As the leaders of the country’s biggest media agency, Josh Dovey and Marco Santos talk to Peta Krost Maunder about the future of media agencies.
Media Agencies in South Africa have to think smart to ensure they have the competitive edge in this tough industry.
Some have increased the services offered or become more specialised. But OMD has literally taken their strategy into Africa.
Over time they have handpicked the best media agencies in strategic countries on the continent and partnered with these companies before ultimately acquiring a majority shareholding in them.
“We are building the powerhouse of media in Africa,” says Marco Santos, OMD South Africa’s new managing director. “People generally divide South Africa and the rest of Africa. The reality is that we are one company that operates over multiple territories and we dominate in all the large economies on the continent.”
Their decision to do this was made over a decade ago but it has been a slow and meticulous process, says Josh Dovey, chief executive of Omnicom Media Group South Africa. OMD is a subsidiary of Omnicom.
“We reached a point when we had a client in every category and needed to decide how we could grow our business. Marco and I have shared a vision for Africa for many years. Our mantra has been ‘new technology and new geography’,” says Dovey.
They recently finalised their purchase of an equity stake in their Nigerian affiliate. “Our vision has just come true,” says Dovey. “When I first went up to Lagos 12 years ago to meet our now partners, everyone thought I was insane. Truth is, the blueprint was staring at us.”
He says he learnt from history, looking at the United Kingdom where media independents got to a point where they may have been the biggest and best media agency in London but if they couldn’t help their clients in France, Germany and the rest of Europe, they wouldn’t get on the shortlists.
“Clients were no longer pitching nationally, but pan-regionally. And that is what is happening here. Any multinational will pitch on a sub-Saharan basis and increasingly so will the large South African companies.
“Where are Distell and Standard Bank going to grow their business? North. Consider that in Nigeria, there are 145 million people with over
60 million just in Lagos. So, you have to have a local expert on the ground there. The only people who really know how to plan that media are people who have been there for the last 12 years and who have consistently been the top media agency. This company has a 28% market share and they are our partners there. So, we offer the number one agency in southern Africa and now the largest in West Africa. We will do a deal with our Kenyan affiliate, OMD Saracen, this year. They are the best in Kenya.”
Dovey explains that their partners on the continent do not service multiple agencies – they are only OMD-registered trading entities and do business exclusively for OMD. “We found that we needed this type of relationship. It’s what our clients want because of confidentiality needs and corporate governance,” says Dovey.
Santos explains that OMD South Africa will manage the business and make sure it is up to OMD standard so clients have one port of call, a single invoice and no rate of exchange variance, but a far bigger footprint.
The OMD network also runs into Angola, Mozambique, Tanzania and Uganda. “We have the most robust network,” says Dovey. “We don’t own all our licensed affiliates yet but we are in the process of taking a shareholding or buying into these companies. We have 10 registered entities and our total staff complement in Africa is around 400 people. Nigeria alone accounts for 100.
“It is beneficial to us because it is what our clients want. So the benefit to us is that we attract those big advertisers that want to be on the continent because it is the world’s last untapped market. Africa is the new frontier for growth.”
He explains that when they work in other African countries, they tap into the local company’s expertise. “In terms of systems, we get our techies in to co-ordinate back-office stuff, like setting up our booking and planning systems. OMD relies on the media craft skills of those on the ground combined with our team (in South Africa) for the overlay of pan-regional skills.”
The group is determined to be at the forefront of technology in its work. “In the same way as the telephonist leapfrogged copper wires, so smartphones will leapfrog the necessity for big broadband cables running into homes and offices,” says Dovey. “Digital will be the portal through which all media is conceived in the future.”
Having said that, the pair dismisses the sentiment that newspapers are dying. “It is just the delivery mechanism that is changing. And where the delivery mechanism meets the consumers’ eyeballs, there will always be opportunities for the customer. And the change is happening a whole lot quicker than people realise.”
Relationship with global bosses
In this and many other areas, the global giants are dictating to Africa. But so many of the local agencies, which sold to international networks, complain about this relationship.
“We are not persecuted by global entitles – it is the same as everywhere else.” When local agency owners sell, they make a lot of money, he says. The benefit to them is that they can tell global clients they are part of that network and can handle their business in other countries. The benefit to the global company is that they have a local company,” Dovey says. “There is a mutuality to this.”
He understands the second-generation management may get frustrated with the degree of reporting that they have to do to the global centre. “When a global company buys a local one, they want you to do well. They are buying the goodwill and the talent because there is no product, it is about the people.”
He says some global companies can be “monolithic and micro-managed”, but he hasn’t experienced this. “If you take the king’s shilling, you need to do the king’s bidding,” he says. Because those globals have sunk a huge amount into the South African market, they want to ensure that their business is run properly and the financials come in on time, so they are aware of what is happening, says Dovey. “The fact is, you can be a little local boutique agency, and there are some terrific ones, but you are severely limited in your growth potential unless you tie up with an international.”
Attracting Generation Y
Dovey and Santos disagree with the common sentiment in the industry that finding young talent is tough. Many of OMD’s top guns are in their mid-30s.
“The average age of our management committee is 37,” says Santos, who is 33.
“Let’s be honest, though, the intention of everyone who goes to the AAA School and Vega is not to get into media numbers. They want the glamour of advertising,” says Dovey. “We need to change this perception because media is interesting and glamorous in its own way.”
Dovey says he gets an average of five CVs a day. “Mostly, if they made the effort to find out about us, we always respond.”
OMD has an internship programme, with five or six interns training at any given time. And if they fit, they are given an opportunity for employment. And it is not predominantly those who study media that are taken on, says Dovey. “They need to be enthusiastic about this work. We take people who have read physics and higher maths. It is about desire, the will to work and be proactive. They also need to be able to talk to clients, be credible and enjoy the buzz of being part of us.”
Santos agrees. “Ultimately, you are either going to crack it or not as you have to deliver.”
Santos says it is vital to make the young talent feel a part of the business, understand how it is doing and what is required.
He says media agencies are now leading creative in strategic intent. “Also, we are now building synergies between all the relevant properties because media used to just be buying and planning, and creative agencies would come up with the fantastic TV commercial. Media agencies would just go into SABC and book stuff and that’s it. Those days are gone. That’s what I mean about media being glamorous because we are now getting involved in those different elements.”
Dovey adds, “Media is sexy because it is all about money and I think money is sexy.”
Talking about money, Dovey says the supposed oncoming recession is not visible in marketing spend. “In terms of advertising, the total budget spent by clients rose between nine and 11% last year and it looks very similar to that this year. Clients are selling stuff so there is budget.
“We are feeling we are in a market coming out of a recession, not going into one,” says Dovey. “‘Adland’ is the first to die and generally the first to be reignited.
“Our own billing is up 17% this year to date, year on year. If we are 25% of the market, we tend to reflect the average so if you looked at total money spent between May last year and this year, you would probably see an increase of between12% and 15%.”
Dovey explains that ad spend is not necessarily going into the same platforms it always has. “Print media is in a slow decline and all you can do with that now is manage a declining market. It is still a huge medium in terms of money but printed newspapers are not the way forward. TV is winning. Digital is winning. News format and digital outdoor is winning.”
And clearly, from their perspective, media agencies are too.
This story was first published in the September 2014 issue of The Media magazine.