'NewCo' will scrap regional offices: Castree

In a move that underscores its commitment to cost efficiency, the new GroupM agency formed by MEC and Maxus will remove existing regional management structures.  MEC global CEO Tim Castree, who is heading up the new company, confirmed the news to Campaign after unveiling its new global structure internally to employees. 

In practical terms, it means that NewCo will not be run at the APAC, EMEA or LATAM levels. Instead, the firm’s top eight global markets that compromise 70 percent of its revenues will report directly to Castree. 

In Asia-Pacific, that means key markets like China, Australia and India will all report directly to New York. (Canada, Germany, Italy, UK and the US are the others).

Remaining markets will be organized into sub-hubs, like Southeast Asia, but will be led by an existing country market leader in that region to avoid overhead management costs.

“We absolutely want to reorient the business as such that we eliminate the idea of overhead roles versus revenue roles.  I hate this idea of overhead,” Castree said.  “We’re retooling the way we think about the business where it’s really about clients and markets. That’s the job. It’s not about people like me.”

But it’s the regional overhead roles that have been made redundant. The current APAC management will be dissolved as MEC regional chief executive Peter Vogel will move on to a soon to be announced new role and Maxus’ APAC CEO Ajit Varghese will take up a global position in London as president of market development.  

Maxus Asia-Pacific CEO Ajit Varghese

 

Aside from providing stronger regional cohesiveness and oversight of agencies, regional management can serve a number of roles, from providing operational support to helping win new business.  But Castree wants NewCo to be much more singularly focused on client needs.

“In many ways we felt the regional structure as it was, as talented and hardworking and amazing as all those folks are, it was a bit of a hybrid role that didn’t exactly mirror clients or markets,” Castree said.

Regional clients will continue to be serviced by strategically-located client-based hubs as they are now, Castree noted.  And NewCo will be able to lean on GroupM at the regional level for operational support.

Remaining regional capabilities will now either move in-market or within client solutions groups, said Castree, who also unveiled a new centralized global services structure made up of three groups:

• Client solutions – to service multi-market and global clients in an expanded and better connected network of clients hubs
• Market development  – a smaller team of five or six people to support hub markets with capabilities like new business pitching
• Global practice leads – such as chief product and strategy officers

Key announcements: no ‘M’ for NewCo’

While about half of NewCo’s 54 local market leaders have been named, Castree expects to announce another 20 leaders in the coming weeks, including those for Australia and India.  The vast majority of other Asia-Pacific country leaders have already been named (see links below).

Castree said he should be able to reveal the agency’s new name and positioning by the end of August, which will be a welcome relief for those tired of referring to ‘NewCo’.  Unlike Mindshare, Mediacom, MEC and Maxus, the new agency will not begin with the letter ‘M’.

“We thought it was time to unleash ourselves from the burden of only ‘M’ words,” Castree quipped.  Like Essence, which will take on a greater role within GroupM, Castree said with NewCo “we didn’t feel we needed to have an ‘M’ name to be intimately connected to GroupM’s scale and businesses.”

The need to differentiate

Dwelling on a new name may sound trite, but as those in the brand business know, it reflects larger aims and motivations. 

NewCo wants to stand out from other GroupM brands and understandably so. Some have criticized GroupM as a structure built around resolving client conflicts and leveraging scale at the expense of fostering unique agency cultures.

“Differentiation within the portfolio is absolutely a driver of this strategy behind the merger of MEC and the build-out of Essence,” Castree noted.

The issue is coming more clearly into focus now that Omnicom Media Group is looking to grow Hearts & Science, the highly-distinctive customer data-driven agency, within its portfolio.

MEC is still smarting from the loss of the multi-billion AT&T account to Hearts in the US in 2016, prior to Castree’s leadership.

Without sugar-coating what a big loss it was, Castree says it may end up being a gift. 

“I’m not saying that it’s the only thing that contributed to this but it definitely spurred us to act more quickly” Castree said, noting how the pace of change has picked up under new GroupM CEO Kelly Clark.

NewCo’s special sauce

Where NewCo wants to differentiate itself is around customer journey understanding and influence, building around MEC’s Momentum tool. Castree dubs it a “hero product” for helping to simplify and organize a clutter of capabilities for clients from ecommerce performance to AI to programmatic.

In a clear continuation of work done at MEC, Castree is most excited about plugging their considerable purchase journey know-how into GroupM’s [m]Platform, scaling audience-specific targeting in a much larger connected data ecosystem.

While some may site this focus as evidence of an MEC takeover of Maxus, Castree refutes this, citing the degree of Maxus representation in NewCo globally, yet he’s not willing to let those criticisms ruin his customer journey vision for NewCo either.

“It happens to be a great product,” he reasoned. “It’d be pretty stupid of me to ignore it just because of the optics.”