Google Adweek 2010: Fast Company CEO Forum


Uploaded by FastForward on 28.09.2010

Transcript:

ROBERT SAFIAN: I didn't hear what Matt said, but
I hope it was nice.
My name's Bob Safian.
I'm the editor of Fast Company.
And we have a great group here to talk with you and talk with
each other.
They've been giving each other a hard time in the green room,
so hopefully they'll keep giving each other a
hard time out here.
I do hope that, relatively early too, we can go to you
all and get some questions.
So we can have this be a little bit of a conversation
back and forth.
It's a large room, but it's reasonably intimate.
So hopefully, we can get some back and forth going on.
I'm going to do a little promotion first. Fast Company,
as part of Adweek, is doing a session tomorrow.
Tomorrow in the morning from 9:00 until 11:30, a leadership
summit over at B.B. King's, which I hope you'll be
interested in.
There's a really interesting case study from Coca-Cola
about their $300 million marketing campaign
around the World Cup.
There's another one about real-time marketing with
Microsoft and MSNBC.
And then I'll be doing a panel with some clients who have big
budgets, the CMO of GE, and IBM, and Best Buy, and
Chipotle, and Yahoo!.
So I hope you can make it there.
That's the promotion.
MATT FREEMAN: Can we join that panel as well?
ROSEMARIE RYAN: Can we join that panel?
MATT FREEMAN: The one with the money, I mean.
ROBERT SAFIAN: Welcome, welcome.
MATT FREEMAN: The one with the money.
ROSEMARIE RYAN: The one with the money,
that's the one, yeah.
ROBERT SAFIAN: So let me introduce the
panelists we have here.
All the way starting on your left--
I think I'm doing that right--
Rosemarie Ryan, who just started a new
business called co:.
Matt Freeman who runs Mediabrands.
Simon Sherwood who is the head of BBH.
And Larry Woodard who runs--
I'm gonna miss the name.
LARRY WOODARD: Graham Stanley.
ROBERT SAFIAN: Graham Stanley, thank you.
Sorry.
And this panel is part of, in some ways, a continuation of
panels and discussions that have been going on starting
yesterday and will continue through the week about what
the direction of the ad industry is going to be.
There's a lot of discussion of transformation and
transformational change.
But to what?
I did a panel yesterday with a group of agency executives.
And there were some people who were saying, we're on the
verge of a new golden age for the ad business.
And other people who thought that the ad industry might be
going in some ways the ways of the music industry, where
expectations have to be changed and technology is
making things slightly less abundant.
And I hope we'll cover some of that ground with this group.
I thought I'd start by asking each of you relatively briefly
to describe--
because when I described your agencies, I didn't say,
digital, or media, or creative, or use
any words like that.
And since there's a lot of discussion about model, if you
could just briefly describe your own business.
What is it that your agency does or tries to do?
Larry?
LARRY WOODARD: I'll take that first then.
My agency is new.
As of April, we started.
And what we're trying to do is be one of the first agencies
that seamlessly combines traditional with mobile,
social, and digital media.
So our premise is that in a native forum, you had digital
agencies and you have traditional agencies.
And we're trying to be one of the first that does it on
purpose and grows it organically.
ROBERT SAFIAN: To the right.
Simon, do you want to--
SIMON SHERWOOD: OK.
BBH started about 30 years ago.
And it started as what is now described as a
traditional ad agency.
We're now a global business although rather a small one.
And we've had to face into all the changes been occuring in
the last few years.
We are still an advertising agency, but we're trying to
turn ourselves into an advertising agency for the
digital age.
So we're trying to integrate a lot of skills and capabilities
into our proposition.
And we're doing that reasonably successfully in
some places, less successfully in others.
But it's something we're determined to do.
That's what we do.
ROBERT SAFIAN: Fair enough.
MATT FREEMAN: I'm Matt.
I run Mediabrands Ventures actually, which is part of
IPG's Mediabrands.
And we're effectively a media holding company.
We've got about 20 companies that span from traditional
media to outdoor, online, search,
social, mobile, et cetera.
And we have really been looking at media in the
broadest sense and trying to figure out especially how
technology comes in and changes that landscape.
ROSEMARIE RYAN: So I'm Rosemarie, and we launched our
company, co:, last week.
And we believe that co- is a very important prefix for the
future, which we think is about collaboration,
co-venturing, and co-creation.
When we talk about what we are, we describe ourselves as
a brand studio.
So when you think back along what Hollywood was many, many
years ago, they owned everything.
They owned the talent, they owned the props, they owned
the people, and all of the money.
And then that got blown into a million different pieces.
And now what they have is a couple of very senior people
who bring the right people and the right talent together
around the right project to get it done.
And that's what we want to do in the marketing world.
ROBERT SAFIAN: And so Matt, if I understand right, you're
running a holding company that's part
of a holding company.
Is that right?
MATT FREEMAN: Yeah, it sounds exciting, doesn't it?
ROBERT SAFIAN: And Simon, you have a global company, but
it's part of a holding company also.
SIMON SHERWOOD: We have a minority shareholder who is a
holding company, yeah.
That's the Publicis Groupe.
They have very little direct influence over
our business though.
ROBERT SAFIAN: And are either of you
parts of holding companies?
LARRY WOODARD: No.
ROSEMARIE RYAN: No.
So co: is at the center of it.
But we have what we call 41 co-conspirators, who are other
companies, who join with us on whatever projects that we need
to make happen.
So it's not a holding company.
We say, it's a coalition of the willing, I think
[UNINTELLIGIBLE].
ROBERT SAFIAN: OK, but are some of the willing then parts
of holding companies?
ROSEMARIE RYAN: I think probably two
of them are, yeah.
ROBERT SAFIAN: Is it a good thing to be part
of a holding company?
Or is not a good thing to be part of a holding company?
MATT FREEMAN: Yes.

SIMON SHERWOOD: That depends entirely where you sit,
doesn't it?

And we sit half in, half out, I suppose.
So we see it from both sides.
I can definitely see some advantages to being part of a
holding group.
There are definite advantages to
consolidation and such like.
But there are also huge advantages to being
independent as well.
LARRY WOODARD: I was a part for the last decade of a
holding company.
And I can tell you that in my case the downside outweighed
the upside.
It was very difficult to move at the speed that we needed to
move at and be part of a holding company.
So now we're independent.
I miss the money.
I certainly miss the potential for investment.
But the fact of the matter is is that I'm confident that
this was the only way to do what we want to do.
ROBERT SAFIAN: Part of the reason I ask these questions
is because some of the other panelists and some of the
other discussions--
I don't know how many of you have been on them-- are about
what the model is that is gonna work right.
And in some ways, a move from being specialists to being
generalists.
And some people claiming that everyone's going to move to
the same spot from different places.
Rosemarie, you're shaking your head, like, no way.
ROSEMARIE RYAN: I don't think it's possible given the way
technology is moving in markets for one company to
have everything under one roof.
I just don't think that's financially viable.
Because there are so many different ways to go to market
these days.
And you do need specialists who know how to do that.
I think you also need people who know-- like an architect--
how to pull the idea or the story together and then
orchestrate those specialists around that idea.
But the idea that all of them will live in one place, to me,
seems unrealistic.
SIMON SHERWOOD: I completely agree with that.
I was told by a very wise client of ours--
five or six years ago, we first started trying to get
our heads around what we could do, and how we could change,
and such like.
This guy was thinking in the future.
And he said, you've got to think about this like the
Olympic Games.
You cannot be a gold medalist in every event.
You just can't do it.
So you gotta pick your events, decide where you're going to
be gold medalists in, and recognize that other people
will be better at other things.
And once you've understood that, then I think it starts
to make things quite a lot easier.
Because you don't try and get your arms around everything
and do everything as well as you possibly can.
MATT FREEMAN: Or you can be Russia and take a total medal
count, I think is the other way to go.
Yeah, you're right, as an individual athlete.
I think the advantage on the flip side is that you do have
the advantages of scale, of capital for investment and
acquisition.
And you can play a broader role in solving client
problems than as a single source provider.
LARRY WOODARD: Well, potentially.
Because one of the things that I found absolutely dreadful
within the confines of a holding company is that they
were trying to serve two masters.
All the holding companies went public.
And the fact of the matter is that clients are who we
traditionally have worked for.
And so now you're caught in the middle.
And I was in discussions that said that at the end of the
year, our stock will be 35.
I don't care what has to happen.
I don't care if you have to fire and rehire yourself.
35 is where your stock will be.
And then I had to, the next day, try to explain to my
client why I didn't have the proper amount of people on
this business.
And the guy I was talking to was a guy who was gonna be CMO
for two years.
Because that's the average now.
And so he was most concerned about could I move his needle
today, not can I make his brand what his brand should
be, not if I could think about his brand for the future, not
if I could think about the customer that's coming.
But could I help him out, please, and get some profits
on his sheet by the end of that year so that he could
keep his job.
MATT FREEMAN: Understood.
And I'm not saying it's all rosy.
All I'm saying is that when you're an entrepreneur, your
objective is profit as well.
It's not like you suddenly have a halo above your head as
soon as you leave the holding company.
You're still mercenary in your own way.
ROSEMARIE RYAN: I think it is rosy all the time.
What I would argue is that I'm not sure so much that it's
about scale anymore.
I think it is about scalability.
And now in our company, and when we were at JWT, we did
partner with other people often to get
to the right solution.
So as long as you know how to do that-- and that's, by the
way, not an easy thing to do--
I think that you can pretty much solve any problem.
We're 10 people.
But we're also 101,015 if I put all the companies together
that we're working with.
ROBERT SAFIAN: But you chose to do this not within JWT.
You chose to leave and do something outside.
So why?
ROSEMARIE RYAN: Well, twofold actually.
First, because I felt it was time to do
something on my own.
And if I didn't do it now, that was
never going to happen.
Because the clock was ticking.
And secondly, because I think starting from scratch and not
having any kind of legacy structures underneath you make
achieving what we want to achieve probably a lot easier.
I think JWT are trying to move down this path.
I don't know how.
And I wish them every luck in getting there.
But for me, starting from scratch and then building
toward what the new model will be was where I wanted to be.

ROBERT SAFIAN: Because sometimes there's so much
angst about the industry.
Is this a time that's like, there should be angst. It's
rough, it's hard.
Or is there something exciting about it?
And how do you walk through those?
ROSEMARIE RYAN: I think there's always been a fair
amount of drama in the business.
When I started in the business, my mother, she said,
why do we want to get into advertising?
And I talked to her about all the reasons why.
And she said, I've been to some dinner parties with those
advertising people, and I've noticed two things.
They are very smart, and they're very paranoid.
And that, my darling, is a dangerous combination.
So I think there's always been a fair amount of
angst in our business.
People are pretty passionate in what they do.
I think that there is a lot of soul searching going on.
And that's a good thing.
SIMON SHERWOOD: I actually believe this is the most
exciting time to be in this business.
And I think anyone coming into this business as a graduate--
we hire lots of graduates.

I've been in the business for 30 years,
which is slightly worrying.
But I think this is the most exciting time I can remember
to be in the communications business right now.
LARRY WOODARD: Yeah, I wholeheartedly agree.
I write for ABC News.
I have a weekly column.
And in this column that comes out Wednesday, I just used
this week to celebrate advertising.
And I love so much of the work that's being done.
I absolutely love it.
And what I would love to have happen is a combination
between what was-- when we were these larger than life
personalities that everyone followed no matter what
industry that they were in--
and a combination of now with the technology that we have
and the opportunity to really touch consumers, whether
you're spending a lot of money or a little money.
It's the best of times, it's the worst of times.
And so I think that whether it's holding company or it's
entrepreneurship, I think that what we're all trying to do is
to break through with this content that changes the game
in a way that's interesting.
SIMON SHERWOOD: And the opportunity to bring together
both intelligence and magic, which is what we all do, is--
there's never been a bigger or better opportunity to do that
and get it out there.
ROBERT SAFIAN: I think it can be very hard.
I live this in the media business, print media.
Some challenges in this building and other places of
getting people to see the possibilities in new things
and not lament the passing of an era where people may have
gotten rich or may have had a particular kind of life.
How do you infuse that spirit in the people
you're working with?
Matt, you must have some challenges with this?
Both straddling up into the holding company that you're
part of and down into the companies that you're holding.

Did I describe that the right way?
MATT FREEMAN: No, it's fine.

A slight mocking tone you could take back.
But the words were fine.

I actually came into this business as a creative, as a
copywriter.
And I'm obviously terribly lost at this point running a
media company.
But to me, the appeal has endured because it's a
business that lets you be creative.
It's a business that lets you work on problems and figure
things out.
And I find that terribly engaging.
To me, the difference between now and when I started is that
creativity has pervaded media, technology, all
aspects of our business.
And I think in a way arguably that it didn't 20,
30, 40 years ago.
LARRY WOODARD: Yeah, we're not as much in control.
If you look back 20, 30 years ago, the media was the media.
You had to appropriate it the way that the
media wanted you to.
MATT FREEMAN: You had a lot of fixed elements in the supply
chain which are now all variables.
And to me, that's exciting.
That's cool.
It means that there's more dimensions of what we do that
you can think about and try to do better than the next guy to
give your clients unfair advantages.
ROBERT SAFIAN: Now, Larry, you mentioned the rapid--
or one of you mentioned the reasonably rapid turnover at
CMO ranks at clients.
How much of the angst or the challenge that the ad industry
faces is because of things that happen at the client
level that you are forced to constantly readjust on whether
that's repitch, or bring in new people, or new strategies?
LARRY WOODARD: I think a fair amount of it.
In the holding company, we used to talk about training
our client.
But in reality, I think that the problem is is that they're
in a very difficult way.
If you look at CEOs or CMOs, there has been a lot of profit
pressure for a long time now.
So it's tough to get a partner there.
Because it's tough for them to want to take a long look.
Because they don't have 5, 10 years.
I worked for the Mars company for a number of years, largest
privately owned company in the world.
And they were only concerned with brands for a lifetime.
So one year's profit didn't matter.
Five years profit didn't necessarily matter.
They were concerned with brands for a lifetime.
And when I contrast that with so many of our other clients,
that just doesn't exist. They have to create advertising
before you can have the meeting.
You're sitting there in the meeting, and they know when
their media's already bought.
We don't know who we're talking to, but the media
plan's already done.
It's just a very, very difficult world to work in
when we're talking about all of these wonderful changes.
And the client doesn't want to hear it a lot of times.
They don't want to hear digital if they don't
understand it.
ROSEMARIE RYAN: Yeah.
I think the average tenure of a CMO is 22 months--
LARRY WOODARD: No, it went up.
ROSEMARIE RYAN: --which is pretty remarkable.

When a CMO walks into their job, what do they walk into?
They walk into a world which is literally
turned upside down.
So the number of brands that exist out there that they're
competing with has gone from 2 million to 8 million.
The number of channels that they have to advertise or
communicate those brands on has grown exponentially.
And then the number of agencies they have to work
with to bring those brands to life has also gone up.
What hasn't gone up--
in fact, what's declined--
is the amount of money that they have to actually do that
with and the amount of time to execute it.
And I think last, but not least, finding an audience,
which used to be pretty easy to do, is more or less
impossible.
So they're in a pretty scary position.
And I think we have to--
ROBERT SAFIAN: Who would take that job?
ROSEMARIE RYAN: Well, I think it's very hard to fill some of
those jobs.
I've seen some of the briefs for those jobs.
I don't know how anyone can do all of that.
I think the job has to be bigger than
the job of the CMO.
Marketing's got to be the job of the organization.
And I hear a lot of people talking about the fact that
agencies are siloed.
Well, I think a lot of client companies are siloed.
And the sales force and the legal department, everybody
needs to get involved these days just because of the way
marketing works.
And I don't think it can be the purview of any one person
or department anymore.
Or shouldn't be.
ROBERT SAFIAN: So another lingering question is how you
all should get paid.

I know well.
MATT FREEMAN: Handsomely.
ROBERT SAFIAN: I know handsomely.
SIMON SHERWOOD: Can I just say something
on that client point.
Because it's such a complex issue this.
Because I used to worry that the agency
business was behind clients.
Actually, we're ahead of clients.
If you think quite rightly that the advertising business
has been slow to change, clients have been even slower.
But that's not to say they aren't trying to accelerate
that process of change.
But I think what they've wanted is leadership from us.
And they haven't had much of it.
Therefore, they've gone outside to other areas and
sought leadership there, which has made it even more
difficult for agencies to take that position.
But the slightly strange thing about this kind of
conversation is that if you go to--
we're obviously sitting here in New York, and
I'm based in London.
But I spend a lot of my time in China, and India, and
Southeast Asia, and Latin America who wouldn't
understand what we're talking about.
It's just not the same.
They don't see the issues as being the same.

Our largest client is Unilever.
All their growth in the next five years is going to come
from what they call the developing and emerging world,
which is the work Mark has obviously just described.
And the communication and advertising model is very,
very, very traditional in those parts of the world.
It's 96% TV. And brands are built using proven growth
drivers that are used time and time
again and lead to success.
So I know it's all going to change and accelerate at a
very fast rate obviously.
But a lot of this stuff is not really relevant to growing
brands and building relationships with consumers
in large parts of the world.
So clients are very conflicted about this.
Because parts of their organization, the brain part
of the organization which sits in New York or London, is
obsessing about all this.
But the operational side of the business, which is
actually what is delivering the growth,
isn't at all really.
And so that's why I think there's this real confusion
that exists within client organizations as to what the
right way forward is.
ROSEMARIE RYAN: And I think the interesting thing is that
a lot of the testing that they're going to need to do--
because there's going to be a fair amount of that-- will
probably have to happen in the developed markets, not the
developing markets, which is not normally how they think
about doing things.
Because technology is moving slightly faster here.
It's also where most of their profits are.
So that even though those markets are growing, they
still probably don't contribute as much to the
bottom line as some of the developed markets.
So it is a complicated issue.
LARRY WOODARD: In getting to the price issue that you're
talking about, it's funny because in our business, as
procurement has taken a role and as the CMO doesn't have as
large a role traditionally as they've had, one of our
biggest issues is that we're not the C-suite partners we
used to be.
When I first got into the business, our CEO had a
relationship with their CEO.
And so many agencies--
except for the largest and where it
matters around the world--
those relationships don't exist anymore.
And they've hurt advertising, and they've hurt our pricing.
Because the fact of the matter is is that you have to have
that kind of importance.
What you're able to charge for your service is really driven
by how valuable the client believes what you're
doing is for them.

ROBERT SAFIAN: What do you guys-- well, I
should ask you, Rosemarie.
So you're starting this new business.
You've structured it in an unconventional way.
So why did you choose that structure?
And within that structure, to what extent is that so that
you can get better access to the C-suite?
To what extent is that so that you can charge for your
services in a somewhat different way?
I'm not sure whether those things go into the
calculation of it.
ROSEMARIE RYAN: I think all of the above.
Obviously, you're going to run a business to make a profit.
Because if you're doing that, then you probably shouldn't be
in this business.
But I think you have to start with a belief about how you
think brands are going to get built moving
forward in this world.
And the reason we structured our agency the way we have is
that we think, you don't need a huge amount of people
sitting at the center.
You do need access to some fantastic talent that sit
outside and an ability to bring them in.
So our model is about that.
It's about bringing people in when we need to solve a
particular--
ROBERT SAFIAN: But isn't that what a CMO does
at a company already?
Aren't they the ones who are supposed to be bringing
those people in?
ROSEMARIE RYAN: I think it's much, much more complicated.
I think about it almost as being a
chief creative officer.
Because the amount of time and energy it takes to, first of
all, have an idea that you can orchestrate people around, and
make sure that idea is big enough, and then actually
facilitate that is enormous.
And I don't think any one person can
necessarily do that.
SIMON SHERWOOD: And have you got a new
financial model as well?
Are you charging in a different way?
ROSEMARIE RYAN: So yeah, we are trying to charge
differently.
So we charge a flat fee for our services for the center.
And we do that as more of a consulting model upfront.
And then when we get to implementation or execution,
basically, everything's transparent to the client in
terms of what everyone else is getting paid.
And then we have a fee that goes into the center of that.
But we don't need to have, from every agency, six account
people and two planners.
So it's a much leaner, meaner model for them.
And then the third way, which is probably the most important
way, is because when we're trying to create actions and
behaviors that we're putting into the marketplace, we
believe that those will generate new revenue streams
for our clients.
And when we do that, we'd like to participate in
the upside of that.
And I know you're doing some of that in the UK, right?
SIMON SHERWOOD: Yeah, everywhere.
We have about five or six different remuneration models
that we're experimenting with.
Some are costing us a lot of money.
But we're learning.
ROBERT SAFIAN: Can you tell us some of the specifics about
what the ones that are working well?
Or what the learnings are that you're getting?
SIMON SHERWOOD: From our point of view, the thing that we're
trying to do more and more is to have more of our
compensation based on some sort of performance measure.
The more of your income that's variable, the more your cost
has to be variable.
So you have to restructure the entire business
to make that work.
We did this extraordinary piece of analysis whereby we
break down the various journals that publish reports
about what clients want from agencies.
Things like creativity, and strategic contribution, and
all that kind of stuff always comes out on top.
And there's a long tail of things that
are much less important.
If you then apply the traditional fee that you get
paid by that client and then look at how much of that fee
goes against each of those different things, quite
horrifyingly, more than 2/3 of the fee goes against the stuff
the client doesn't particularly want.
Only 1/3 goes against the kind of stuff that adds value.
Present that information back to your clients.
Quite dangerous in some ways because they say, well, just
cut the 2/3 out then.
But if you say, this is what's wrong with this model.
It doesn't recognize the difference between the stuff
that adds value and the stuff that doesn't.
So we're going to try and pioneer a new way.
More of that money needs to go against the things that really
build your business and add value.
And a lot of the revenue that comes back to us has to be
driven by various performance measures.
You can have different kinds of conversations.
But you have to put quite a lot of internal restructuring
through on the back of that.

It's a thing this industry has failed to crack.
When most clients moved from commission to fees, we all
thought, eureka, that's it, we've cracked it, it's done.
And now we're trying to move away from that.
But there's only been two financial models in the
history of advertising.
So it's not an easy thing to fix.
ROBERT SAFIAN: And are clients responsive to these ideas?
Do the clients want to do this?

SIMON SHERWOOD: Clients are looking for value.
And they don't mind paying for real proven
drivers of their business.
What they are all trying to do, in my experience, is to
eliminate all the waste and inefficiencies.
And I have to say, our industry has got a lot to
answer for in that respect.
There have been some horrific financial practices that have
been implemented and managed for years, and years, and
years within the advertising business.
It's shocking really.
ROSEMARIE RYAN: But we also haven't been paid for the
thing that's most valuable.
And I know that BBH has a policy of not pitching.
But the fact that we give away probably the single most
important piece of value to our clients is also an
indication that we're not really--
SIMON SHERWOOD: It makes you start on the wrong foot
[UNINTELLIGIBLE].
ROSEMARIE RYAN: Exactly.
You're not starting in the right place.

ROBERT SAFIAN: If any of you all have some questions and
you want to jump in, I think there are microphones--
it's hard for me to see.
There's one over there on the side and one over here.
So there's hands up over here.

AUDIENCE: What part do you think that you're giving away
for free to your clients?
ROSEMARIE RYAN: The strategy.
AUDIENCE: You're giving away the strategy for free, and
you're not charging for that.
ROSEMARIE RYAN: Right.
ROBERT SAFIAN: The things that happen in the pitch to get the
business in the first place.
ROSEMARIE RYAN: So the strategy, the idea.
There's a huge amount of energy and work that goes into
developing that.
Probably more senior work as well, senior people.
ROBERT SAFIAN: And you guys spend more and more time doing
more and more pitching against more and more different
people, right?
Because the consultants have multiplied and all that stuff?
LARRY WOODARD: Yeah, until you stop.
It's never ending.
ROSEMARIE RYAN: Until you don't.
ROBERT SAFIAN: Until you don't.
AUDIENCE: Do you think the marketers have reorganized
away from what was the traditional brand management
system which focused on large chunks of spending?
Have they reorganized to the slivers?
Because you guys are all about it isn't just 3 or 4 things
you have to do these days.
It's 15 or 20 to all the touch points.
Have they reorganized on the client side to reflect the
fact that sliver marketing is probably more important than
chunk marketing?

MATT FREEMAN: I don't know about slivers and chunks.
But I'll take a slightly
different approach to answering.
I think what's happened from our perspective is marketing
organization, product organization, and IT
organization have all come much closer together.
So our Verizon client has a DVR remote control app that
needs to go to the iPad.
Is that marketing?
Is that product?
Is that IT?
Yes.
So the challenges that they're facing, I think, are colliding
a lot of the different components of their
organization which were previously discrete, which is
good to see.
ROSEMARIE RYAN: I was in Japan recently.
And I saw that in the subway in Japan, they're growing
hydroponic lettuce, which I thought was probably the best
piece of communication that I'd seen in a really long time
and built on their story of freshness.
I don't know whose idea was that.
Did that come from the franchisee?
Was that driven by product development?
It's a great marketing idea.
AUDIENCE: So I had a question around advertising at scale.
So obviously, in the days of television, you could deploy
$100 million and not worry too much about how you were going
to do that.
In the digital world, it's a different ballgame.
It's highly fragmented.
It's very difficult to spend that kind of money.
I'm wondering what you folks think will be the future of
how you'll be able to execute $100 million campaign using
digital channels, which might be all there is.
MATT FREEMAN: I'll just say quickly, it's
sort of a false premise.
The days of TV aren't over either.
AUDIENCE: Well, I didn't claim it is.
My question was more, how would you deploy that kind of
capital on [UNINTELLIGIBLE]?
SIMON SHERWOOD: Would you ever be in the fortunate position
of having to do that?
I'd probably say to my client, that's too much money.
ROBERT SAFIAN: This is a pitch meeting.
ROSEMARIE RYAN: Too much money, yeah.
MATT FREEMAN: Look, I think spending large sums of money
online is difficult simply because it's still a
protoplasmic ecosystem in many ways.

The friction is coming out of the system.
So you do see larger and larger sums of marketing
investment flowing through digital.
And you see the cost of distributing those investments
coming down.
So I think it's happening very quickly, and it is becoming
much easier to spend large sums of money wisely online.
LARRY WOODARD: And also, I think that as clients and
agencies come to grips with what it is that you're trying
to do, it's not a chicken or an egg statement.
You look at what Toys "R" Us did last year, which was
fabulous, which is that they look at their printing
franchise and said, why are we printing this wish book?
And then they put it on Facebook.
And then they gave parents free Facebook accounts.
They gave kids free Twitter accounts.
The kids put their Christmas lists on Twitter.
And then they told the parents what store they had, for
instance, a purple Furby that was near them and
what the cost was.
So all of a sudden you were dealing with something that
cost you $60 million.
You did it in $20 million, you did it more efficiently.
And what happens?
Well, a company they thought was going out of business,
like KB Toys, didn't.
And it had its best year ever.
So more than $100 million, it's really about
understanding what is you're trying to do, and getting the
right people in the room, and being able to corral them like
cats until you can get the solution.
MATT FREEMAN: A smarter answer than the one I gave before
maybe is that it's not about scaling the amount of money
you can spend, but the amount of people you can reach.
LARRY WOODARD: Well, I thought I have a smarter
answer than the one--
MATT FREEMAN: You did.
You clearly did.
I'm just trying to redeem myself.
Give me a second.
We have a business called Cadreon, which is a
demand-side platform.
And it's this idea of using data to produce 100%
composition.
That way, you can scale an audience without necessarily
scaling spend.
AUDIENCE: I have a question.
In the days of disintermediation, where
everything is broken up, and it seems like clients want to
keep it that way, and use best of class, and use many, many,
many agencies, how can you possibly go to all those
meetings and figure out how to work with all those different
people from all those different agencies?

SIMON SHERWOOD: It's a great word,
disintermediation, isn't it?
We see a lot of this happening at the moment.
And I think it's one of the big challenges the industry
faces in the next year or two.
And it talks to the point I made earlier about the value
added stuff and the stuff that isn't really value added.
And a lot of the stuff that's moving away from what we do is
stuff that we can't really add much value.
All we can do is the money can pass through us.
And we're just in the way.
So why not go direct to the supplier if you're a client
and get it that way?
So that's happening a lot.
We have departments in agencies that are built around
just handling that money.
So that's part of the restructure
that needs to go on.
But there are clients also who are looking for someone to
manage this process for them and to take an overarching
role in controlling how these various components are used
and work together.
And I'm just trying very hard to not say
the words, lead agency.
Because that's the old part of me that being an ad guy, you
want to go with a lead agency of course.
Because we're the ones you spend the most money with.
But it isn't about that at all.
But often there are companies that we've encountered who
actually want the agency to help them coordinate, manage,
and control this disintermediated process that
they're embarking on.
ROSEMARIE RYAN: I think more and more companies
are looking for that.
Because it's just so hard to manage all
that money and time.
And I think they need someone who is going to be the-- and
this is very old-fashioned language, but I'm not
frightened to use it--
the brand guardian who's going to take the idea and make sure
that it gets distributed in the right way.
Procter & Gamble's whole model is based on that, which is the
[UNINTELLIGIBLE] model.
SIMON SHERWOOD: Yeah, they do very well, don't they?
ROSEMARIE RYAN: Yeah.
LARRY WOODARD: And the truth of the matter is is that it
gets figured out.
And if it gets figured out poorly, it's a horrible
experience.
You said that you didn't want to use the word lead agency.
And I fought it my entire life.
But I was in a situation where there wasn't
one, and it was horrible.
And the fact of the matter is that a
practical thing that happened.
We went to the shoot, and the client hadn't participated in
the prepro because she was flying.
And she thought that she could use her BlackBerry, but she
couldn't open the attachments.
And so we're sitting there waiting for an answer for her,
and it's costing us $25,000 an hour.
And she doesn't come up with an answer.
And then she comes to the shoot and says,
well, we can't do this.
And so she's blowing a million dollars because she's
overworked.
And you have five agencies that have
to work at her speed.
And she's already working 20 hours a day.
So the fact of the matter is is that she needs help.
And the help can come in some form.
We're actually pretty good at it as advertising agencies.
Our problem is is that our learning
curve is sort of steep.
And all of the agencies haven't figured out
everything.
They don't understand multicultural along with
understanding digital and everything else that they need
to understand.
They're going to get there.
Look at an ad that Draft has in the program.
They say, they've already gotten there.
I don't believe them.
But the fact is is that we have to eventually get there.
SIMON SHERWOOD: And clients will pay agencies to do that.
ROSEMARIE RYAN: Yeah, they will.
And I think the other thing is--
and I'm now going to embarrass myself--
although I've ran some very large agencies in my life,
I've never been on a shoot in my life.
I've grew up in brand planning.
So I didn't grow up on the
production side of the business.
Yet, I was more than capable of adding value, I think, most
of the time, hopefully, to my clients' businesses.
I don't think you need to know how to execute everything.
You need to have people who do, who are really great at
doing that.
But you don't have to be intimately knowledgeable about
every single thing.

ROBERT SAFIAN: I think we probably have time for one
more question.
There's somebody standing over there.
AUDIENCE: I have the microphone here.
I'd like to refer back to your discussion a minute or two ago
about spending certain sums on digital.
And it sounded very variable.
And I was wondering that and beyond that, just with current
media, what budget issues do clients face in terms of, for
instance, allocating a media budget for a year ahead?
Do you have issues like that with the client?
Difficulties in actually allocating out the money as to
what might be where.
SIMON SHERWOOD: Just speaking from experience, one of the
problems that we've encountered--
and this may or may not answer your question.
I'm not sure.
But often the internal accounting procedure within
client organization isn't really fully up to speed with
the way in which that money needs to get spent.
So I'm aware of clients that separate
production and media monies.
And they value media as an investment, production as a
cost. They don't understand that actually there can be
production costs that don't involve any media cost. But
those things can still be extremely valuable.
Because they're using old-fashioned ratios about,
our production budget has to be no more than 20% of our
media budget.
LARRY WOODARD: Not working.
MATT FREEMAN: Isn't that awful?
Totally awful.
SIMON SHERWOOD: I thought if I said that, it would give away
which client I was thinking about.

But you're right, it's working and non-working.
So that's the problem I face into with trying to persuade
clients that if they can spend more in this area, it doesn't
necessarily mean it's going to come with a big media.
They need to think differently about how they assign budgets
to tasks and what they're going to get back.
ROSEMARIE RYAN: And there are some great companies who can
sit down and will help you work out where the best place
to allocate some of that money is based on their knowledge of
the brand and the category.
MarketShare is a great company that I've worked
with a number of times.
And I think they do that well.
They do get underneath the brand and help you understand
the best place to spend it.
But you're right.
So much media is earned media these days.
I don't know how.
MATT FREEMAN: From our point of view, we look at just
audience generation in general.
And the way you get there can take multiple forms.
ROBERT SAFIAN: Since I have to wrap you guys momentarily, I
have a favor to ask you.
So as I said, tomorrow I'm gonna be leading a panel with
a bunch of clients.
LARRY WOODARD: Tell them we said, hello.
ROBERT SAFIAN: So what are the questions, other than your
email addresses--
ROSEMARIE RYAN: And you can give them our card as well.
We'll leave some of those with you.
ROBERT SAFIAN: And yes, your card.
What are the questions that I should be putting to them?
What are the things that you would want to hear or would
want to know about from the people on the other side?
Don't worry, I won't tell them who told me the question.
LARRY WOODARD: I'd love to hear a client talk about--
particularly clients that have a role like a CMO role or a
role where they're in charge--
at what point they believe now that we live in an era where
the company isn't necessarily dedicated to them.
They will not spend the rest of their life at that company.
What part of what they're doing is their personal brand?
And what part is the agency brand?
I have a couple of high profile
clients that have left.
And I've been back to the companies.
And the company, said, well, we'll never hire anyone that
wants to be a star and write a book anymore.
But it's really interesting because that's happening.
ROSEMARIE RYAN: I guess I'm interested in understanding
how they get the rest of their organization behind what they
need to get done.
Because so many of the decisions they're making
aren't paid media, working media decisions.
They're decisions that help abrogate an
audience around something.
And they involve many other people in their organization
getting involved.
So I'm curious to know how they're finding that.

SIMON SHERWOOD: The question I would like you
to ask on my behalf--
no, if you work with lots of multinationals, they all have
their own processes.
And they all have their own ways of
trying to get to things.
And they usually start with the word integrate and end
with the word communication.
And the word in the middle often changes.
So it could be I, integrated marketing communications, you
get brand communications, whatever.
And so they all have these approaches that are very well
laid out and clearly followed.
But a lot of the behaviors actually are about
disintegration and separation.
And so I would ask those clients, those who preach
integration, what exactly do they think that is?
ROBERT SAFIAN: You have any buzzwords you
want to throw in?
MATT FREEMAN: I have no buzzwords.
My question would be, what should an agency be?
ROBERT SAFIAN: What should an agency be?
What are they looking for?
Well, I want to thank you all for helping me with my panel
tomorrow and for helping us here today.
Thanks very much.