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5 agencies combine to create Merkle B2B ‘powerhouse’, CEO Michael McLaren explains why

Five agencies become one Merkle B2B

Merkle, DWA, gyro, B2B International and Digital Pi have been united to create what Dentsu Aegis Network is calling the first end-to-end integrated B2B agency. We catch up with global chief executive Michael McLaren for a deep dive into where B2B is heading and the role that Merkle B2B will play.

By many accounts, business-to-business (B2B) marketing is the quietest $120bn industry you’ll ever hear of. Yet, with digital ad spend up 22.6% in the US alone and eMarketer calling for 20% overall spike in 2021, there is certainly opportunity.

With this in mind, Dentsu Aegis Network has brought together five of its B2B specialist agencies together to form Merkle B2B. The goal of this strategic integration, announced today, is to deliver B2B brand creation and activation on a global scale, “making it easier for marketers to enable end-to-end business marketing solutions”.

This joined up offering, which already manages more than $16bn in global billings, has offices in five continents. The agencies that comprise Merkle B2B are:

  1. Merkle: a leader in B2B technology integration, data, and analytics.
  2. Merkle DWA: a fast-growing global B2B media agency.
  3. gyro: the global B2B leader in strategy and humanly relevant creative.
  4. B2B International: the largest, global, dedicated B2B market research company.
  5. Digital Pi, a Merkle Company: a leading digital marketing agency focused on B2B marketing automation consulting services.

Merkle B2B will also leverage B2B talent from other Dentsu agencies including Isobar, DEG and MKTG.

To get a better understanding of what’s next for the B2B industry and how this new collective is being built for the changes in the marketplace, The Drum spoke with Merkle B2B global chief executive officer Michael McLaren.

What is Covid-19’s impact on B2B?

“The B2B marketplace is accelerating its level of digital transformation and that is coming about largely because of changing customer expectations. Companies were already waking up to the fact that they needed to get their digital ecosystem in order. Now it’s all happening virtually, in social channels, in informal peer group channels, website searches. The companies that don’t have the dots connected are really going to struggle. And, buyers are getting better and better at leveraging digital. Increasingly Millennials are penetrating the key influencer role. They’re very comfortable in their ability to navigate the ecosystem. So, companies that are investing in technology and enhancing customer experiences are going to leapfrog the competition as a result of Covid-19.“

So, millennials are the key?

“They are an increasingly fast-growing part of the business decision making audience. Right now, 73% of business decisions are influenced by millennials, (according to a trend study of 3,000 B2B chief execs conducted by B2B International). We originally thought they’d be mid-level managers. But what we’ve seen is that, increasingly, they’re the senior director and executive director. In most B2B organizations, that’s the quarterback of the big decision. And we’re seeing Gen Z sweep right behind them. There are a lot of reasons why this is important: They’re digital natives. They’re mobile first. They like video.

“Just drill all the way down to basics. Go and have a look at the top 100 B2B sites right now and tell me how are these customer experiences? Do they suck? The reason that’s important is that millennials will dump you like a hot potato if they have bad experiences. They are twice as likely as baby boomers to do so. The second thing millennials will do is they’ll ding you. They’ll give you a shitty Net Promoter score. So, beware of disappointing a millennial audience. Now, the flip side – the data says that if they have good experiences, they’re twice as likely to recommend you to a friend. It puts quite a pressure on the marketer to ask, ‘is my experience is up to scratch?’“

What changes, from a tech perspective, are driving the industry?

“There’s the integration of the big marketing clouds so that you can actually run full end-to-end marketing programs. Leveraging these marketing clouds and getting maximum efficiency is a big deal.

“Adobe is integrating full end-to-end capabilities. Salesforce is on the same mission. Most companies have both in some form. So, are you optimizing that investment? Then there are the same forces that are impacting the consumer landscape. Data is key. It’s one of your most valuable assets – information about customers, and prospective customers, and how you can leverage that data to create more meaningful engagement.“

Michal McLarenWhy create Merkle B2B?

“The B2B market has been massively underserved. If clients really want to try and integrate a connected customer experience, it’s on them to do it. They have to go find a social agency, digital agency and website experience agency and build a content engine and a media operation in-house. They are juggling all these balls. I don’t think it’s possible to find it in one place, other than Merkle B2B, and have it all work together straight out of the gate.“

Who are your competitors?

“In each region we compete with a large regional agency or a set of smaller agencies. We bump against them, but increasingly we are bumping into Accenture and Deloitte. If you look at what Accenture has been doing, it has been traveling the other way. It just bought CreativeDive and Yesler. It is pulling together these marketing services agencies to chew up that part of the value chain and deliver increasingly sophisticated B2B capabilities. We see it very much as our key competitor.“

Who are your acquisition targets?

“There are still a couple of gaps. One area we are intrigued with is sales enablement. Especially since we think Covid-19 has changed the world forever. Buyers are going to be increasingly reliant on digital channels, so connected commerce becomes an important piece. Once you get to connected commerce then you are into the post-sales experience. Then sales enablement and sale engagement start changing shape. It’s not the old, physical, walk the halls, have an event and go to lunch. Those days are gone. Enabling sales in a digital world and helping sales organizations be more effective and tightening that connection with marketing – that’s a big opportunity for the future.“

Do all of the five agency brands now go away?

“We have a migratory path in mind, but we don’t have a firm timeline. First of all, we have legacy relationships with clients in each of these brands. Secondly, some of them are still in earn-out, so the principals still have a say in terms of what happens with them. And thirdly, each agency has known expertise in its specific marketplace. We want to bring the legacy in each of those areas with us as we continue to build Merkle B2B.

“As we sell more integrated solutions to clients – where we’re bringing multiple players together – we’ll be doing that as Merkle B2B. Where we sell point solutions, whether it’s just creative or just media, we’ll be doing that as the individual brands. We’re not saying that you can only work with us if you give us everything because that’s just not realistic. What we are saying is: we’ve got these best-in-breed capabilities and you can continue to buy those. But at the same time, we have a vision of more integrated, data-driven, tech-enabled solutions that are only able to be delivered by bringing us all together.“

What about AI?

“You’re going to see some pretty extraordinary application of AI and decisioning engines, and not in just the obvious places. I’ve seen some extraordinary evolutions around things like next best action analysis and predicting what the call coming into your call center is going to be about based on customer behavior. I won’t even start telling you about the things I’ve seen in casinos and how they use data to predict next behaviors, but it’s quite amazing how sophisticated they are. We’re going to see really ingenious application of AI across the marketing mix and across marketing decisioning support. We want to be right at the vanguard of that.“

We’ve talked a lot about tech, but what other factors should B2B brands be emphasizing?

“A lot of B2B brands have lost sight of the power of the brand, the importance of brand equity and the emotional connection that brand has with the customer. They’ve kind of spent the last 10 years focused on the performance-oriented optimization funnel. As a result, they’ve bypassed the emotional equity of the brand relationship. There’s an opportunity for us to get back into that conversation.

“I’m intrigued with the growing influence of millennials. They are interested in doing business with businesses that have the same values. They believe in the importance of a carbon neutral footprint, a diverse workforce and knowing that their business partner doesn’t propagate hate speech. These social issues are going to get increasingly woven into the decision-making criteria. I believe that we need to move beyond some of the standard KPIs and start looking at a broader set. There’s value in the classic share of wallet or share of mind, but I also think we need to explore share of heart. We need to really understand these fuzzy kinds of dimensions that are going to increasingly come into focus in the next five to 10 years.“

[Editor’s note: This interview was edited for length.]

To learn more about what’s next for B2B, register now for B2B Worldfest (Nov 18 and 19).

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