Leadership change: What now for Dentsu Aegis, Carat and the media industry?

Nic-Christensen-234x151-234x151-234x151Dentsu Aegis has undergone a sudden and dramatic leadership transition with Luke Littlefield being replaced by Simon Ryan as CEO. Nic Christensen looks at what drove the change at Australia’s second-largest holding group and what it means for its agencies, clients and the media industry alike. 

It’s hard to think of a man more different to Harold Mitchell than Luke Littlefield.

When Harold Mitchell left in 2013, Littlefield – a finance guy and CFO by background – was installed to replaced the man who had quite literally learnt the media buying business as he simultaneously built it.

Littlefield’s background was very different.

Littlefield: a CFO by background.

Littlefield: a CFO by background.

A former KPMG consultant, who had not worked in advertising before he joined what was then Mitchells Communications in 2007, it would be Littlefield’s job to broker and bed-in the $363m acquisition of the group by Aegis Media in 2010. He was also Johnny-on-the-spot when Japanese giant Dentsu bought Aegis in a global $4.8bn deal two years later.

By all accounts it was a challenging brief, but one which has now largely been completed, and so now the industry attention turns to the future of Australia’s second largest holding group, which claims more than $2.332bn in billings, and which employs more than 1,600 staff across more than 20 businesses.

Nick Waters and Simon Ryan

Dentsu Aegis APAC boss Nick Waters and new Australia/NZ boss Simon Ryan.

The man tasked with filling both Mitchell and Littlefield’s shoes at Dentsu Aegis is 41-year-old Carat CEO Simon Ryan.

Ryan, in contrast to Littlefield, is an adman through and through and in this new group role is likely to have an impact on not only his agencies and clients but also the wider media industry as a whole.

Getting out of the shadow of Harold Mitchell

Mitchell's legacy still looms over the industry.

Mitchell’s legacy still looms over the industry.

Rumours of Littlefield’s departure have floated around the industry, on and off, for some time, but in Friday’s leadership announcement took many people by surprise.

In the words of one Dentsu Aegis insider: “Luke was in many ways ‘a man for the time’ – his job was to bring it all together and in many ways he succeeded, but his role was really transitional.”

Taking the reins of a major advertising group from a legend of the game like Harold Mitchell was always going to be challenging.

Harold’s legacy still looms large over the industry, particularly in Melbourne where Dentsu Aegis remains the largest player, and his successor was always going to require a broad skills-set that few people actually have.

On one hand, the job required unique management skills to streamline operations and bring together a number of disparate businesses, making key brands such as Carat into national networks that could compete with its rivals like GroupM and Omnicom.

But it also required a strong account management focus as, on the media buying side, the group moved the vast majority of Mitchell & Partners’ billings to other parts of its Melbourne headquarters at Emerald House. The biggest beneficiary of this was Ryan’s agency Carat. It also meant pivoting what had long been Australia’s biggest media agency into an agency focused almost solely on local Australian clients.

Emerald House

Clients were shifted around Dentsu Aegis’s Melbourne HQ Emerald House.

As a general statement, most of the transition went well, with few complaints (the most notable being Simplot, which left last year after first being shifted to full-service agency Huckleberry and then balking at a move to Carat following the Huckleberry’s closure in 2015) and Mitchell & Partners has managed to successfully rebrand to Dentsu Mitchellwhile also being strengthened by picking up the Federal Government account somewhat unexpectedly.

In building out Carat some of the changes were superficial such as the rebranding of the Mitchells office in Brisbane as Carat, while others did see a number of major clients move agencies and staff shift as Carat swelled from a media agency with $200m in billings to one which has claimed billings of $1.3bn.

Littlefield, with his management and finance background, was also tasked with making key strategic acquisitions for the group in order to build out something he called “The Operating Model”.

BWM Dentsu

Key acquisitions included buying creative agency BWM.

He bought the BWM and turned it into BWM Dentsu in order to build out the group’s creative credentials, and also bought Soap Creative aligning it with Isobar and helping build its strength in digital.

All of this was designed to get the group to a point where under the “Operating Model” a client can come in under the auspices of one business but then be offered other services from other parts of the group as needed, similar to the methods employed by other large holding groups.

As a proposition “The Operating Model” still has some ways to go in terms of getting traction and understanding across the market (indeed, don’t be surprised if under Ryan the language shifts) and it perhaps highlights one of Littlefield’s weaknesses and why they have now made a leadership shift.

Under Harold Mitchell, the advertising group would always make its presence felt in market.

Harold was never shy of a headline but Littlefield has been far more low key than his group head peers Henry Tajer, Leigh Terry and John Steedman, and indeed his biggest headline was for a misstep when The Australian quoted him in the midst of the Mediacom misreporting scandal on the topic “value banks”. The agency boss would, subsequently, claim he had been misquoted and that the group did not participate in “value banks” but instead it did something called “mutual value creation” (the precise difference between the two concepts has never been clear). 

Ultimately Harold was also master networker and held a lot of key relationships that kept some major clients on the hook for years. It’s not clear that Littlefield had the same depth of relationships, particularly on the media owner side (to be fair to Littlefield, there aren’t many people in market who do).

We can definitely expect Ryan to be far more visible with his profile and bring some good relationships to bear as well.

Ryan takes the reins

Simon Ryan now takes charge of one of the big five advertising holding groups, at a relatively young age.

Simon Ryan CEO,

Simon Ryan is likely to continue an aggressive new business push.

If history is any indicator he is likely to be aggressive in market, especially around chasing new business and will likely seek to challenge both GroupM’s place as the largest holding group and also OMD’s place as the largest single media agency.

While the value of the RECMA rankings (something I’ve previously described as a self-judged beauty contest) and assessing media agencies on the basis of their billings has been increasingly questioned, it remains a key, if somewhat flawed, yardstick to the health of agencies in market.

CaratRyan, who took the CEO role at Carat in 2013 after four years of running its Melbourne office, inherited the reins of an agency that had little presence in market and had struggled badly on the new business front.

One thing Ryan does not lack is confidence, and it is to his credit that he has managed to instil that confidence throughout the agency as a whole.

And while Carat and Ryan have been beneficiaries of the strategy implemented by Mitchell and Littlefield to move the globally-aligned media agency front and centre and put the bulk of its client base there, the agency has also worked hard to shed the Mitchell-imposed media blackout for senior executives and push its presence in market.

Within this context, Ryan has put runs on the board on the board in terms of new business, with the likes of L’Oreal, Mastercard, Medibank, Barbeques Galore, and Greenstone Financial Services, and he has also recruited strategically hiring the likes of Paul Brooks and Ashley Earnshaw from Mediacom and Dan Sinfield from OMD.

Woolworths_logo_2014.svgHowever, his biggest achievement in the past two years has actually been in defying expectations and retaining the $220m Woolworths media account after one of the most drawn-out pitches in recent memory. When it pitched in 2014, many in the industry expected the account to move; however, Ryan not only retained one of the country’s biggest spenders, he was able to negotiate an increase in the service fee to boot.

If Carat has a weakness in the market it’s probably the industry perception that it is big and unsophisticated. However, this is an area many media agencies struggle with and the industry as a whole is starting to move the needle on.

Where to next for Carat and the wider Dentsu Aegis group, and the what impact will this have on the wider industry? 

Friday’s announcement noted that Ryan would retain the CEO’s role of Carat.

Mumbrella understands that Ryan will only retain this role in the short term, given the size of his day-to-day responsibilities with the group now, and that the agency is already looking at candidates for the Carat CEO spot.

Paul Brooks Simon Ryan

Ryan and Brooks.

Among the obvious internal candidates is Paul Brooks, who moved across to Carat in 2014 from Mediacom before being promoted to position of managing director of investment and partnerships of Amplifi, the Group’s media investment arm last year.

Other potential names include Carat’s Melbourne MD Joe Pardillo and Sydney MD Dan Sinfield, although it is also expected to look overseas at potential candidates within the group.

Screen Shot 2016-02-14 at 10.34.18 am

Williams will play a key role on the creative side of the business.

On the creative side, Mumbrella understands that Ryan will look to BWM Denstu Group CEO Paul Williams to lead its creative business and ensure it is more competitive in a space it has struggled to break into.

From an industry perspective, expect Ryan to overturn one of Harold Mitchell’s long-standing decrees that saw the agency group eschew awards and refuse to join industry body the Media Federation of Australia (MFA).

Ryan quietly aligned Carat with the MFA last year, and we can expect Dentsu Mitchell and Vizeum to join up in 2016, something that will be good for both parties. That may go some way to building bridges between the group and its rivals.

We can also expect to see agencies being entered for more awards as they look to build presence in market.

RECMA now has Carat in second place, but it is clearly aiming for top spot, and with OMD increasingly looking to build-out its sister agency M2M (it currently folds its billings into its own) the agency may very well get to number one in 2016, especially if it can win one or two more of the pitches currently in play in the first half of the year.

Dentsu Mitchell will likely go very hard at the Toyota media pitch which is expected later this year (given Dentsu’s strong roots with Toyota in Japan and elsewhere) while Vizeum, which has flown somewhat under the radar compared with its rivals, can also been expected to have a greater profile in years to come.

The reality is that while Simon Ryan is not Harold Mitchell (to be honest, who is?), he does have more of Mitchell about him than Littlefield. Dentsu Aegis will be much bolder, brasher and more aggressive in market than it has been, as it seeks to reclaim a crown that it feels it surrendered when Mitchell left the building.

How that plays in market with both clients and rivals will be a great challenge and one that many in the media industry will be watching with great interest.

Nic Christensen is the media and technology editor of Mumbrella. 


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