Agency Report Card 2021: Wunderman Thompson

Wunderman Thompson, born three years ago from the amalgamation of two agencies, no longer considers itself to be an agency. It believes it has carved out a new category, referring to itself as a “growth company” that is part agency, part consultancy and part technology business. But it also recognises that this proposition is confusing to clients, and requires a more integrated structure. New leader Ewen Sturgeon, who was appointed to oversee both APAC and EMEA in September following the departure of Annette Male, believes he is well-positioned to remove the roadblocks at Wunderman Thompson and drive a more connected, healthier business. But did the agency’s focus on fewer, more strategic bets come at a cost?

Category 2021 2020 Business B- B- Innovation B B- DEI and sustainability B- B- Creativity and effectiveness B- C+ Management B B Read about the grading methodology

Business (B-)

With a proposition that is focused on growing clients, Wunderman Thompson measures its success on its ability to extend its scope of work with existing clients rather than win new business. The agency’s incremental revenue, which refers to an increase in scopes of work with existing clients, shot up seven-fold in 2021 compared to the prior year—but it's important to note this is from a low base.

In addition, new business accounted for a larger proportion of Wunderman Thompson’s revenue in 2021—from just over a tenth in 2020 to nearly one-fifth—which leadership is not happy about. The aim is to reduce new business to less than 10% of revenue in 2022 by growing organic. Despite new business accounting for more of its business, the agency slipped to fourth place in R3’s New Business League for creative agencies in December 2021, from third place the prior year.

Nevertheless, its total net sales grew year-on-year, and a good chunk of its incremental revenue came from commerce and technology projects. It also displayed a good geographic spread for its new business wins. 

Leadership made some headway in making Wunderman Thompson a healthier business in 2021, when one of its biggest frailties has been a huge volume of clients that make up a small portion of revenue. Sturgeon intensified the business’ strategy to have fewer conversations with more strategic clients by culling the dead weight, which resulted in a lower retention rate from 80% to 75%.

But repositioning the business and aggressively honing its proposition came at a cost. As it moved away from traditional marketing and focused on offering clients strategic solutions that harness its data and tech capabilities, it ended up alienating some clients, losing a handful of its top 100 strategic clients.

Leadership suggests the agency’s biggest challenge is the complexity of what it offers, and the fact that brands are often not organised in a way to action its solutions. This also impacts its pitch-win rate, which remained under 70% in 2021. Wunderman Thompson expects its rate to improve as it gets better at integrating its skills and pitching its proposition.

And since connecting APAC and EMEA, it is beginning to see some opportunities flow between the two regions, as clients in India and Japan look to grow their business in EMEA. Since this is in early stages, it will be a bigger consideration for 2022.

While we can see that Wunderman Thompson is heading in the right direction, it seems 2021 was a year of suffering some short-term pain to make the business healthier and more sustainable in the long-run. It remains a B-.

Innovation (B)

Wunderman Thompson has a long list of new innovations for 2021, developed both globally and within APAC. 

The tool that it says helped it differentiate and drive new business was its ‘Inspire’ study, which uses brand effectiveness data from WPP’s two flagship brand-tracking products, BrandZ and BAV, to measure how inspiration drives growth for brands. Using insights from the study, the agency built tools that benchmark brands at a market level, not just identifying their overall inspirational potential, but also dissecting how they inspire consumers differently from their competitors. The global tool is not dissimilar to the way other agencies measure motivation or meaningful brands—and in many ways it feels like a tool that harks back to the fundamentals of advertising—but if it's helping win new business and open up more strategic conversations, we can’t argue with that.

Another new approach that isn’t unique to Wunderman Thompson is its ‘Collision’ methodology, in which it brings together staff with different skill sets and capabilities, like data scientists and creatives, to devise solutions for clients. Leadership tells us the approach has helped remove siloes created during the merger and showcase the breadth of its capabilities to clients who might be confused about what the agency offers. Meanwhile, a new ‘Fire’ methodology, which takes an outcomes-based approach to creative ideation, drove some of its most awarded work from 2021.

The agency built up an APAC presence of its marketing-automation practice, headquartered out of Copenhagen, the fastest-growing practice in the agency worldwide. This was responsible for key regional wins including McDonald’s, Nestle and Ikea.

On top of this, Wunderman Thompson had two key APAC innovations. A solution developed out of Thailand enables brands to better activate their CRM systems in Line to drive increased customer loyalty. It delivered sales uplift and increased engagement for two major brands. A healthcare professional CRM tool, in which Wunderman Thompson conducts an audit of a brand’s current CRM efforts, identifies gaps and opportunities for improvement and creates a personalised strategy. This found use with a major pharmaceutical client and is being eyed for expansion into other regions.

The above is a small snapshot of a much more comprehensive list of innovations either born in APAC or adapted to the region. And while not all of them are unique, we are provided with plenty of evidence of how they contributed towards new business wins or growth for clients. For this reason, Wunderman Thompson is upgraded to a B in this area.

As Wunderman Thompson focused on innovations and business practices that it believed best fit its growth strategy, it made the decision to sell Shanghai-based field marketing agency Always back to its original owner.

DEI and sustainability (B-)

After establishing global and regional diversity and inclusion councils in 2020, the following year was about actioning on insights gathered from internal inclusion surveys.

A new allyship programme was designed to teach employees how to stand up for others. It was first rolled out to the APAC leadership team, following which champions were trained in each market to run their own programme. Disability-inclusive marketing guidelines were introduced to ensure the work the agency produces is fully representative and accessible for the disability community. And several employee resource groups were established around different areas of DEI. On top of these APAC initiatives, several new market-specific initiatives launched, such as ‘WT Ladybirds’, an employee resource group connecting female staff in India; the introduction of Reconciliation Action Plans (RAPs) in Australia to provide tangible and substantive benefits for Aboriginal and Torres Strait Islander peoples; and mental health programmes in Bangladesh and Singapore.

Last year, Wunderman Thompson’s leaders told us they wanted to increase the proportion of women in leadership roles. While at a regional level the agency is close to achieving an even gender split in its leadership and senior roles, it is honest in saying it has work to do in improving its gender split in certain markets or areas of the business. So it is setting up a dashboard to track job applicants and new hires and identify opportunities for increasing diversity. While this is an initiative for 2022, we’re really pleased to see a data-driven, transparent approach to DEI. 

Gender will continue to be a key focus for 2022, but the agency is in the process of setting DEI goals in relation to supporting mental health and wellbeing, and tracking diversity goals across gender, race and ethnicity for the region. 

While Wunderman Thompson was able to outline several plans to implement sustainability initiatives, these too are set to launch in 2022. The agency is building a practice in advising marketers on how to fulfil their own sustainable initiatives across the region and the world, and plans to conduct audits as part of its plans to reach net zero carbon emissions in its business by 2025 and across its value chain by 2030. Wunderman Thompson will also be establishing sustainability criteria on which it selects suppliers, leases premises and chooses resources for its offices. We’re pleased to see the agency putting plans in place, even if there wasn’t any action in 2021. However, we have significant concerns about its sustainability goals clashing with some of the clients the agency works with, like oil and gas giant Shell. While it’s certainly not the only agency to work with fossil-fuel companies, we can’t commend its plans to establish sustainability criteria on its suppliers while it continues to be paid by the oil and gas industry.

Wunderman Thompson gets one mark for sustainability and five marks for progressing DEI. We’d like to see more focus on improving other diversity metrics beyond gender, but we’re pleased to see this is on the cards for 2022.

Creativity and effectiveness (B-)

In our 2020 report card for Wunderman Thompson, we noted that we saw scant few examples of its creative skills while it focused on boosting its commerce and technology capabilities. In 2021, it did a better job of injecting creativity in its tech solutions. Its standout campaign, which is confidential, centred around a social commerce experience for a beauty brand in China. It combined interactive design with a sophisticated tech solution, and delivered impressive conversions and sales. 

Another piece of work that delivered both results and societal value was a purpose campaign for Thai milk brand Dutch Mill Group, which dedicated its campaign budget and marketing expertise to drive sales for more than 200 pandemic-hit mom-and-pop shops. The agency geo-targeted ads to promote shops that were within a 1 km-radius of the consumer, delivering a commendable sales uplift for the shops. A shining example of how brands should approach purpose, the campaign was Ad Nut’s top ad of the year. It’s worth noting the geotargeting strategy isn’t unique—it’s a similar approach taken by Wavemaker and Ogilvy’s award-winning ‘Not just a Cadbury ad’ 2020 campaign. But that doesn’t change the outcome.

Wunderman Thompson also collected a good amount of award metal including 34 Grand Prix, gold, or best-in-class awards, predominantly for its 2020 Thai Airways campaign ‘Stay home miles exchange’. We believe the agency demonstrated creative innovation and effective results in 2021, and have upgraded it to a B-.

Management (B)

There was a major management shift at Wunderman Thompson in 2021, when Campaign revealed in September that APAC CEO Annette Male was moving to Facebook. Shortly after, the agency decided to eliminate its APAC and EMEA regional leadership positions in favour of one CEO of International. The role was taken up by EMEA CEO Ewen Sturgeon, who has had oversight of the two regions in past businesses. Sturgeon believes this shift has fostered stronger connections internally, resulting in the scaling of tools, and allowing it to expand its remit with clients from APAC to EMEA, and vice versa. We mentioned in the business section how this could benefit the business in 2022. With two vast and diverse regions under his purview, Sturgeon says his diary “is a car crash”. But we can see that he’s driven the cross-pollination of products in a short period of time, so we’re so far convinced of the business case for his expanded remit. 

Sturgeon also built on Male’s work manoeuvring the business into a healthier position by focusing on fewer, more strategic bets. The strategy to cull Wunderman Thompson’s reams of marginal clients is as much a business decision as it is a people one. It will free up staff to work on more interesting and valuable work, which Sturgeon hopes will make Wunderman Thompson a more attractive employer. Perhaps this is another initiative to impact 2022, because 2021 staff churn increased 10%. This varied significantly by market, with China experiencing some of the highest staff churn—a trend we have seen in other agencies—while Thailand, the Philippines, India and especially Japan were on the lower end. We’re told the biggest reason staff left Wunderman Thompson in 2021 is career development, so it has promised significant investment in improving its development opportunities—consistently across APAC—in 2022.

A new business development introduced by Sturgeon in 2021 involved making regional leaders billable on clients. He claims this keeps leaders plugged into what clients want. It’s the first time we’ve come across this kind of fee structure in agencies, and we’re intrigued to see what comes from it.

Importantly, Wunderman Thompson’s management are clear about their weak spots and have a strategy to improve on them. We value this transparent and open approach to leadership. So while churn increased and business performance was mixed, we believe Wunderman Thompson laid the groundwork to be a better business in the long-run. Management retains its B score.

Branding and communications 40% Commerce and technology 23% CX 18% CRM 11% Data and analytics 8% Inspiration and brand building Operationalising data and technology for actionability by brands Connected commerce Dell Technologies Estee Lauder Ford Globe Telecom HSBC Johnson & Johnson Microsoft Nestle Unicharm Unilever A: In 2021, we delivered client growth with effectiveness and impact, pushed creativity where it matters the most, and above all, centred purpose, people and community in all that we do.