When Human Capital Is Most Important

Advertising is a people’s business. While it is imperative for all in the industry to put a premium on people, it is interesting to see what happens when an agency takes its strongest asset ‘people’ and creates a model intrinsic to it, in its structure, business, profitability and even philosophy. IPG’s creative agency FCB, is investing its top dollar in doing exactly that. In a year, when global advertising business has been marred by undercutting, controversies around workforce inclusion and competition from new quarters, the agency’s strategy was deeply rooted in its human capital.

Three years ago, when Carter Murray, among the youngest global CEOs, had taken charge, everything had become about high energy and kicking up the momentum. Soon after, when the agency added Susan Credle to its leadership as its chief creative officer, FCB first begun its narrative around a ‘never-finished’ philosophy. FCB’s never-finished story has many chapters, and for Murray, one of the most powerful chapters is around its people. “There are several ways in which an agency can speak about itself. When Susan came along, we did significant work on who we are as we wanted to distil it all down into a single thought,” recalls Murray.

The FCB logo, unfinished in its design, was the starting point. The ‘never-finished’ approach is seen in many aspects — the forward looking mentality of a startup; or the way in which a traditional business keeps the best of past, understands the present, rejects what is not working and moves ahead in smart ways. “Some of the best ideas in the creative process do not come from an epiphany, but grows from something interesting that has been done over time. It is about constantly learning and never thinking that you are finished. That is precisely the way talent and people behave,” says Murray.

Driven Workforce
With Murray at the helm, FCB has seen some change in its leadership team, with addition of high-calibre talent, while pursuing a people-first approach across most of its operations, including India. The strategy must be working. FCB has won more than 200 pitches globally and celebrated its best Cannes Lions International Festival of Creativity in 2016. A significant part of this can be credited to the infusion of fresh blood. The more important question however is, where the next burst of energy will come from?

“When an agency immerses its culture around its talent and its work, it can keep people motivated to look forward to work every day. That is when constant action and new ideas come forth. If the conversation changes to percentage points because the honeymoon period is over and numbers have to be delivered, it can destroy everything. We have worked out the values that define us as a company, and when we stick to them, we set the foundation right to stay vital for a long time,” says Murray.

Acquisition Shy
While aggressive on the people front, FCB has followed a modest acquisition strategy unlike its other sibling IPG Media brands that made acquisitions in data, mobile and content marketing, among others. This, despite acquisitions serving it well in the past. For instance, FCB Inferno in London has been a consecutive two-year Grand Prix winner at Cannes Lions.

Murray has three reasons for FCB not making any recent acquisitions. “Strategically, our focus is on organic growth as opposed to acquired growth. Our people can help us re-energise the company, building on our massive existing potential in the various markets we are in. We have great clients and infrastructure that need a little bit of focus and fresh perspective,” says Murray.

The second reason is pure caution. Citing the fact that some industry acquisitions have not panned out as expected, Murray says that sometimes the success of an acquisition ended with the earn-out period. “We put in extra thought and diligence on acquisitions because we have a responsibility towards shareholders and our employees. We have pulled out from advanced discussions, if we did not see the right cultural and business fit,” he says.

Murray’s third argument is about investing more in the company’s own human capital than on acquisitions.

The Big Guns
In line with its people-first approach, the agency has really upped its investment in preparing itself for the digital transformation and innovation that some of its clients are seeking. “We are a 143-year-old agency that is three years old. Our approach was never to hire a chief digital officer because everything is digital today. I also believe that the expectation of a CEO knowing it all, is passé,” says Murray.

Murray decided to create a team with agency’s top leaders including its chief strategy officer, chief client officer (CCO) and vice-chairman along with two digital experts, and give them a budget and mandate to assess where the agency was placed in its top markets. “The team worked tirelessly for 18 months and created a plan that outlined what decisions we should take and what changes we should make. Largely, such exercises are done at holding company level, but we did this at an agency level,” he says.

The multi-tiered app-roach of equipping people to function in a new world, while adding senior hands to the agency, has impacted India as well. With Rohit Ohri as CEO and Swati Bhattacharya as CCO for FCB Ulka, the agency has begun action at various counts including doing some interesting work.

Self-admittedly, Murray has made it a point to visit India more than his global counterparts from other agencies. “India is a very important market from the perspective of a global economy and from what we can achieve there. India has scale, some of our biggest clients, and an able leadership; everyone feels the difference. I intend to stay close to ensure that we now focus on delivering on our expectations from India,” states Murray.

Three Qs to Carter Murray on ad agencies evolving business structures

Much about creative agencies has changed in the last year, except their business model. Does it worry you that that aspect of the business has not evolved or reinvented itself?
What worries me more is that we are partner to our clients and we need to do that right. How we get paid for it and be profitable is a concern, but at another level. The first concern is around the right creative and brand strategy. When we get that right, clients will pay for it. The scope-fee model, where you scope the work you are doing and charge a fair fee, works in multiple industries. The real concern there, is at the industry level. As an industry, we have to respect what we do, despite the competitiveness. The kind of undercutting that we are seeing is bad for everyone because it is not sustainable. It is very worrying.

The industry has always been cutthroat. What has aggravated this in recent times?
I think a perfect storm is brewing. There is pressure on the bottomline and topline. People in holding companies are agreeing to financial deals that are very hard to compete against and make money. While procurement itself can be healthy, we are seeing unhealthy procurement. Quality is a challenge. In that environment, we have to focus on being the best. We have to have the best people, so we can create the best brand strategies and best creative products. We can then grow our share, and choose clients that are like-minded, and who will pay a decent price for us to have a positive impact on their brands and businesses.

While media, creative and digital agencies have been competing with each other, now even the likes of Accenture are calling themselves agencies. Where do you see the next competition coming from?
You have to agree that it has never been more exciting to be in advertising. We are pitching and winning; it is interesting to focus on strategy and creative for clients. That remains our competitive advantage. We drive a client’s business, operating from strong bedrock that can deliver everything from advertising, design, social media and media strategies. We are diving further into getting that right and that revolves around human capital. That is where we are investing to build our company.

noor.warsia@digitalmarket.asia; @NFWarsia