What does the future hold for Mitchell & Partners?
After the retirement of Harold Mitchell last year the Dentsu Aegis group has been shuffling its pack, moving some major clients into Carat away from its traditional powerhouse agency Mitchell & Partners. Nic Christensen sat down with the new management team at Mitchells to find out what the future is for an agency now a third of its former size.
Harold Mitchell was undoubtedly a dominant figure in Australian media buying, and while he may have retired last year, his shadow still looms large over the business empire he built over 40 years and what was known for much of its life as the Mitchell Communications Group.
(L:R, Mitchell & Partner’s leadership team: John Thompson, Kenny Stewart, Luke Littlefield, Adrian Roeling)
Two takeovers, one by the British firm Aegis in 2010 and a second when Japanese giant Dentsu consumed Aegis in 2012, has meant that the Mitchell name is long gone from the front of the building at its York Street headquarters in South Melbourne, which are now the home to the Dentsu Aegis Network and the 25 businesses which make up that brand across Australia and New Zealand.
Dentsu Aegis CEO Luke Littlefield can’t help but begin with an apology. “You’ll have to forgive me, if I drop the word ‘we’ in the wrong place (when referring to Mitchell & Partners), it’s because I’m an ex-Mitchell Communications Grouper myself,” he jokes, as we sit down to talk about the future of what has been one of the key parts of Harold’s empire – and the only one that still bears its founder’s name – Mitchell & Partners.
Yet for a self-confessed “ex-Mitchell Grouper”, Littlefield also has a surprising confession about the opportunity facing the post-Harold regime and the media agency he founded.
“Harold was an unbelievable success and outstanding at driving Mitchell’s and then the Mitchell Communications Group. But in some ways such a big strong personality so successful at all levels, he was the halo on everything. All parts of the business,” he says.
“In market with the trade press, clients and the wider media (we now have the opportunity) to articulate the story of that agency brand with their own people and their own personalities, rather than a person like Harold so strongly attached to the Mitchell’s agency brand, covering it all off from the top.”
Harold’s evolving legacy
The Dentsu Aegis Network of 2014 is a long way from the old Mitchell Communications Group started by Harold Mitchell back in 1976. Today it has 25 distinct agency brands and employs some 1,200 staff across Australia and New Zealand, with more than 700 of them in Melbourne.
“From my perspective it’s been about continuing a journey that Harold started 40 years ago as a pioneer in this particular media, marketing, comms landscape,” says Littlefield.
“This has been about a program of integration behind the goals and objectives of continuing to leverage all the history of the Mitchell Communications Group to the benefit of the integrated Mitchell’s and Aegis Media.”
To make that transition Dentsu, together with Harold Mitchell himself, reorganised what for many years had been the prized jewel in their media buying crown — the media agency Mitchell & Partners. For close to a decade Mitchell’s has been Australia’s highest billing agency topping out the most recent and independent Nielsen billings report at more than a billion dollars, dwarfing its sister agencies.
But as Littlefield explains they felt it was important for the group’s competitiveness in international pitches to build up the Australian presence of international brands such as Carat and Vizeum.
“Some of (our objectives) were around making those international brands number one in the market and so we’ve reorganised clients that we believe fit with that – in terms of staff, brand, cross-media, digital, creative and others,” says Littlefield.
The final piece of that program of change has been confirmed today with the rebranding of the Mitchell & Partners office in Brisbane. “That particular program is now complete and we are now the Dentsu Aegis Network in Australia and New Zealand,” Littlefield tells Mumbrella.
“It was largely a rebrand of what became Aegis Media. From there there were a whole range of things that came off the back of that reorganisation. It was also about appointing key people in key posts to drive this group going forward.”
Mitchell’s in 2014
For the last few years the market has been wondering what might be the future for the brand Mitchell & Partners in a company where Harold Mitchell is no longer at the helm.
These questions only grew with the movement of major clients out of Mitchell’s and into Carat, which now claims in excess of $1bn in billings and 300 staff, while the former behemoth has been reduced to a more humble $300m and around 100 staff.
The shift of hundreds of million of dollars of client money has also caused confusion in the market. As one expert on the panel of The Source’s Media Agency Review noted last year: “It’s important that they clarify what each media agency brand stands for, because before that the unifying piece was Harold. If you don’t have that then you have to be much clearer on what Mitchell’s, Carat and Vizeum stand for and why they exist.”
Littlefield says he has heard the message from the market: “It wasn’t unsurprising given the reorganisation we had done. What came through The Source’s Media Agency Review last year was ‘where does Mitchell’s start and Carat end?’ and that sort of thing.
“In a way I think one opportunity of Harold no longer being in the group is it actually makes our ability to tell the agency differentiation story easier.”
Littlefield also argues that Mitchell’s has a strong leadership team in national CEO Kenny Stewart, former head of Emitch and now also general manager of Melbourne Adrian Roeling, and general manager of the Victorian Government team John Thompson, who runs the agency’s biggest account worth $85m.
“In a way one advantage we can take by (Harold) not being there and not having the significance of his influence is that it will allow us to bring people like Kenny, Adrian and John through and give them presence in market,” says Littlefield.
The perception problem
At this point we’re introduced to the team who now run Mitchell & Partners. Stewart is an industry veteran of 30 years’ experience who has headed the Mitchell’s Queensland office for the last three years, before being promoted to national CEO of both Mitchell’s and sister agency Vizeum last year.
Roeling is a former head of Mitchells’ digital division Emitch who was promoted to the role of general manager some 18 months ago when the company quietly merged the division into Mitchell & Partners. Thompson is a well-respected marketer who used to head one of the key parts of the Victorian Government account running the marketing for the Transport Accident Commission before moving agency side in 2012 to take his current role.
Stewart’s role heading two separate agencies in many ways could be seen as a contributor to the confusion around some of the Dentsu Aegis brands, such as Vizeum, which claims around $100m in billings and a staff of 75.
It is one that he acknowledges, but counters there are synergies for both media agency brands. “On the face of it, it does appear confusing because they have different positions,” concedes Stewart. “Vizeum being a lot edgier around the strategic focus and the digital side and Mitchell’s defined around the idea of being experts in convergent planning.
“But there is a commonality in my role and when you look at the task at hand, it is about getting the positioning right in market, and then getting the awareness about that positioning and what the differentiation is.
“The task for me (in leading both Mitchell’s and Vizeum) is actually quite similar. It is about leading two very strong teams to do exactly that and get the respective positionings right and then go for growth. It is all about new business growth.”
The question of growth for Mitchell’s is a challenging one. Increasingly market gossip has been around the decline of its billings with some of the expert panelists in The Source’s Media Agency review noting last year how Mitchell’s was increasingly seen as “a Melbourne agency – there to service the Victorian Government” while another warned that “other agencies are lining up to pick off (Mitchell’s) clients.”
Unsurprisingly this is not an interpretation Stewart or his team agree with. “The dominance is Melbourne, but we are national, we have a presence in every market,” says Stewart. “It has been well documented what has happened in terms of us fuelling the growth of the other brands (Carat and Vizeum).”
Adrian Roeling notes that while the Victorian Government is its largest account the agency still has a number of national accounts. “Yes (the Victorian Government) is the largest but our portfolio is quite diversified. We have a number of large and important national clients in the commercial space, for example The Good Guys, Renault, Industry Super Australia (ISA) and we operate all of the Woolworths accounts that are based in Melbourne out of our Melbourne office, for example Dan Murphy’s and Home Hardware.”
Mitchell’s says it has not lost any account outside the group in the last 12 months. However two of these accounts – Woolworths, which is held mostly by Carat – and ISA are currently up for review and represent well over $250m in billings for the wider group.
Traditionally Mitchell’s has always differentiated itself on price. Clients went to Harold Mitchell for media buying when they wanted someone who could drive the hardest bargain in rates negotiations with media owners.
Today Stewart says Mitchell’s will still leverage itself off the wider group but it can no longer define itself as a old school “buying shop”.
“Harold’s main focus was to be the biggest. We were the biggest for the last nine years so of course people will think its all about the buying,” says Stewart.
“We are still part of the Aegis Network and can leverage $1.8bn as a group and so still have the buying capacity. Nothing has changed there,” he says. “But clients are looking for more than the great buy.
“Of course they want the great buy as well but let’s face it – any of the big guys can now offer that. It’s not a clear differentiator the way it has been in the past.”
Redefining Mitchell’s
John Thompson is a well-respected marketer who was the 2009 Australian Marketing Institute’s Marketer of the Year. He argues that traditional perceptions of Mitchell’s are fundamentally changing.
“One of the important points for us – right now – is that you have two guys running the Melbourne office. One is a marketing director with 15 years’ background, so it’s really a strategically led operation and then you have someone who has been running a digital operation,” says Thompson.
“If you want to smash the myths about us just being a ‘buying shop’ then there’s a big tick against the story of where we are heading.”
Roeling also argues that the market unfairly views Mitchell’s as an “old-school” traditional media agency but notes that with the 2012 merger of Emitch, 43 per cent of Mitchell’s staff have a digital background. “Our clients know (how good we are), and that to us is the most important thing, but there is a perception that Mitchell’s is a traditional media agency,” he says.
“We have really changed the make up of the business on our floor at 105 York Street. You’ve now got media specialists, digital specialists, social specialists, content specialists, activation specialists and our strategy department has increased by some 250 per cent.
“We haven’t lost any clients outside of the group in the last 12 months. We defended one of our largest accounts, Goodyear Dunlop, in a competitive pitch and while our competitors worked very hard to get it we retained that business.”
Mitchell’s 2.0 and The Operating Model
Kenny Stewart is now CEO of what is already a very different Mitchell & Partners from the one he inherited when he took the reins back in October. But he says he is embracing a new way of working with a framework Dentsu Aegis is defining as “The Operating Model” and one that is aimed at presenting Mitchell’s as specialists in convergent media.
“We have one profit and loss statement for the whole (Dentsu Aegis) group and that encourages cooperation, and the people in the various groups are experts in their own fields,” says Stewart.
“The idea (of The Operating Model) is that if it is from the lead agency we are able to see where the opportunity is and pull in absolute experts in those particular fields, to make sure whatever convergent solution we are presenting to clients is state of the art.”
Littlefield also elaborates on the model arguing it is going to be important for all of the group’s 25 businesses.
“The way The Operating Model works is that it is insight, it is strategic focus about what is the best solution for the client. Do we understand the business challenges, their opportunities and maybe the problems they have?” he asks. “Then through our lead agency let’s remember that there are 24 other businesses in this group that we can leverage from.
“This is a real point of difference. We can activate it. We have activated it. It is something I reckon we can do better than anyone else in the market.”
Is this a return to the era of the full-service agency? “No,” says Roeling categorically. “The term we are using internally is ‘a full-service media agency’. We are not playing too much in the creative space outside of developing both short-form and long-form content, digital activations and so forth.”
Where Dentsu Aegis’s operating model will be interesting is that it is an attempt to differentiate itself in an increasingly competitive market where media agencies often look the same.
Asked what his yardsticks for success will be going forward, Stewart says he has some clear markers. “Hopefully you’ll see more new business wins, that would be an obvious one,” he says.
“But also you will see it in the complexion of the clients, the types of clients we are attracting, the work we are doing, the retention of staff and the people wanting to work here – all of those things.”
Thompson too is bold about the future of the agency. “This is a reinvention – I think we’ve even called it Mitchell’s 2.0 a couple of times — that’s how we are reworking our business,” he says.
“(In areas like digital and social) we are now working across the spectrum of clients, whether that’s The Victorian Government, The Good Guys or the likes of Renault, our strategy team is very strong and our clients are happy to tell people about that.
“We’re circling as much as our competitors are circling us. We are quite humble in getting on with the task, building on the business Harold created.”
Still confused…
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so am i
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Like all acquisitions in this country, they will stuff it.
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Yes I’m confused also…shame they are killing off Mitchell’s
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Even more confused than when I started reading the article!
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Give them a chance……they’ll probably surprise more than a few of you.
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How, by shrinking a big business down to a small one?
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Is this native advertising?
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Wow, that really is confusing. It doest seem to actually say anything. I would put my mortgage on that management team not being intact in 12 months. There will be a pom flown in to save us poor Aussies again.
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