It’s going to be an exciting challenge” was my first instinct when I was tasked with transforming Initiative in MENAT. Definitely, there were concerns on my mind; however, the adrenaline rush I experienced overtook any feelings of hesitation.
Naturally, my mind was running a hundred miles an hour and my inner voice was pushing me to take lots of urgent decisions, but I quickly thought to myself: “How often does one get an opportunity to transform an agency?” I needed to reflect and think before taking major actions or making major decisions. In the meantime, the idea was to end each day having taken a couple of good decisions and prevented a couple of bad ones until I had full clarity on what needed to be done, and how.
Perhaps the most immediate thoughts on my mind revolved around the notion of value, and most importantly the role of the media agency within its industry value chain.
In a simplified media planning and buying industry value chain, media agencies sit between the media representatives or sales houses and advertisers or clients, interacting primarily with both these parties. Having said that, we also know that the role of media is to affect consumer behaviours. Therefore, the crux of what we do at media agencies has a direct impact on the behaviours of the end consumer.
There have been multiple developments fuelled by changing consumer behaviour and the impact of data and technology, which are disrupting this industry value chain and adding external pressure on the media agencies. Two developments worth highlighting are:
Consolidation of the supply chain: With the advent of biddable and programmatic media, media owners and reps are now well equipped to sell ad space directly to advertisers.
Content creation is everywhere: Content is being created by multiple players – from traditional creators, all the way to user-generated content (UGC) triggered by brands and end consumers.
Entertaining these thoughts for a couple of days, and with some quick investigation paired with extensive analysis, it became clear that the biggest challenge is: If agencies cannot create enough value within the industry value chain, how will they be entitled to capture value and grow their business?
In theory, the task became clearer: rebuild an optimised agency to enable value creation that facilitates value capture.
Sounds great, but how do we measure value creation?
We look at two important parameters: willingness to pay (WTP) and supplier opportunity cost (SOC). To be able to create higher value, Initiative should be able to increase the customers’ WTP and reduce the company’s SOC.
So, all decisions needed to be taken to affect at least one of these two parameters, and ideally affect both where possible.
Before actioning any big decisions, I looked at the industry’s competitive forces, which showed significant pressure affecting margins negatively, and continues to do so:
Very high intensity of rivalry due to a large number of well-established competitors.
Very high threat of new entrants, since the barriers for entry within our industry are very low – all you need is one big client to start an agency.
Moderate threat of substitutes, most of which are a result of the advancements in data and technology, the increase in media consultancy firms and the establishment of clients’ in-house media teams.
Very high bargaining power of customers, especially given that part of the media industry is a commodity business, and several agencies are in survival mode today. This means agencies are willing to go very aggressive on commercials to win clients’ contracts.
Moderate bargaining power of suppliers, driven by the difference in the agency’s room for negotiation with suppliers based on what tier they belong to in the ecosystem and the media platforms they represent.
It was also clear that this downward trend of margins will continue, so value creation is even more difficult unless the agency can differentiate itself by creating a sustainable competitive advantage in the market through a series of activities, resources and capabilities.
The transformation journey started with my rockstar team crafting a clear vision for Initiative in MENAT, along with putting together a dynamic and actionable plan to achieve this vision.
The 360-degree revamp focused on the six Ps: people, product, partners, process, performance (financials) and profile (PR/reputation). Perhaps most exciting to talk about here are the first three: people, product and partners.
An organisation is an amalgamation of the people who work there. Therefore, people are the most important assets of any company in the service business, especially media agencies. However, they’re also the biggest challenge for agencies, and Initiative was no exception.
A typical agency in the MENA region faces challenges around platform-agnostic talents, irrelevant business structures, limited talent growth and remuneration, and restrictive agility in spirit and behaviour. That is a long list, so I’ll take a step back and break it down.
The challenges stem from resources and structures that have been previously built to answer outdated requirements. The rise of digital media, coupled with the evolution of the data and tech landscape, has transformed the way consumers interact with brands. As a result, clients require channel-agnostic talent at media agencies.
The limitation further lies in the traditionally unrewarding remuneration models of agencies, and their rigidity in constraining entrepreneurial spirits within the corporate world. So, why would the best talents come or stay? This is a challenge I continuously hope to solve.
After careful assessment, the amount of change that was required on this front was massive yet necessary, so we have restructured deeply, including all agency market leaders and all regional leaders across functions (management, strategy, digital, planning, etc.).
To ensure that we mitigate the challenges above, we carefully selected talents based on a five-C framework. I strongly believe that each of these is extremely important:
1. Charisma: strong character and confidence.
2. Capability: the ability to deliver strong results (here comes the skill).
3. Commitment: an entrepreneurial spirit with the dedication to take ownership (here comes the will).
4. Connections: the awareness and ability to build and maintain healthy, genuine stakeholder relationships.
5. Carefrontation: enough maturity and transparency to strike a proper balance between care and confrontation.
As such, our talent base is growing very fast. In addition to our extremely talented and strong existing talents at Initiative, we have already attracted more than 60 new, talented people with diversified skillsets at different levels of seniority and expertise. Not only this, but we are also currently in the process of adding 25 additional members to our team. We’re proud to say we are the only agency in the region that has grown its talent pool by 85 people in the past 18 months.
On the product front, the most important aspect was cascading ‘Velocity Planning’, our global planning framework, into our region. Our route to activating this for brands tracks two complementary tasks: planning media and ideas that adapt to evolving cultural trends; and interpreting and responding to data signals to optimise media delivery.
We had constant training sessions at all levels to ensure that not only our integrated planners, but everyone working at Initiative MENAT is proficient when it comes to applying Velocity Planning, and the bespoke toolkit that supports the delivery of the planning process.
We are very happy with the results, and the best acid test has been the recent pitches we participated in, when we had the highest technical scores against competing agencies.
At Initiative, we are extremely proud to have some of the most trailblazing brands within each industry as our client partners. We have had an impressive record of retaining existing client partnerships, with 58 new partners added to our portfolio in the past 18 months. We are highly committed to further strengthening and growing these partnerships.
Our promises to our partners and potential partners are fivefold:
1. A superior team, with unmatched talent in terms of quality and dedication.
2. A unique combination of global expertise and regional media and consumer understanding.
3. Distinctive proprietary tools that power informed decisions.
4. Optimised and transparent trading, prioritising and securing our clients’ interests.
5. A tried and tested growth partner that is equally responsible with the marketing teams to drive business growth.
As we always like to say, Initiative is not just a media agency, we’re a growth partner. We’re here and ready to support your business’s growth.