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MediaCom UK CEO on why scale will always win a battle against in-house competition

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By Jessica Goodfellow, Media Reporter

February 15, 2017 | 6 min read

MediaCom UK’s chief executive Josh Krichefski downplays the rise of publishers taking work in-house as he outlines plans to go “gangbusters” on startups, data and creative acquisitions, to build on the agency’s strongest asset - scale.

Mediacom CEO Josh Krichefski took the reins in 2015 promising to reshape a 30-year old business

Mediacom CEO Josh Krichefski took the reins in 2015 promising to reshape a 30-year old business

Like its peers, the WPP-owned business is recalibrating its business model for a future where marketers exert more control over how and where they spend their budgets. Krichefski, the man at the helm of MediaCom’s shift in the UK, has been steering a ‘roots and branch’ review of the business in hopes it will reach “optimum agility” as it prepares to face a new score of competition; publishers.

Tumbling print sales, a weak sterling and cannibalised digital revenues as a result of adblocking, ad fraud and third party distribution have forced publishers to consider what other revenue streams they can add to their business. News UK creating Pulse Creative, an in-house agency formed by WPP staffers promising all the skills of a media agency but integrated within the content-making process, is one such example of how publishers' decision to get closer to clients could be intepreted by some as the publisher circumventing the role of a media agency.

But Krichefski’s confidence in making MediaCom “the best agency in the world” in the face of rising in-house competition is unwavering: “If you could tell me a publisher that does every medium, plans strategically and takes a client budget and tells them how they can use that budget to deliver on their targets, I’d love to know who that is. I haven’t come across any media owners who can do that. They can deliver a part of it but not all of it.”

“I don’t feel threatened by it at all,” he added.

It’s an edict media agencies have pushed to the market since publishers first started seeking direct deals with advertisers a few years ago amidst a revaluation of their own business models. Forbes giving advertisers direct access to its CMS to upload paid-for native content is the most extreme example of this.

The tension, which is more pronounced around native content, has led to grumbles from some media agencies that publishers are muscling in on the budgets once reserved for them. As native content is tipped to drive 74% of ad revenue by 2021, according to BI Intelligence estimates, publishers believe they have a unique skill in this area in their ability to offer clients the same quality of content and understanding of audience they apply to their journalism, something media agencies can only shadow.

Krichefski doesn’t deny that publishers are expert content creators. Instead he repeatedly refers back to the “vast scope and scale” of MediaCom as one of its most valuable, and unmatchable assets:

“We have such a vast scope and add value at so many points down the value chain - the media buying is becoming a commoditised area but all the planning we do, media owners can’t do that.”

But it is this scale that smaller, nimbler agencies argue give them an edge, helping clients to navigate an increasing number of channels and touchpoints.

“The size and structure that clients have to operate in means they are looking for simpler solutions to those problems,” Mr President’s founder Nick Emmel said last year at The Drum’s Brief Encounters event. “I think everyone would prefer to have reduced, clever answers that would be served much better by an independent.”

Krichefski admitted agility at a 1000-strong office is “a challenge” as it faces hurdles in keeping apace with the fast-changing media landscape. But while smaller agencies can “probably make decisions quicker”, that doesn’t mean they can perform better for clients, he continued.

“There are many more benefits to scale than there are drawbacks to scale. Above all, we have got huge resources”.

The agency boss is “laser-focused” on becoming more agile moving forward, which Krichefski’s ambitions for acquisitions will likely steer. It’s a growing trend among the agency giants as Krichefski concedes it is easier to swallow up skills than build them from the ground up, as highlighted by several deals last year that saw Accenture acquire UK advertising agency Karmarama and Dentsu Aegis purchase a majority stake in data and performance marketing agency Merkle, among others.

“We will certainly be looking at potential acquisitions this year around creative companies, data companies, anything that helps strengthen our core products. The bigger networks like MediaCom will continue to bring specialists into our organisation. I believe very strongly that a business of our scale should be able to offer the best of any specialist service to our clients,” Krichefski explained.

“I like simplicity. There is too much complexity, a lot of the time unnecessarily. If consolidation makes things more straightforward for advertisers and consumers and brings the ability to do more multimedia campaigns, it is a good thing,” he adds.

What it all boils down to for Krichefski is thinking about what value MediaCom can bring to clients, something he believes makes the agency stand out when so much of the conversation “has gone down to commodity and transparency”. In line with this thinking, he outlines plans to go “gangbusters” on its start-ups consultancy service Blink in 2017, a service designed to help its clients navigate the “ever-expanding startup space”.

“What that brings us is the opportunity to have a different conversation with clients. Traditionally that conversation has been with the marketing department or the CMO about an advertising campaign - now we are finding we can talk to the CEO about a deeper business issue. It could be something around digital transformation for the business, or how they might want to diversify their business through startups. This is the thing I want to go gangbusters on,” he concluded.

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