“Our fundamental objective is that our customers do well and we help them sell more.” (Oscar Dorda, CEO, PHD Spain)
Shortly after Oscar Dorda arrived at PHD Spain as CEO in April 2016, the agency won the global Volkswagen account, which is one of the largest advertisers in the world. Given its size, the staff of PHD Spain has multiplied in recent months to exceed 130 employees.
PHD had a great growth in 2016, coinciding with the award of the Volkswagen account. How did you close 2017?
The impact of the Volkswagen account was in 2017, which is when we started working with the whole group in Spain. Mostly, the account is managed from Barcelona, where we have grown exponentially in structure, equipment, resources. We have gone from having six people there to a team of over 65.
I imagine that integrating all these new employees will have been a challenge.
Starting with a new client is always a challenge and it is not easy. It has been almost a start-up model. We became almost 70 employees in the Barcelona office, with many people coming from different agencies. We tried to have a balance between internal profiles, people who had already been working with the account so as not to start from scratch and profiles that came from other experiences. The idea was to make a cultural mix that will help us to be agile and make a plug and play so everything will work from the first minute. I think in the end we got it.
I suppose that now it will be necessary to consolidate all this new business. What forecasts do you manage for this year in the agency?
We cannot remain alone in consolidating the new business. The needs of the group, like any company, are to grow. And more when the market is growing in terms of investment. 2017 has been to consolidate it and to make the best management of this account and of all the others. Let’s not forget there are other clients that we must continue to give exactly the same level of service they have had until now.
The situation of PHD is a bit exceptional, in a context in which large groups of agencies are seeing their income stagnant. Why do you think this situation is occurring?
The issue is to have the sufficient level to compete with new actors and add value to the advertiser where everything is integrated. Give solutions that give meaning to all disciplines.
At the investment level, we know the figures of media are controlled. There is a significant amount going to supports that are not currently well measured, such as programmatic, search, social. The growth is surely greater. It is a reality we will continue living.
It is a problem there are actions that are not being measured – we do not know the real dimension of the sector.
It is a challenge that we have as an industry. Trying to have a more complete and updated view of what is happening in terms of investment. We had very well measured television, the press, outside; but now in digital it is not easy. It is difficult for any system to record and allocate an investment to all this. Maybe the solution has to be more declarative.
The big groups are undertaking a transformation in their structures, simplifying them. Are there more synergies with OMD?
With OMD, although we belong to the same group, we are competitors in the market. PHD has its results plan for each year, just as OMD has its own. It is true that what is good for OMD or PHD is good for the Group. It is complicated to have synergies because we each have our own areas. Where we come together and if we promote synergies is in Omnicom Media Group, in another series of transversal areas. But everything that has to do with customer service, where we can differentiate ourselves, we each have in-house. We are simplifying in the sense that we do not have to rely on other units of the group for certain things. Everything is in the agency. Here we have the team of insights, programmatic, performance; and in OMD the same thing happens.
The two largest advertisers in the world – Procter & Gamble and Unilever – boast about cutting back on agencies. Is this right?
I am a clear advocate of the role that agencies have in the market, the value we bring and the effect that our work has on the advertiser’s business results. Our fundamental objective is that our clients do well and we help them sell more. It is true that there are disciplines that an advertiser can decide to do internally and remove it from the agency world. But what they are saving in agencies does not mean they are cutting budgets. It is being destined to other things. The agencies have to be able to be relevant in that change of work model of some advertisers. Otherwise, we will lose part of the client’s management.
Indeed, it seems that more and more large advertisers are internally managing certain agency services, especially in the digital field. Do you see this happening in Spain? Are you worried about the agencies?
In our case it is not happening. The value of the agency is not purely transactional. In addition to optimising purchases, to automate systems, to offer the best prices, there is a qualitative part of capacity to help the client unblock communication problems, to be relevant to consumers and how this has an impact on the result of your business. An advertiser can hardly do all this internally. It would have to have a very large structure, be very complex and surely expensive. The role of the agency is essential for the advertiser’s business results to be as expected. Although it is true that the services provided by the agencies to the advertiser must be improved. What was previously only buying media to insert spots, wedges or fences, for digital transformation, now we enter into other types of communication projects trying to be part of the advertiser’s marketing team.
Why has the programmatic purchase only just started here in Spain?
The Spanish market is less mature in programmatic and in other disciplines than the Anglo-Saxon markets. This delays the diversion of investments to programmatic. We are also a slightly different country in terms of media consumption. Spain is a country with a lot of television, although it is changing. Neither do we have to fall into dangerous fashions. I firmly believe that programmatic is a tool for communication and the generation of spectacular results. But it must be well valued to determine what percentage of the advertiser’s investment should go there, based on its objectives, and measured well. However, the programmatic has grown a lot in the last two years. We are starting to have technology that allows us to programmatically buy in secure environments.
Advertisers are concerned with some aspects of digital advertising, namely visibility, fraud, adblockers, etc. Is this ecosystem not mature?
All this forces us to improve in technologies that guarantee we control these situations and that the current business structures are modified. In our case, we are giving the advertisers enough guarantees that any problems appearing are resolved with different suppliers. What we cannot allow is that all this modifies the need for an advertiser to be digital. As for the adblocks, I think you have to fine-tune the messages that are made and the type of communication. When a person bombards you with messages that do not contribute anything, it ends up saturated. But this is the same in any medium. In the case of television, the adblock is to change the channel or get up from the chair when there are blocks of many advertisements, or hire TV OTT. It is a question of making advertising more intelligent, personalised and relevant to the user.
Related to this, many forums talk about the end of the advertising interruption model, which has prevailed until now. What do you think?
The television model in Spain is what it is. We still like to consume it. I believe that in television itself they are the first to know that the market is changing. Television knows that it needs to find solutions to the new needs of the advertisers, basically, by a change of the consumers. The moment we have a park of televisions connected with interesting content, advertising can be more interactive and relevant. It cannot be that the audience – with the differences of interests that exist – sees the same advertising content. Technically, this will end up being possible.
Speaking of television, there is a television duopoly in Spain, a situation that also occurs in the digital section, with Google and Facebook. How does this situation of concentration affect the media agencies? Are you victims or responsible?
Duopoly situations, in general, are not good. They give a lot of power to certain agents. It is a market situation that has been around for a long time and has not been able to change. Perhaps whoever ends up doing more damage to the television duopoly ends up being digital with an even stronger duopoly? In the case of Google and Facebook we run the risk that they can become advertising agencies because of the disintermediation that they make possible. We must know how to defend ourselves, by the ability we have to have everything connected, to have the full outline of all communication thanks to analytics. Although technology also shows us that something that is essential today, until another comes and changes the landscape. For example, Amazon is entering and doing it right. As I said at the beginning, what you have to achieve thanks to technology and contribution models, is to understand very well what each one contributes to the result of the business and how some actions influence others.