The new regime at WPP PLC's GroupM is making big changes to its
central ad-buying group as it prepares for a future in which more
media is consumed digitally and ad deals are more reliant on data
and technology than handshakes.
Rino Scanzoni, the GroupM ad-buying veteran who influences tens
of billions in media spending each year, is moving out of his role
as North America chief investment officer. He will become executive
chairman and CEO of GroupM's addressable TV group, Modi Media, as
well as its barter group, Midas Exchange, which essentially helps
companies trade distressed assets for media inventory.
Lyle Schwartz, GroupM's managing partner for research and
marketplace analysis, is becoming president of investment in North
America, taking on media buying and negotiation responsibilities
across TV, digital, radio, print and local media. Mr. Schwartz has
worked closely with Mr. Scanzoni, but he's known more for his
experience in research and analytics than TV network
negotiations.
GroupM is also consolidating its central resources and dividing
them into two groups—investment and platform services. The
investment group, which includes the network-level ad-buying team
that negotiates with ad sellers and houses buying resources like
research, will be overseen by Mr. Schwartz, while Phil Cowdell, CEO
of Mediacom North America, will move into a new role overseeing
platform services. The platform services group will incorporate
most digital operations, including GroupM's search and social group
Catalyst, data and analytics resources, and the network's
programmatic buying group that offers disclosure on agency and
media costs.
It's an effort to get the separate operations "to learn from
each other," said GroupM North America CEO Brian Lesser. "Five
years ago, search marketing was very different than programmatic
media. Now you can use audience data to power search marketing and
use elements of search to get smarter in how you trade
programmatically in display video and other channels."
Mr. Cowdell and Mr. Schwartz will both report to Mr. Lesser. Mr.
Scanzoni will continue to report to GroupM global CEO Kelly
Clark.
Xaxis, which is GroupM's alternative programmatic buying
operation, will remain separate and focused on building its
supply-side model and performance-based buying. Unlike the
company's other programmatic buying group, Xaxis takes principle
ownership of media inventory and asks clients to sign nondisclosure
contracts that mask the media and agency costs.
GroupM agencies, including Mindshare, Mediacom, MEC, Maxus and
Essence, will also continue to operate independently within the
network.
On the investment front, the change in leadership is a direct
response to the changing nature of trading. "Trading is more
dependent on technology, data, and tools," Mr. Lesser said. "That's
becoming more important as more media channels become digitized and
as they become more measurable on an individual user basis."
That doesn't mean that GroupM will stop going to market as a
collective group when negotiating with the big media owners—a
strategy sharpened by Mr. Scanzoni to gain leverage for better
pricing. It means that data will continue to play a bigger role in
those negotiations, according to Mr. Scanzoni.
"I don't need a vendor to tell me what I should be buying from
them," he said. "We think that it is our responsibility to seek out
the value, assess it and apply it to our strategies."
The changes come almost two months after GroupM brought back
longtime agency executive Kelly Clark to serve as global CEO and a
little over a year since it elevated Mr. Lesser from Xaxis CEO to
GroupM CEO in North America. At the time, the move signaled a
commitment to investing in more digital resources.
The latest leadership changes not only drive home that message,
but also signal a heightened emphasis on diversification of revenue
at a challenging time for the agency business.
"I think the business is reliant on incremental revenue from
every specialty business," said Mr. Scanzoni. "There's no doubt the
core business from a profitability standpoint has challenges.
Specialty businesses enhance the revenue growth for the company
which benefits us and our clients."
Mr. Scanzoni will focus on two of those specialty businesses.
His plan is to scale GroupM's addressable TV group Modi, which
launched in 2015. "We're probably at a point in the marketplace
next year where 70% of households by the end of 2017 are able to
receive an addressable TV message," he said. He also wants to scale
barter group Midas and expand its customer base beyond WPP and
GroupM clients.
Barter agencies typically help clients liquidate assets—anything
from office furniture to real estate—in exchange for media credits
that the barter agency acquires, typically through investments it
makes in media companies' businesses. Today, barter looks
different, said Mr. Scanzoni.
"The business is much broader than 10-15 years ago, which was
just taking a product that is either discontinued or
underperforming," he said. Now, there are trading programs that
don't involve any client assets.
Barter is an area in which GroupM takes principal positions on
media inventory. That practice, and its built-in nondisclosure
contracts, will likely grow as Midas scales, and as Xaxis continues
to grow its own business within the network. Still, GroupM isn't
putting all its eggs in one basket.
"Within GroupM, there are certain things that will be fully
disclosed and others that are non-disclosed but always transparent,
and it's about getting that basket of services right for clients,"
said Mr. Lesser.
Write to Alexandra Bruell at alexandra.bruell@wsj.com
(END) Dow Jones Newswires
November 14, 2016 09:25 ET (14:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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