Simplification, responsibility, automation: GroupM’s approach to a changing market
- April 24, 2023
GroupM is entering an increasingly complicated upfront market this year with a simplified approach to investment.
The world’s largest media buyer further consolidated its portfolio when it merged Essence with MediaCom last year, relaunching it as EssenceMediacom in January. The merger, in addition to dropping the global CEO role at out-of-home agency Kinetic, was part of global CEO Christian Juhl’s strategy to simplify GroupM’s sprawling and siloed offerings.
“And a lot of it, to be honest, was quite internal looking as well,” says GroupM global head of investment Andrew Meaden. “It wasn’t really in the best interest of what clients might want.”
Meaden, who has been with GroupM since 2000 when he joined as CEO of Mindshare Japan, has been leading investment globally since January 2020. It’s been a period of evolution under Juhl, as GroupM’s strategy adapts to a post-pandemic world.
Simplification within GroupM is a direct result of media fragmentation and its impact on investment strategies. Take Kinetic, which the group will integrate closely with its central investment team.
“We had this legacy structure where a lot of the big holding groups have an outdoor specialist,” Meaden says. “It shouldn’t be like, you have an outdoor budget. You should just have a budget, and where best is it to deploy that money for clients?”
With fewer doors to enter, clients also get easier agency relationships to navigate. “They don’t need to worry about another brand. It’s cleaner and easier to deal with,” Meaden says.
In that sense, bringing together Essence and Mediacom was a logical move because they have “quite contrasting and suitable strengths,” he adds. Clients no longer have to work with more than one agency to get the best of programmatic and linear investment.
While Meaden doesn’t hint at any other major consolidations across the portfolio to come, GroupM is “constantly” looking at ways to simplify for clients.
“A lot of the holding companies, the structures and the way they are set up have become very, very complex …. And we think that clients are not really interested in that,” he said. “They want solutions. They want the easiest way of going to market.”
Bringing programmatic and linear investment teams together is not a new strategy, but it’s one better suited to a market where viewership happens across screens. Meaden is bullish on programmatic as it “brings so much more effectiveness to our clients” through the ability to optimize using real-time data and technology.
But adoption in the premium video space, particularly in CTV, still faces barriers from clients and content owners who worry about lack of transparency and the so-called “ad tech tax.”
“It’s still something of a black box in that sense,” Meaden says. “If you talk to senior clients, they are still very concerned about the money they are paying for technology, where their advertising appears, whether programmatic is safe, all that stuff.”
This hesitation led GroupM to launch a premium marketplace to unify programmatic buying across inventory from display to CTV, supported by cross-platform measurement standards. Operating its own programmatic marketplace allows GroupM to collect a “very clear, disclosed, auditable technology cost” from vendors, Meaden says.
“It’s very clear to them what’s being charged to the client, and then 100% of the actual media money goes back to the vendor,” he explains. “It’s a really good place for the vendors to maximize how they’re selling. And it means clients are not overpaying for technology, and [they know] where their media is appearing and so on.”
Managing the marketplace also creates more opportunity to innovate on behalf of clients and “ensures that things like our win rates when we buy are much higher, which in turn reduces media pricing and so on,” he adds.
Fluid buying and alternative measurement
Despite the rise of biddable media, Meaden still believes that big clients will always want to leverage their scale to lock in pricing advantages in advance, especially on premium supply.
“I don’t think it’s going to be as set in stone as the linear upfronts are at the moment, but I think there’s a value [in upfront buying], certainly,” he says.
Media consolidation, new streaming offerings and new currencies and measurement partners are also forcing change to the decades-old buying market. As linear TV viewership declines, streaming services are pitching ad-supported offerings with lighter ad loads — translating to less available supply for marketers.
As a result, GroupM has been encouraging clients to evolve their thinking from striving to decrease CPMs to measuring things such as engagement and attention and emphasizing quality.
“We often have a challenge where traditional owners will look expensive on a cost rank when you compare them to social media, and clients don’t understand it,” Meaden says. “But when you look at all of the benefits you get from high quality content … that really has been undersold.”
“Maybe you reach people fewer times, but in a more effective way,” he adds. “ When you explain it to clients like that, they get it.”
Getting clients to evolve decades-old buying frameworks is difficult, because they often benchmark against legacy pricing on a yearly basis. Such a structural overhaul during a time of economic uncertainty is also unlikely.
As a result, Meaden says clients are “still early in the game” in testing new currencies and expects many to use them in parallel with legacy offerings this year.
“At some point, it will start flipping. It will have to, because it won’t make sense anymore just to be completely focused on ratings as they get smaller and more fragmented,” he adds.
A macro push to bring ESG closer to business operations has put “responsible investment” at the core of GroupM’s strategy.
Launched two years ago, GroupM’s Responsible Investment Framework is built on five pillars: brand (and public) safety; inclusive representation; ethical use of data and AI; investment in responsible journalism and hard news; and decarbonizing the media supply chain by 2030.
Since its launch, the framework has led to the creation of another global framework to reduce carbon in media campaigns and a tool to help brands invest in quality news journalism. Its next project is to work with Scope3 to assess the emissions impact of its supply path efforts.
Responsible investment is not just a draw for clients, who increasingly want to be better corporate citizens, but for talent. “Obviously we are a young business and we’ve got a lot of young people, so in that sense, there’s a lot of enthusiasm,” Meaden says.
While these offerings may seem to cost more on paper, particularly when it comes to minority-owned media, Meaden again says it depends how you value it.
“The engagement with those audiences and what they think about the brands is really positive. There is a clear economic yield that you get back from that,” he says.
Automation and offshoring
Like most holding companies, GroupM is looking at both automation and offshoring to mitigate costs while providing always-on client service. Digital media is a focus as it requires a “huge amount of repetitive work,” Meaden says. GroupM also offshores “a very large amount” of its biddable buying to hubs in Colombia, Delhi, India and Central Europe.
“We can have very high quality, university-educated talent in those markets,” Meaden says. “We effectively pay more than the going rate, so we’re a good employer to work for, but the savings we can then pass on to clients are still very significant.” He added that staff in those markets typically have lower churn rates.
As a result, markets that “benefit” from the support of offshore hubs, such as the U.S. or the U.K., can employ more experienced, senior people who might stick around longer.
“The industry has had a challenge … where [we] employ these brilliant graduates out of college and … they end up working spreadsheets. We can give them much more interesting roles, which I think keeps them in the industry and keeps them excited.”