Healthy paranoia: Mark Patterson on GroupM at 10

The terms disruption and evolution have been so overused that they are almost a cliché to describe the world in which GroupM and its five brands—Mindshare, MediaCom, MEC, Maxus and Essence, the youngest sibling—play. Yet there are few industries as impacted by the changes in technology and consumer behaviours, as well as the diversity of Asian markets, as the media industry. So, in many ways, GroupM’s story of ambitious growth and solidity almost belies the churning waters in which it operates and the intense rate at which the media landscape is evolving.

Now, at 10, and with Mindshare approaching its 20-year anniversary, the WPP business is undergoing the most comprehensive internal review in its history. Mark Patterson, CEO Asia-Pacific and chairman China at GroupM, is part of the senior management team evaluating business models and structures, with newly appointed global CEO Kelly Clarke. In this interview, at GroupM’s Hong Kong offices, Patterson analyses the changes in the client business and what’s next for GroupM. 

Atifa Silk: Where is GroupM at, 10 years on?

Mark Patterson: We’re still a young company by lots of standards. Around us, we have businesses that are also young—Facebook, Google and, in China, Alibaba, Tencent and Baidu—that are demonstrating unprecedented scale and scope of change. The group structure allows us to consolidate and centralise key services, platforms and tools, as well as consolidate trading volume. It allows the agency businesses to have their own cultures and points of difference within the group family. Currently we are in the process of taking a step back and looking at that and rephrasing our own way of operating. We took a decision to look at the assets, products and services we need to develop and create for the next five years. In particular, around data technology, what do you build, buy or rent and the pros and cons. That review is now in process so we equip ourselves structurally internally as best as we can, and based on the needs of clients for the next few years.

Atifa Silk: How do you see the role of GroupM evolving?

Mark Patterson: The role for GroupM is to ultimately deliver advantage to our clients through the agencies. GroupM is a client-facing brand and the clients understand that. They have expectations of what GroupM brings to the agencies they work with and we have to continually reinforce what that is and help bring new products and services, particularly if you’re going to invest in data and technology. That’s an expensive business and you want to do it well once. You don’t want to be replicating it five times across the group, so the strategy is one-voice trading using our scale for our clients’ advantage and also one-voice technology. Ultimately, everything we do has to bring some advantage to our clients because we’re a client business. Clearly within that, there has to be an advantage for our people.

I take the view that the region works for the markets; they’ve got to pay for us. They pay a tax and we are as good as the success of the individual markets rolled up. Fundamentally, my role is to try and get things moving faster in the right areas. The regional is there to help put some extra bit of weight on the accelerator because it all comes back to this need to move that speed. And, the role is to help get the right balance on the urgent and the important, because markets are very close to focusing on the urgent and you’re focusing on the important for the next year and the year after. So try and work in partnership with them that way. 

Atifa Silk: With Mindshare turning 20, how has the media agency business changed?

Mark Patterson: We’ve seen media agencies come of age ahead of our expectations, not just in terms of scale, billings and financial metrics, but the type of work that they do. Media agencies are full-service businesses these days, using an old nomenclature. If you pick up a current pitch presentation, which is the classic view to encapsulate the great work you do, and if you de-branded it and look at it, you’d see it as part McKinsey, part Deloitte, part IBM, part Ogilvy. As an industry, what we deliver to clients now is quite broad in terms of the full spectrum of services and capabilities, although clearly some networks have developed faster than others. There is that constant need to reappraise and reinvent. We have a healthy paranoia that gives us energy to constantly review, change and continually stretch ourselves. But change can be daunting. The type of people that we’ve nurtured, developed and attracted to our business are by nature resilient, quick and adaptive, and in Asia there is generally a positive, can-do attitude. All of that combined gives us an underlying sense of speed and momentum, which is essential if you’re going to have any chance of succeeding. 

You combine [performance measurement data] with the ability to target in a very precise way and it’s business nirvana. It’s exactly what we’ve been striving for.

Atifa Silk: So what’s around the corner?

Mark Patterson: It’s getting harder to predict what’s going to happen. Right now, we can’t see what’s around the corner. It’s that context that makes it an amazing industry to work in. Most of us are not in it for the moment, but we’re in it for the perpetual challenge of change. The scale and nature of it is going to take us by surprise and so that sort of future readiness is something we have to have. Some of it you can manage and some of it you’re going to have to react to. Just recently, the world’s largest ad agency in one of the world’s biggest ad markets, Dentsu, was exposed for systemic over-charging, which could have significant ripple effects in the world’s advertising markets. You have the world’s fastest growing media owner, Facebook, uncovering a significant issue with its key advertising product and inconsistencies in average viewing time. These things have ripple effects and you don’t know what’s around the corner. Clearly, they were both rolling around the heightened issue of the relationships between clients and agencies.

Atifa Silk: What are some of the challenges around clients?

Mark Patterson: It’s tempting to generalise about clients. The reality is that clients’ expectations of agencies are much broader in Asia, compared to Europe or the US, where they can be more homogenous. Australia is slightly different, but in the majority of markets the client base is so broad that what client A wants, needs and expects from its agency is fundamentally different to what clients B, C, D and E will require. One of the challenges of agencies is catering for all those different needs, so it’s impossible to generalise about clients because some clients see you as a true, trusted partner and adviser and an extension of their marketing department, while some see you purely as a commodity supplier of a service. One of the big differences of Asia is that while the whole industry has developed, clients have developed at vastly different speeds for vastly different reasons and we have to manage a more eclectic range of needs which then has implications on how you structure your business, the type of talent, products and services you need in varying degrees in different markets. Diversity is the essence of the work in this region, which provides not only big challenges but also opportunities so you have to be nimble, agile and adaptive in order to succeed. 

Atifa Silk: Is digital diversity only set to grow in Asia?

Mark Patterson: Digital diversity is massive; we’ve got some markets that are well into double-digit figures for percentage of spend and billings on digital, while others—such as India—are at the lower end of that spectrum. We believe it’s going to be a world of apps rather than channels. When we started our business we were talking about people consumed to channels, and TV was their main media. With the digital age, people moved to sites and now it’s about apps as your way in to media and that’s whether you’re communicating, sharing, buying, selling, or doing your financial transactions. A recent McKinsey report looked at six emerging markets in the world, including China, India and Pakistan, and it noted that of the 80 percent of people who have a smartphone, only 55 percent had a bank account. So the development of payment facility via mobile is going to stimulate economic growth in those markets because of your ability to transact and do financial transactions through your smart phone. It will make buying and managing your finances easier, adding to economic growth. If you look at what’s happened in China, half of ecommerce is mobile now, and that has massive implications for all of our clients across all those markets—more quickly in some emerging markets than you otherwise might expect. It changes consumer behaviour in every shape possible, and how we work with our clients on that. 

Atifa Silk: What opportunities does that data bring?

Mark Patterson: We’re going to have more data that can attribute a transaction or a revenue event back to consumers’ media consumption and their consumption of marketing messages. So the line that we’re able to draw between transaction and outcome with clients looking at our ability to influence it is narrowing. It’s always been the biggest challenge of what we do—our action and the response. So we see a move to a performance-marketing-led world. Performance will mean different things for different clients, all of whom want and expect different outcomes from what we do—be it sales and dollars, or brand building and loyalty. It can be measured. It’s about understanding what influences the other, and you have the data and scale available to make that decision. You combine that with the ability to target in a very precise way and it’s business nirvana. It’s exactly what we’ve been striving for. That’s why we should be really optimistic about what we’re doing because as it gets more complex clients are going to need businesses like ours to help them through it. We should see that complexity as a positive because who else is going to be able to embrace it and work it out? Now some players—I can name the two major global digital organisations—they can see A-to-Z. But it’s a narrow view within their walled garden and their own media world. That can’t be the answer. The breadth is as important as the depth, and we have the ability to make recommendations to clients.

Atifa Silk: Why is the digital coalition important?

Mark Patterson: As Martin [Sorrell] says, “You shouldn’t be marking your own homework.” You’ve got this headlong dash to digital, but people start to put brakes on it. It’s incumbent on us as the leader in our industry to lead the charge on trying to make sure our industry is equipped, so the coalition is important in this respect and we take that responsibility seriously. You can argue we have an interest in levelling the playing fields and encouraging a more diverse set of media options. That’s in the interest of clients as well. We’ve got no issue as long as there is clear data that is objective and we can explain the return on investment that we can get or a client can get.

Atifa Silk: Who is winning in the battle of Chinese brands vs MNCs?

Mark Patterson: We’ve got an interesting dynamic now where you’ve got faster growth in many categories among local Chinese brands than their multinational counterparts. In many categories, local players are competing, taking share from multinationals. So the competitive landscape is changing. Domestic brands understand distribution and that China’s a vast country, as well as local sensitivities and tastes. You can argue that they, potentially, have the nimbleness and adaptability that global companies do not. We have a foot in both camps, so to speak, which is the right balance. What we are also seeing in China is domestic brands starting to structure and behave in ways that reflect what has traditionally been reflected in multinational brands, whether it’s in terms of compliance or the way they organise themselves. We see opportunity as they adapt marketing techniques and processes for when they’re appointing agencies or evaluating agencies and start to become more like multinationals. 

Rebate is not a dirty word. You sit down and negotiate a contract and one of the things you talk about with clients are rebates and what the arrangement is going to be on rebates.

Atifa Silk: Trust is an industry issue. What are some of the changes you made in Australia?

Mark Patterson: It was in 2014, and one of the things we did was to call in a third-party auditor to help us create the process and systems to ensure that we didn’t trip ourselves up again. So we sought external help and we built our own internal compliance team whose job is to ensure that. We changed a lot of processes and systems and we have a permanent team in place to ensure that we self-regulate, self-police, and they come back in every six months. It’s raising importance and tightening the degree of urgency around these sorts of things. For us, it was a few bad apples rather than systemic. As media agencies, you could argue we’re the most audited businesses around. So you’ve got that constant sort of vigilance. And then, when you identify something there’s zero tolerance.

Atifa Silk: Rebates are part of business in Asia. How do you approach the issue with clients?

Mark Patterson: Rebate is not a dirty word. You sit down and negotiate a contract and one of the things you talk about with clients are rebates and what the arrangement is going to be on rebates. Again, it comes back to that point of diverse clients in this region. They’re all contractual, but we have a very different approach to some clients. It’s the full spectrum, which you hardly get in North America, but it’s all about open dialogue and discussion.

Atifa Silk: Where can Asia play a global role?

Mark Patterson: Everybody talks about the importance of Asia, but the reality is that most of the agency groups are led out of New York or London, maybe Paris. The world should look at a third global hub in Asia, given the big, growing brands—whether they are Japanese, Korea, Chinese, or Indian—that are based here. Asia should be a global hub for clients, commerce, analytics or technology development. It should be a hub for resources and talent, because that’s where the growth is: China, India, Indonesia, Vietnam, the Philippines and Pakistan. The other big population shift in the next 10 years is the growth in young Muslims and women. We’re talking billions of people that represent massive growth: young, mobile-savvy, and increasingly brand-savvy. The ability to transact on the phone and the rise of women totally changes the dynamic at a macro level that we’ve got to start to work to. You’re seeing some client structures that are now centres of global excellence based in Asia. You’ve seen that clients have directed their A-class talent to the region, their global A-class talent, as part of their career progression, particularly to China.