MediaCom Global CEO says agency pulled plug on Pac Brands because it was ‘unprofitable’
The global CEO of MediaCom has confirmed the agency decided not to participate in the ongoing Pacific Brands pitch because they “can’t say yes to unprofitable business”, and urged competitors not to get “sucked into a race to the bottom”.
Last month GroupM took the unusual step of publicly announcing neither MediaCom, which had held the business for 17 years, nor any of the other agencies from the group would tender for the clothing brand’s media business, with MediaCom’s Melbourne managing director Peter Barrie saying the two businesses “are no longer aligned”, but not elaborating on the reasons behind the split.
However, in an interview with Mumbrella Asia at the Festival of Media Asia, where MediaCom was named regional network of the year, global CEO Stephen Allan said: “The greatest threat to our business is people. And by this I mean this industry losing its brightest to other industries. We are under other pressures, such as the rise of procurement, but we still have to be able to pay our people fairly. That comes about by being paid fairly by clients.
“MediaCom Australia recently withdrew from a pitch for Pacific Brands. We took the decision not to participate. Mumbrella covered the news quite well without getting anyone in a court room. Agencies have to get to a point where they can say no. Agencies can’t say yes to unprofitable business. If they do, it’s a race to the bottom.”
Pacific Brands declined to comment.
In a wide-reaching interview Allan, who oversees the agency’s 5,600 staff in 86 countries, said the industry has to stand up to abusive clients, following the deaths of two young workers in China and Indonesia last year, blamed on overwork.
He said: “Those incidences are very sad. The first thing I’d say is that clients can be very demanding. Sometimes they don’t respect the right of their agency team to have a private life. As an employer, I’m not looking for people to be in the office until late at night. People who have a healthy personal life outside of work is a good thing; when they come back into office, they tend to be in a fresher state of mind.”
“I won’t tolerate unreasonable client behaviour. You have to stand up to clients, as it can get to the point of abuse. Occasionally you get the maverick kind of client. And I have to rely on my local management to eek out those situations. In those incidences, you have to be prepared to say no,” he added.
He also said the Australian office is the network’s second biggest in the region after China, saying the region is forecast to outstrip ad spend in North America for the first time ever: “The days of global CEOs visiting the region to give Asia folks a patronising pat on the head are well and truly over.”
You can read the full Q&A with Stephen Allan here.
Well said
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Could not agree more with the insight shared.
Partnership needs to come from both sides.
Thanks Gilles.
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Nailed it.
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A lot of parallels can be draw to ad tech vendors as well. Agencies, under the pump, apply massive pressure on ad tech vendors to fill talent and time gaps while pushing down the price they are willing to pay for it.
If you don’t provide they will move business away.
Everybody in the industry needs to have a hard look at themselves and treat others the way they would like to be treated, pay fair prices and say thank you when a job is well done.
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Well said
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be nice if that was the case Pat – but client expectations are that DMP/DSP, data and new technology will constantly deliver lower cost ROI. So agencies are constantly forced to squeeze vendors on yields or find the next provider willing to cop it up the kazzoo..
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Good stand, now if only more in the industry would take this point of view, we would see more training in the industry, something agencies can no longer afford. The client who screw agencies are just using the screwing process to justify their positions in the company, to hide their inability to carry out their marketing roles. You can’t screw your way to greatness.
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Good points – interesting that Mediacom has often been the biggest offender in the race to the bottom, perhaps their shift will shift the market
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To be fair Pacific Brands business results are diabolical – they aren’t used to making money so they probably expect their vendors to not make any money either.
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Smart move. Now to tackle the bigger problem of inflation and an overvalued dollar making Australia uncompetitive with the rest of Asia / the world.
It is the most expensive place to do business, and it’s not our fault and not should we be working until midnight to justify comparatively paltry salaries given our cost of living. But something needs to be done to ease pressure on housing prices, essentials, etc before we become economically irrelevant.
Already half our work is being outsourced to sweatshops in India, we are in danger of becoming an industry full of producers / sales reps while the real work is done overseas.
We need a solution and we need it fast if jobs are to stay in this country – across the board.
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Well said. Driving lower costs isn’t sustainable and needs addressing to allow talent and the quality of media to grow.