UM is dropping its Big Boutique brand position in favour of a new model that sees it reinvent itself as “The Creative Connections Agency” as it pivots to embrace more earned and owned media, Mumbrella can reveal.
The new positioning will see the agency move its major clients off a commission structure and onto either a retainer or a paid for performance model — a structure expected to be rolled out to its entire client base by June.
In an interview with Mumbrella ahead of today’s announcement CEO Mat Baxter said the major change to UM’s remuneration model had stemmed from agencies’ addiction to using paid media at the expense of building clients’ other properties in owned and earned media.
“It’s getting off that drug that is commission,” said Baxter. “We don’t have commission in the agency any more and that is something we have been working over the last 18-24 months. Obviously commission is still paid but now it’s rebated back to clients.”
He also declared he no longer sees media agencies as competitors, pointing to companies like Google, R\GA and One Green Bean as its new challengers.
Baxter announced the changes at the agency’s annual media upfronts this morning, where he took media owners through its strategy for 2015.
In an in depth interview around the repositioning, challenges to the media agency model and the reskilling of his staff base, Baxter argued the current system of agency payment systems too often biased media agency advice in favour of traditional channels.
“We now earn on a head hours model, based on retainer, or on a paid for performance model or a combination of the two,” he said. “That gives us a freedom not to be wedded to a revenue stream that is dependent on spending money on paid media frees the agency up across the range of things.
“The only way you can be advice neutral is if you are profit neutral. Once you earn your profit from a particular channel you are no longer objective. We have therefore made a considerable effort to migrate our clients off that system.”
Baxter also challenged media owners wanting to win business from its clients, which include Coca-Cola, Coles, McDonald’s and ING, to look to integrated partnerships with other media properties.
“What we are saying to the media is that actually what we are looking now for is the optimal combination of channels. The channels or connections points, might not be the strongest in their respective fields, when they are combined together they become super strong,” he said.
“It can be one media owner with multiple connections or it can be multiple media owners with multiple connections.”
The UM boss pointed to a report from Starcom Mediavest Group this week predicted those channels will grow 3.5 times faster than paid media channels this year.
“Clients understand that it is better to own the house than rent the house,” said Baxter. “They are looking to build equity in their owned assets rather than rent through paid media.
“The world’s best brands, Unilever, Nike, Coke, are all there – they understand it and when you get to that tipping point, which is where we are at, you have to question the sanity of the business we are in.”
A polarising figure within the industry, Baxter declared his desire to move away from the “baggage” of the media agency label, adding: “Media agencies aren’t our competitors. Media is exactly the sandpit we don’t want to play in anymore.
“The reason we are calling ourselves a connections agency is less about playing with words and more about getting the organisation outside of the psyche of the media plan: they think spots and dots, paid transactions, media owners.”
Challenged on who his competitors were Baxter pointed to digitally centred agencies, who were not tied down by legacy.
“If you map the agencies who are doing a very good job of connecting with the consumer in a very good way most of those names are not media agencies,” said the UM boss. “Media agencies are doing a very good job at spending money to connect to audiences but are not doing a good job with connecting to audiences without spending a lot of money.
“The companies in that connections quadrant are companies like Google, R\GA (who are in our Interpublic group), companies like Soap, One Green Bean, dare I say Naked, and you look at their work and they are connecting to large audience with really interesting ideas or programs of work.
“And they are doing it in a digitally centred, grounded way that is freed from a lot of the legacy of media agencies which is to start with TV and work my way out.”