GroupM, the world’s largest media buying firm, has named a CEO for Canada for the first time as it attempts to find growth in this market.
On Thursday, the company owned by communications giant WPP plc, announced that Stuart Garvie, currently president of sales at Bell Media Inc., would take over the new role in early October.
Canada is the seventh-largest market in the world for GroupM and a focal point for future growth. WPP is expanding Essence – an agency focused on data analytics and digital media that it acquired two years ago – into markets including Canada early next year. And it’s extending [m]Platform to Canada, a GroupM tool that collects consumer data from a number of sources in an attempt to better understand target customers and analyze media buys. The platform announced its Canadian leadership last year.
The move also reflects WPP’s global reorganization of its media agencies. This week, it announced a brand name for the global merger of agencies MEC and Maxus, which will now be called Wavemaker. That merger was intended to simplify the business and free up resources to invest in other areas such as data analytics.
“Setting up a Canadian structure by itself is not enough. We have to innovate and create new services for clients,” GroupM global CEO Kelly Clark said in an interview. “We’ve seen this in other markets: Dedicating strong leadership on the ground will improve speed in decision making and our ability to innovate. … It speaks to Canada’s importance as a market to us.”
The changes also come on the heels of a disappointing quarter for the ad industry’s biggest holding companies, which have faced slowdowns in growth, particularly in North America, since late last year. Last month, WPP lowered its forecast for net sales growth this year to 1 per cent or less, sending its stock down more than 12 per cent. The company pointed to major budget cuts at packaged-goods companies, which account for roughly a third of its business.
Other concerns beyond belt-tightening are also affecting agencies’ relationships with clients, however. Last year, a landmark report commissioned by the Association of National Advertisers – which represents marketers in the United States – claimed that agencies were pocketing financial incentives on media spending that were not disclosed to clients. That compounded a spate of concerns about the level of transparency marketers have into how their media investments are spent, particularly in digital media. In a speech in January, Procter & Gamble Co.’s chief brand officer, Marc Pritchard, said he would put all of the company’s agency contracts under review this year in an attempt to address what he called “a complicated, non-transparent, inefficient and fraudulent media supply chain.”
Clients in general are putting agency relationships up for review more often, pressuring agencies to dedicate extra resources to pitching for business.
“It’s the new normal,” Mr. Clark said. “Clients are under enormous pressure, particularly in some categories because of low growth rates or declining sales. We live in a very complex and sometimes very opaque world. Transparency, as a principle, has come to the fore. … How well do clients understand where their money is being spent? How do they find agency partners that will help them navigate that complexity?”
Canadian marketers’ reliance on agencies to help them with digital marketing in particular is not growing, according to a recent survey of almost 600 marketers and agencies here. This year, 41 per cent of marketers said their reliance on agencies for support has increased, down from 53 per cent in 2015, and 16 per cent said it has decreased, up from 10 per cent two years ago. The rest said it has remained the same, according to the 2017 Canadian Digital Marketing Pulse report, prepared for the Canadian Marketing Association by Ipsos Canada.
“With growing knowledge and experience among the marketers, many companies are taking functions in house. In addition, specialized platforms are also squeezing the agencies out,” the report said.
Mr. Garvie previously worked at GroupM, most recently as chief commercial officer of GroupM Canada, before moving to Bell in 2015. Prior to his time with the agency, he held senior marketing positions at Danone and Reckitt Benckiser.
“I understand the pressures in each business,” he said in an interview. “The biggest challenge to all media markets is the definition of value and the procurement-led pitches that are driving client business to move around. We need to make sure we’re delivering business results to clients … to show the value of media planning and buying.”
In the wake of Mr. Garvie’s departure, Bell announced that TSN president Stewart Johnston would take over as president of media sales, marketing and TSN.
Source: The Globe and Mail