After layoffs, restructures and client losses, can R/GA’s new leadership team reset?
In an exclusive interview with The Drum, the executives tasked with arresting R/GA’s commercial decline lay out their vision for the agency’s future.
Robin Forbes, the interim CEO of R/GA / R/GA
Rocked by the tech sector downturn, struggling Interpublic Group (IPG) agency R/GA has shed staff, client scope and revenues over the past year.
In 2022 several clients, including Mattress Brand, Ally Bank, Siemens and Nike, cut back the work they entrusted with the agency – the former revealed by a leaked internal memo that claimed the agency had “massive cracks in our scaffolding process, communication, and our organizational readiness to move at the speed of retail”.
All in all, this resulted in a year-on-year revenue decline of around $50m. Starting last June, the agency responded with several rounds of layoffs – primarily in the US, where it reportedly cut over 20% of its workforce (a spokesperson for R/GA disputed the revenue estimate, but declined to confirm the precise number of redundancies or the precise revenue loss).
And despite initiating a restructuring process last October, the cuts have continued while top agency leaders have continued to leave, including global media head Ellie Bamford, global head of content Margo Lowry and chief marketing officer Ashish Prashar. And in the most troubling blow, to both internal and external surprise, chief executive Sean Lyons joined them in exiting the business for Accenture Song in February. Its global headcount now sits at 1,300.
But over the last few months, the company has finalized a months-long “redesign” to draw a line under recent troubles. It’s being led by interim CEO Robin Forbes and global chief creative officer Tiffany Rolfe, now also appointed chair. They’ve worked to diversify the agency’s range of services while meeting client needs with a more “adaptive” – that is, slimmer – workforce. But recovery may be contingent on economic trends bigger than its brand name.
Business of reinvention
R/GA is no stranger to the process of reinvention. Every nine years from its founding, the agency's co-founder Robert Greenberg, an avid believer in numerology, would overhaul the business. That led the firm, which began as a special FX studio for cinema, to embrace digital production work and later advertising, molding it into one of the industry’s biggest creative names.
In 2020, R/GA seized upon the spirit of the times and reinvented itself once again, led by Greenberg’s successor Lyons. This time consulting services and ‘experience design’, including NFTs and the metaverse, were placed at the heart of its plans for the future. But three years on – and over 100 layoffs later – it’s clear that model wasn’t resilient enough to withstand its clients’ response to a troubled economy.
Forbes, who’s been with R/GA for almost a decade and led key accounts such as Samsung, has been in charge since the end of February. He says the gig is “a dream role for me”, but not one he saw coming. “I will say I wasn’t expecting it. The timing of Sean’s [Lyons] departure certainly caught me off guard – there’s no question about that.”
Suggested newsletters for you
Forbes however, insists that “as I view it, I don’t see anything wrong with the business.” In his and Rolfe’s estimation, the agency was a canary in the advertising coalmine – subject to pressures that have hit bottom lines at several agency groups in recent months. “We’re in an unpredictable economy and as a result, we’ve had to adapt our workforce,” he says.
According to Rolfe, “This was about a redesign, rather than things being fixed. We are out there trying to disrupt, do things differently and design new ways of working and new ways of adapting to client needs. We think what we’re doing is the right way forward.”
The agency’s project-based business model means that its work with clients was often on the chopping block first, Forbes adds. And its exposure to tech clients meant the slowdown in the US technology sector had an acute impact.
“When you look at the sectors of the clients that we work with, we have traditionally worked with a lot of technology clients. And that sector has been particularly hard hit in the last six months or so,” he says.
According to Rolfe, “We tend to be an indicator. When the economy is good clients invest more in innovation, in things they need to make their business strong for the future. And sometimes they double down on business as usual to be safe.”
Forbes and Rolfe’s changes will make the business more resilient to market knocks, they say. “What we’re doing now is building for the types of work, the types of service and experiences that our clients need… and to get to a place where we are more adaptable to changes, whether economics or changes our clients need. We’re trying to design our workforce to be at the core of that,” says Rolfe.
That means utilizing more freelance and more part-time staffers, a workforce that can provide more flexibility as projects ebb and flow than R/GA’s previous set-up until this year run out of expensive, totemic premises in Manhattan. Rolfe calls it “distributed creativity.”
“We’re trying to get to the right level of freelance so we can shift and adapt,” she says. “We’re building a workforce that can have more flexibility with their time. But it’s not enough to have full-time and freelance. There needs to be a third way… perhaps somewhere in the middle.”
Though it hasn’t yet hired a replacement CFO or CMO, and though Forbes’ position is in the gift of parent company IPG, Forbes and Rolfe are at pains to emphasize it is still hiring for certain positions. “We’re constantly looking for talent that fits the new opportunities that we have,” he adds.
New model R/GA
Since autumn of last year, the agency has begun breaking down its services into five discrete “practices”. The model was first trialed in the States and has now rolled out to its businesses in Germany and the UK – led by the newly promoted Rebecca Bezzina, now CEO of its EMEA business (above, alongside chief creative Nick Pringle). She says that despite some “structural changes” in London, “we’ve built an amazing foundation.” The next objective, she says, is to “extend the reach” with clients in Europe and the Middle East, something she hopes will be enabled by the agency’s new approach to talent. “Post-pandemic, we’re in a world where we work flexibly as a company, but also we’re able to have talent distributed everywhere to service clients.”
The core practices include brand design and consulting; ‘connected communications’; product and experiences; media; and brand relationship design, or in plainer English, CRM and loyalty. It’s a little closer to the product-led approach recently adopted by Interpublic stablemate Huge, though Forbes says the agency still prioritizes the tailored touch. “There’s a level of bespoke definition based on the client,” he says.
The pillars provide “a very unique value proposition” he says, and a guiding principle to organize the business around. “The intent is to focus on those five areas and to ensure we go deep in each of them, we have organized our teams around them, rather than around geography.”
Scan a close eye over the agency’s stark red and white website, and you won’t find much promotion of its NFT or metaverse expertise, areas previously considered promising but which lost the agency up to $10m last year.
Bezzina says there’s still potential there: “Clients are still spending money in that space – less than the initial frenzy – but we still have a ton of clients that are interested in reaching audiences in those spaces.” And regarding the demand for broader metaverse activations, she says “There’s obviously less of that… but we’re absolutely still involved in that stuff.”
Forbes sees green shoots elsewhere. “We are seeing great demand in certain practices, in particular the brand design and consulting space, in CRM, loyalty and membership, and our product and experience work.”
“That’s a reflection of clients’ continued pressures and ambitions to digitize their businesses. On CRM, it’s a clear reflection of clients needing to extract maximum value out of their existing client relationships. And on the brand design side, it’s clients who are sharpening their proposition and being aggressive in a downturn, trying to capture share, or introducing new products.”
And despite client cutbacks last year, the agency has held on to some of its longer-term clients, such as Samsung. Forbes, who takes a hands-on approach to that account, says “it reinforces that what’s most important for me is to be sleeves rolled up, inside the walls of a client office to truly understand their business.”
He says “we’ve made the changes we need to make, given what we can portend for the future concerning economic circumstances.” But he doesn’t rule out further job cuts at the agency. “It’s impossible to promise that there will never be another reduction in the workforce,” he says.
The agency’s top brass, and its cost-conscious parent company IPG, expect to see the benefits of the restructuring emerge by the third quarter of the year. Chief executive Philippe Krakowsky indicated in February that the numbers might not turn around until “the back half of this year,” but added that the holding company might also address the agency’s “measure of independence” from its parent.
The message implied that this flagship agency has a deadline to solve its problems. Forbes says it’s possible to meet – with a fair wind. “We’re feeling very positive about the back half of the year,” he says.
“But there’s grey swans on the horizon. We don’t know what’s going to happen to the economy. No agency leader can guarantee that we’ll necessarily see the economic impacts.”