GroupM's North American chief Kelly Clark on the spate of media reviews and his take on the rebate controversy
The first half of the year was unlike any other for the media sector, with each month bringing another billion-dollar-plus account or roster review. Most recently, it was revealed that GlaxoSmithKline was reviewing its $1bn media set up, following a long, long list that includes Johnson & Johnson, Volkswagen, Coca-Cola, Visa, Coty and Unilever.
Kelly Clark, chief executive of GroupM North America, discussed the many reviews his agencies are currently facing, some of which they are defending, and offers his views as to why they have all come at once.
"It's an equal mix of procurement pressure, and every client will be different, because businesses are constantly looking for efficiencies in marketing and agency fees are part of that."
Clark is in London to catch up with his UK counterparts and has taken time to sit down with The Drum to discuss the goings on within the media sector in recent months. No doubt a lot of those discussions will include those media reviews.
He explained that another reason for the sudden surge in reviews is due to "the whole dynamic" of how complex the media world has become, the rise of ad tech and how clients make sense of the huge amount of data they are being served.
"Some clients and some agencies are confused and part of the reason to all of these reviews is to try and get some answers to some of those questions. A lot of the reviews that are taking place are agency/client relationships that have existed for five or ten years and in some cases even longer. Clients are probably saying 'even if we are happy with our agency performance, let's have a look around the market to get the best product and service delivery that we can.’"
Clark is savvy enough to bring the conversation around to the controversy surrounding comments made by former MediaCom chief executive Jon Mandel, which has kicked up a lot of dirt that the media sector would rather he had been left well alone.
Mandel, who left MediaCom in 2006, revealed in March that media agencies were widely taking rebates and were no longer being transparent. His claim has been rebuked with many pointing to his near decade-long absence from running a media company as proof that he is wide off the mark.
Clark is adamant that the practices within GroupM are clear of such behaviour and added that his companies are "strictly governed by the letter of the client contract". However, he admitted that clients have begun to ask more questions of their media agencies since the claims were made though feels such scrutiny is correct.
"It's human nature and it's good business practice to ask those questions when allegations like that are made. We thought it was important to get our own point of view and our policy on the record and we were out there within an hour or two of the first report. We have clients ask questions and we have have dealt with them transparently and honestly. The analysts were asking questions of WPP and the other holding companies…there is going to be a level of scrutiny and question asking for some time but we welcome that discussion with clients because we are very clear on how we treat those relationships with them."
Clark is also aware that there is a vested interest from some within the industry to keep the 'kickback' coverage going and "whipping people into a frenzy" but believes it's right to question the motives of those who do.
"We haven't had any detrimental effects to any of our client relationships," he claims before highlighting the joint task force that has been formed by the 4As and the ANA to analyse the claims as a response by the industry to draw out answers.
"It's ultimately not good for confidence and the integrity of the marketplace which is one of our biggest concerns," Kelly admits. "You have so many issues from viewability to bot fraud already, these issues create questions in clients minds about where their money is going. All of this is, in some ways, a distraction from how we trade and how we approach this issue in the market and we would rather be focused on some of those issues. I am hopeful that the task force can answer the questions that clients have in their minds satisfactorily and we can move on from this."
He said that it's important that his companies are clear about their principles and offerings and that those are followed internally and externally.
"When I have had conversations with clients I take them through the levels of controls that we have. We employ an army of accountants and lawyers to ensure compliance to accountants contracts and to audit and validate our revenue streams so I can talk confidently to clients about those things and have done on a number of occasions and to their satisfaction so far. It's hard to disprove a negative. All you can do is take them through the controls you have in place, the policies and communications that you do internally on business practices and ethics and the consequences to people who don't follow those which we have been very explicit about and we have shown clients our codes of conduct and the requirements and IT security protocols that we have in the business and the audit and legal compliance reviews that we have and most of those things are confidence building for clients when they see those."
Clark is absolute in his belief that his agencies are fully transparent with clients and revealed that in order to improve trust he has ordered more communications internally and externally to ensure there is a firm understanding of GroupM's business practices.
"That's my commitment to my team and I make it clear to them that I will never do anything knowingly at risk of their own reputation or their own goal compass. And I communicate that regularly through our communications and as a result people are able to have confident conversations about it," he stated firmly, drawing a line under this element of the conversation.
Also discussed is the group's growth within the sports marketing space - where it is investing heavily within - a trend that Clark expects will continue to take place in both the U.S. and UK. On the other hand, the company's digital growth continues to be on the agenda, most likely through acquisitions in America and Canada.
He is also of the belief that consolidation in the ad tech space will be a major trend with "a shakeout' in the programmatic sector expected in order to allow companies to scale and grow revenues.
"The same is true of the mobile space where there will be more consolidation whether it is in ad serving or attribution or other parts of the mobile marketing chain."
Clark also briefly discusses the emergence of tech companies such as Google, Facebook and Twitter - described by his boss on many occasions as "frenemies" due to WPP's partnerships with them - while being well aware that these growing giants also want to work with their clients too.
"These companies are under intense pressure to achieve astronomical growth rates,” he said pragmatically, well aware of their own business objectives. He went on to explain that GroupM aims to “sit above” all of the media owner relationships that their clients have with the aim of offering “a neutral point of view,” and that they try to keep competitor relationships “amicable” in the interests of their clients.
It’s unlikely the media sector has known a period of such intense pressure as clients scramble for answers to an ever growing list of questions spouting from the continued evolution of digital. There is no sign that this will stabilise any time soon, and Clark will no doubt be aiming to shore up his agencies for further disruption ahead.