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January 24 2023

PHD CEOs describe the lessons of 2022 and the marketing needs of 2023

Perspectives

While 2022 was ‘a case study like no other’, global CEO Philippa Brown is determined to bring sexy back to the industry in 2023 by helping marketers’ real data and commerce needs and growing brand value without solely resorting to short-term tactics.

Philippa Brown, worldwide chief executive officer at PHD and James Hawkins, chief executive officer of PHD Asia Pacific, sat down with Campaign Asia-Pacific to discuss their agency’s performance in 2022.

With increased billings and retention rates, the PHD chief executives credit the agency’s success in growing and retaining business in 2022 to its future-focused client offerings. They also discuss the potential headwinds for the industry in 2023 and why the industry is prepared for any potential challenges.

We have picked out the highlights of the conversation below, edited for brevity and clarity.

PHD Worldwide ranks highly in new business performance and retention rate for the first three quarters of 2022 compared to other global media agencies, according to Comvergence rankings. What is the secret behind your performance?

Philippa Brown, worldwide CEO at PHD

This year, we are at the top of the net new business at over $800 million new business. So brands like Chanel have joined us, and the retention rate is over twice as high as our nearest competitor, which is excellent.

There are several reasons why we have performed so well. We are very clear on our proposition. Our thought leadership comes from planning and comms strategy. Our positioning is helping clients leap forward in creativity, data and tech. Our people are also one of our secret sauces. We interview, acquire and employ people with a PHD mindset like being curious, courageous and collaborative. This plays well with our clients like Chanel, for example. We’re fascinated with how we approach things.

Another reason is our data and tech offering. According to the recent Forrester Wave, OMG is positioned as a leader. One of the reasons for that is our omni capabilities, which is our marketing insight and data platform. Clients like Chanel have bought into that as a platform as they recognise it as one of the best, if not the best, in the market.

We are also helping our clients to rethink their marketing approach along with us. One of my favourite chapters in our book ‘Shift’ is about 15 new marketing roles that clients and their agencies should have. We have been doing a training program internally about new capabilities described in the book.

James Hawkins, CEO of PHD Asia Pacific

We have had a fantastic year with growth, new business, and excellent regional coverage. There were big wins in China and India. Australia continues to be featured highly in the northern New Business League.

When we talk to our clients, the prospects, and the people we are future partnering with, we have been looking at our proposition and what is required of a future-ready agency. They are looking for more thought leadership and guidance, and our proposition is resonating more than ever, which is showing in the new business leads.

Let’s talk about the industry. Like PHD, other holding companies/agencies also enjoyed good business in 2022, posting good quarterly earnings reports. This comes in the face of inflation and economic disruption that have impacted other sectors. Why do you think this is the case?

Brown: It is fascinating. I’m not an economist, but it goes against everything we should see. We still have lots of vacancies, but staff turnover is slowing down. As a group, we feel that quota fall will soften and has softened. As an industry, we will have challenges in the first half of next year, but we will bounce back quickly.

Clients have learned a lot since the last economic downturn when they stopped spending and not investing in their brands by building brand equity and keeping the brand front of mind for consumers. When they returned and spent, they found they were so far behind, and their headstock was much lower. They realised they would spend more than if they had continued during the downturn.

We have seen so many case studies now that clients are saying the opposite entirely. We need to support our brands and people, not the other way around. Looking back on 2023, we will use it as a case study that was like no other.

There will be challenges every year, whether it’s supply chain or inflation, but we are not expecting it to be the worst year or anything like that. That’s different from what our clients are telling us. They want to invest in their brands because they know the evidence is there to support them.

Hawkins: From our perspective here in Asia, as we approach these times of uncertainty, because of the strength of our partnership with our clients, they are asking for greater guidance and greater insight. As a media agency, we have the data points to help reassure them and offer them a route through. What has helped our success is by having a closer, tighter and stronger relationship in these uncertain times with our clients. That is not going to change.

Is the industry in a better place than five years ago? At that time, we saw walled gardens establishing direct relationships with advertisers, consumers’ cord-cutting impacting traditional TV ad buys, adtech platforms offering more data solutions and consultancies encroaching into your turf.

Brown: I have been in the industry for over 30 years and think it is in a healthy place because we have created and developed new capabilities. We have also shifted with the changes in the market as clients are reaching out all the time for us to help with new operating models and how they should be structured for the future.

With the explosion in ecommerce during Covid, we have just launched Transact, our new retail and ecommerce offering, which will be incredibly exciting. We are offering new capabilities that were not there before and what clients need today.

In our recent townhall in Singapore, I told the room that there’s never been a better time to join this industry because of the number of skills and capabilities you will learn.

Hawkins: We are seeing that it is rapidly becoming a desirable industry to get back into. We are seeing that even though we have had a tough time with the ‘Great Resignation’. With more people coming back into our industry, it is an attractive place to come and work in that media world.

Five years later, we see a reversal of fortunes as brands turn to agencies like PHD to tackle new challenges like commerce media and Apple’s ATT crackdown. What questions are you hearing from clients today about first-party data and those selling directly to consumers, and how are you answering them?

Brown: Data privacy and brand safety are at the top of the agenda. For brand safety, clients are still talking to us regarding data privacy. We were talking to our Chanel client the other day, and data privacy is crucial for them.

Brown: Data privacy and brand safety are at the top of the agenda. For brand safety, clients are still talking to us regarding data privacy. We were talking to our Chanel client the other day, and data privacy is crucial for them.

It is not about gathering loads of data to retarget and target against that data, primarily if we still need to implement the proper privacy measures. We have set up privacy councils and work with all the tech companies to ensure the data has been checked. We select the data partners to work with, which is the right way forward.

The critical question is then when what to do with all the data with our Omni and Omni studio. How can we connect and sell more products to our consumers? Our Transact offering is right at the front and centre of that. It will be one of the big things you will see in 2023.

What are your predictions for 2023? Will agencies face reduced marketing budgets from clients if economic conditions worsen?

Brown: We have learned quite a lot about having short-term tactics and forgetting about the brand’s health. Brand investment and investment in brands are still significant. We need to work out the balance between the long and short-term, which is a critical part crucial part of our role. We will not move 100% into short-term tactics because that would be wrong.

Our work with our clients on their new operating models will also be a big focus in 2023, and we are already working on that with some of our big global clients. For the ‘Great Resignation’ that James mentioned, we will have talent return to our industry, mainly because of the tech companies’ issues.

There will be some excellent talent in the market, which will only bolster our offering, which is great because we have needed more staff turnover during Covid. We want to bring, I suppose, the sexiness back into the industry because it is a fantastic and fun industry. It is interesting because you can learn and grow in this industry. 2023 will shine through for us.

 

Article first published by Campaign, here.

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