Why FCB’s model is working when other agencies’ aren’t

Creative agencies across the global industry have had a difficult year persuading marketers to hold steady on marketing investments and IPG’s were hit particularly hard by reticence among tech clients in late 2022 and throughout 2023. Organic revenue among digital and creative agencies amounted to -1.7% across 2023, despite a 2% pickup in the final quarter of the year, and at many of the companies in the IPG portfolio, those numbers have manifested in job losses and lighter bonus payments for those remaining.

The performance of Foote, Cone & Belding (FCB), however, is proof it doesn’t have to be that way. IPG chief exec Philippe Krakowsky, in need of a win when speaking to investors last month on the holding company’s fourth-quarter earnings call, highlighted the network as an example of a creative agency model functioning well.

“In a fragmented media ecosystem, creative ideas matter a lot,” Krakowsky said before praising the network’s “forward-thinking management team.”

Last year, the network recorded 5% net revenue growth and brought in 45 new clients across eight markets, including Clorox and pharmaceutical giant Pfizer – performance at odds with its stablemates.

So, what’s different about FCB’s model? And why is it working when others aren’t? Tyler Turnbull, FCB’s global chief executive officer, tells The Drum much of its recent performance is the result of focusing on its capacity to provide work that functions as an “economic multiplier” for brands.

“Fundamentally, we think that creativity, when leveraged the right way, will drive growth and transformation. A long time ago, we made a decision that we are a product company and our product is the work that we make,” he adds. In real terms, that has led to both media planning and production being bound closer to FCB’s traditional creative work.

Turnbull says the agency’s planners use IPG data business Acxiom’s proprietary data tools to hunt for relevant data that could inspire campaign work. “We started to make that the foundation of how we speak to clients and how we target.

“When our clients are seeing ambitious, bold, creative ideas, they know that they’re grounded in a real audience that we can target in a real way and that we can really understand very quickly and optimize the work on.”

Turnbull credits Tina Allan, the agency’s global chief data and intelligence officer, with that shift. “She really led the charge for us to bring audience planning to the forefront of what we do.”

An internal benchmarking system, put into place by global chief creative officer Susan Credle following her move from Leo Burnett, provides a means of critiquing work inside the agency. The ‘456’ benchmark, a six-point scale in which work rated at one is considered actively damaging to a brand and six a platform-building ‘big idea,’ provides a “shared language” for creatives, according to Turnbull. He also credits it with leading to “fewer revision cycles, less rework and, frankly, happier teams.”

Production provides the other side of the coin. Over 70% of FCB’s work is now made by the agency’s in-house production unit, 456 Studios, saving the company cash previously spent with third-party production companies.

“The ideation needs to be as close to the making as possible,” says Turnbull. As well as adding to FCB’s market proposition, the production house’s growth is a good model for how the network has invested in recent years. Launched out of FCB’s Chicago shop in 2012 (and originally named after FCB’s first founders Daniel Lord and Ambrose Thomas) by veteran production head Kerry Hill (now head of FCB global production), the studio concept was implanted across the global network in 2020.

“When we see something that works, then our goal is how do we scale that and how do we take that to the other agencies as quickly as possible,” he says.

Similar initiatives, such as performance-focused creative shop FCB/Six, came out of local offices and were scaled up from the center – a product, Turnbull says, of FCB committing to the decentralized network model when its peers are attempting to centralize decision-making.

“I think about kind of global teams and leadership is an inverted pyramid,” he says. “At the wide, top part are our clients. The next level is our teams interfacing with them on a daily basis, then their local management teams. And at the bottom, for me, is the global team where I sit,” he explains.

“A lot of networks, it’s the inverse. You come to the mountaintop, to the global CEO, and they approve or disprove. It can create a bureaucracy. A sense of slowness. A quicksand. You have to enable the people who are closest to our brands and our clients to build companies that they’re proud to lead.

“That isn’t to say this is a franchisee system. We have a very clear ambition as a company, a clear set of goals. And we have high expectations for our work and what it’s delivering for our brands. But in terms of the actual operating model, I want our teams to be empowered because teams are what wins.”

Despite that, the pressure to investigate how AI might change its business is, Turnbull says, leading to more initiatives coming from the top down. Turnbull, speaking the week after OpenAI’s video tool Sora was released, tells The Drum it has mostly adopted generative AI as an internal aid for tasks such as storyboarding or ideation.

Like many agencies, that’s happened across the network in different ways. But the legal risks surrounding the tech mean Turnbull’s team have had to establish a central strategy. “We’ve developed a framework that has three pillars,” he says, which are “workforce, workplace and work.”

The first two relate to potential business applications of tools and training staff in their use, plus proactive recruitment for AI-adjacent skills. The third relates back to the creative its staff make. “Our focus has been on developing an enterprise-wide safe sandbox that allows all our teams to experiment, build our own GPTs and understand our tools in an FCB way.”

Pilot programs that encourage staffers to create bespoke GPTs, he says, are in the process of rolling out. “I’m very excited for it, in terms of not just the creative application of it, but also the foundational kind of work realities that it can change.”

At peers such as Media.Monks, the embrace of AI has led directly to a shift in the way work is costed and charged. In line with Turnbull’s description of FCB as a “product company” and the productization experiments underway at IPG sister companies such as Huge, he says it’s pursuing a mixed commercial model. It’s a change, he says, that is occurring regardless of AI, though.

“We’ve experimented with specific product-based rate cards for tools or core services, based less on time spent and more on value-driven,” he says. “Will AI be a big accelerant of that? I’m not sure.

“AI will play a part, but I think agency leaders need to be thinking about how to evolve the commercial model to suit the market we’re in today. We were already in conversations about what type of model we needed and, frankly, whether we should change the model based on specific clients.”

Almost 50% of the network’s organic growth last year was derived from project-based work, he notes. That’s a consequence of the current economy but also a sign of a longer transition among clients, who Turnbull says are raising more questions about the way they work and pay agencies.

“Everything revolves around our creative product. The business is creative and creative is the business.”