Dominic Proctor’s current obsession is the reinvention of GroupM, the holding company for all the media agencies of marketing communications conglomerate WPP, of which he is the president. As Proctor puts it, a new volatile digital world is forcing media agencies to rewire themselves. “Our investment priorities have changed. We are now investing in new types of technology, people and data to feed that technology,” he says. Talking about the sweeping changes taking place in the media marketing landscape, Proctor, in an interview with FE Brandwagon, says more of media will be bought programmatically and a lot of the new acquisitions for GroupM will in the area of social, search and analytics. Edited excerpts:
Many of the recent acquisitions by GroupM as well as its competitors have been in the digital space. What really is the big picture?
The GroupM big picture is in line with WPP’s big picture. It is new media in new markets. While not ignoring the old media, it is important to acknowledge that the world is changing, and the focus really is emerging media and emerging markets. There are sweeping changes in the marketing and media landscape. The pace of that change is different in different places, but it is all going in the same direction. Our business and our company have to anticipate some of these changes.
The main area of expansion for us is digital and this is also true globally. We are constantly re-inventing our own company. We are now investing in new types of technology, new types of people and new types of data to feed that technology. GroupM has an army of 25,000 people around the world and we are all marching to a new tune, which is the digital tune. The amount of retraining that it requires and the kind of people that we employ and the kind of technology that we are investing on is quite phenomenal. In India, for instance, the total population is approximately 1500 people. Out of this, 500 are digital specialists. That’s a big change from three years back. There is a significant change in skill sets. To sum it up, we are doing some hiring, some acquisitions and some re-training.
Several new age business models have been spawned by the internet. How has that complicated the business for you?
It does complicate our business a good deal, because you simply cannot predict what happens next. What we need to do is to keep an open mind and constantly keep reinventing the company because the opportunities that are going to confront us are often not known. We have to constantly re-tool the company in terms of people, data and technology in order to anticipate change. If we are not more knowledgeable than our clients, then they may as well do it themselves.
What is the future like for newspaper companies?
Newspapers that are published on paper are certainly challenged. Perhaps they should change the name from “paper” to something else. The word paper is confusing. Content delivered from brands that used to be called newspapers—such content surely has a rosy future. But content that is delivered via a format based on dead trees is challenged. People find things that interest them. And that content is more likely to arrive on a tablet than a piece of paper. India, however, is some years away from this scenario.
It still is a very strong newspaper market. Not in every part of the country though. India is a collection of different countries. The thing is this—even parts of India where newspapers are relatively predominant—publishers will understand that their world will change at some point. The direction of that change is clear. The pace and timing of that change is less clear.
How is native advertising likely to fare in the long term?
Certainly, there is an appetite for native advertising in the current day and age. But I worry that if it becomes too crowded too quickly, then consumers will just reject it. Anyone can see through deceit. Now I believe that there is absolutely a time and a place for commercial messages embedded in media. Bur consumers are smart enough to understand the difference between a message and more brutal propaganda.
How much of media buying is done programmatically?
Ad Week quoted a figure of $21 billion. While programmatic buying is certainly on the rise, it is surprising that it hasn’t become more predominant already. Eventually it will have to be. Transaction is immensely important. The accuracy of the transaction and speed is critical. I think all publishers understand that. In broad terms, digital publishers are adapting very well to programmatic ad buying because it is the closest to their line of business. All media in all markets are realizing the fact that this business will be more automated. The more efficient we can be in the engine room of our business, the more we can invest in the new areas. It will take us to another level in terms of the strategic inputs that we give clients. We embrace programmatic buying.
Does GroupM invest in media platforms? And if so, is there a conflict of interest?
We do invest in some media platforms in some countries. As long as it’s well managed, I don’t see a conflict of interest. For example, we can take a position on a sports event, on behalf of our clients, who can then have access to that sports event—preferential economics with preferential treatment because we have on our own dollar made the decision upfront to invest on that. The key is to be transparent about it.
Does that mean that you could potentially take ownership of a TV channel? Or a new age content company such as BuzzFeed?
Possibly, yes, depending on the country .We already have play in content. For instance, we could import a television format from a different country with the help of advertising. If you have a TV asset like ‘You’ve Got Talent’ and you are working in a country, where the broadcaster doesn’t have that kind of scale to afford that kind of programme, we could help bridge that gap.
The broadcaster might look at the support of a multinational advertiser to help bring that format in. It’s a kind of ‘Back to the future’ scenario because the origins of this business were in the Procter &Gamble soap operas. In many countries, we tie up with television producers and get their content on to broadcast networks. In India, we could be doing some of that, but CVL Srinivas (CEO, GroupM, South Asia) may be better placed to answer that.
Why has WPP decided to ditch open ad exchanges?
We just believe our clients are better served by keeping away from that area. Some issues have been documented about security and other aspects, involving the exchanges. We will just have to wait and watch if our decision has been the right one.
What is the kind of recovery the global ad market is seeing?
A lot of the significant markets are now ahead of the growth that we had originally foreseen. Most people characterise Western Europe as slow, but Germany and the UK have grown significantly. This is in terms of the general economy, the media economy and also GroupM within the media economy. In the media economy, there is significant growth in the US as well. The overall global picture for media is ahead of the global picture for the economy in general. In India, we have revised our estimates for the annual estimated ad expenditure growth for 2014, from 11.6% to 12.5%.
GroupM has witnessed tremendous momentum in the business for several years now and not just last year. We are developing our market share, but just as importantly, we are looking at developing a broader range of services in addition to a deeper volume of billings.
What share of your global revenues comes from Asia Pacific?
I won’t be specific but it is over 20%. And it is only set to grow visibly. It goes back to my ‘new media—new markets’ strategy. We are open to acquisitions. And our acquisitions will be in line with the global strategy. Over the next few years, we will certainly be increasing our presence in social, in search, in data analytics and in sports marketing.
Your market share continues to be higher in India than in China. Why?
Our market share in India is one of the highest anywhere in the world. China is a different kind of market. The overall share of multinational agencies in China is much lower. In India, most of the media is transacted through big media groups. You have a significant independent local operator in the form of Madison. Aside from that, there are few other significant players. Recma, the only global measurement tool that there is, says that our market share in India is 42%.
Our global market share is less than 30%. I am happy to report that our revenues are growing very well, reflecting not just increase in market share but a growth in the services that we have to offer. We are growing far ahead of the market.