Essence source, when asked how the combined agency’s old clients, as well as those in Mediacom, might be feeling, argued: “smart marketers don’t make emotional decisions”.

“The metric will be whether they are performing, not if the name has changed. If the nature or the characters change, that’s when they start looking.”

Crowley says “a bunch of clients are renewing their scope with us” now, and it is a testament to them buying into “exactly what we’re trying to build here”.

“Marketers are moving into a really complex landscape that they’ve got to navigate and they’re looking for assistance and different ways of doing it and I think that’s what we’re bringing them.”

Another question for smaller or medium-sized clients will be am I going to get the same attention or love? Or be sidelined as they focus on the bigger business?

With Subway in December, the present talent will be key to retaining its client base now and in the future.

Subway, part of a trio of client losses for AKQA Media in late 2021

Finding early wins post-merger will be key for EssenceMediacom. With speculation mounting Medibank and Woolworths will pitch later this year the focus for Crowley and his exec team will be to show positive momentum as soon as possible.

Crowley says though the focus right now is on the short term, then in 2023 “we’ll set ourselves up for that”, but for now the focus is on helping solve clients’ problems, helping prepare the proposition, the product, and the team, in order to kick on with growth next year.

“There’s no denying we’ve got a big job to do this year, and you don’t want to create instability with your existing client base by going through that change.”

“I think the make of a successful business is knowing when to focus internally before you then rally for the next growth sector,” says Buchanan. “You see agencies often go down the: growth, growth, growth, and I think it’s very hard to sustain that.”

She continues that the business needs to fly between internal and external, and there is no pressure on Pat and his team in the medium term to be worried about the external.

“We want to build this so that it’s ready to go for what we need, not patched together with band-aids, so that takes a bit of time.”

Challenge four: Talent

One thing that is clear is that EssenceMediacom’s ability to retain and attract good talent will be key in what happens next.

The ace in its pack: Pat Crowley who has a strong track record in holding together agencies through tumultuous times.

Crowley was anointed as head of the new super-agency in April, just after being promoted into his first agency CEO role months prior as Essence CEO.

“Pat is a major part of why clients and talent are sticking around,” says another industry executive.

Crowley is not just well regarded but also well-liked across the industry and in some parts jokingly referred to as “Mr Commonwealth Bank”, in reference to his close and long-standing relationship with Australia’s biggest bank.

As one industry executive told Mumbrella, you can get the proposition, the logo, the name, and all of that right, but a media agency still comes down to the people.

Commonwealth Bank has been handled by Crowley for the best part of 16 years, so much so that another source told Mumbrella, “wherever Pat goes, so does Commonwealth Bank”.

In a much-publicized pitch in 2014, Ikon fought off stiff competition from some of the biggest international players in the market to retain the then $60m account.

It was well documented at the time that central to the agency retaining the business hinged on Ikon rehiring Crowley, who had left just months prior to join Match Media.

He was rehired and Ikon retained its partnership with CommBank, and has since. He also played a key role in helping hold together Ikon going back to its time under Dan Johns and subsequently James Greet, whose departure saw him step up to be managing partner in Sydney.

The now $100m CBA account was in fact quietly retained in 2021 following a client review, in what Crowley agrees was “absolutely” a clear mark of approval for then AKQA Media, shortly after its merger with Ikon around six months earlier.

A tick for Crowley and Co. AKQA Media retained Australia’s biggest bank in 2021

He says the aforementioned retentions now are “off the back of trusted great relationships too”, as he says trust will be an important factor in building the business they aim to for clients.

Talent retention will be the key for EssenceMediacom in the coming 12 months.

The agency “needs to keep its best people”, says one ex-Ikon exec. “A players never play for B players.”

Buchanan firmly stands by Crowley as being the right person to take the agency forward, adding he “understands how to lead in a very empathetic and human way”.

“If anyone can make this work, it is Pat,” says one industry source close to the agency.

Avoiding Messence

There is no doubt the challenges facing Pat Crowley and his team at EssenceMediacom are many and varied.

Asked about the cheeky label “Messence”, given to the merged entity by its competitors and other trades, Buchanan jokes that she may have accidentally coined it herself in a meeting when pronouncing the inverse ‘MediacomEssence’ quickly.

And while Crowley says the name is new to him, he responds: “I think if you asked our 500 staff, they would all know exactly where we’re heading and what we’re trying to build. And if I’ve got 500 people that don’t think it’s a mess, it’s not a mess.”

UPDATE: RECMA reached out to Mumbrella following the publication of this article to claim that the figures are not attributed to the organization.

The term “billings” in the context of this article also refers to a value stipulated in the agency’s “client portfolio”.


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