The freshly minted Mutinex APAC CEO and former global media agency chief wants the industry to bin large volume media deals and become far more agile in the way that media is transacted, arguing at Cannes in Cairns, Presented by Pinterest, that ‘old world’ media buying practices are no longer fit for a ‘new world’ media environment that is fragmented and caters to “schizophrenic-like” audience behaviour.
Mat Baxter has addressed what he argues is the biggest elephant in the room threatening the effectiveness of the media planning and buying ecosystem – upfront media deals.
In a punchy fireside chat with B&T’s features and analysis editor, Arvind Hickman, Baxter warned that if media agencies and media owners don’t evolve the practice of investing in huge annual media deals and become more fluid and agile in transactions, parts of the industry propped up by large volume deals will not remain sustainable.
“When capability evolves, structure and operations need to evolve with them. So what’s happening in the market right now is we’re getting much better at understanding what drives effectiveness and what doesn’t with a granularity of performance across the media mix.
“If we really want to realise the opportunity to be a much more commercially minded industry, we’ve got to gear ourselves up to trade and operate in a way that allows that to happen. And if you put an old-world structure around New World capabilities, you’re not going to realise the full potential of annual capabilities.
“You can’t evolve all your planning and your data and your analytics capabilities over here and leave all your operational, transactional and immediate partnership structures and contracts over there. It doesn’t make any sense.
“You either catch up and keep pace with what is needed, or you die, it’s as simple as that. If you are not keeping up with the needs and demands of the end user, which in this case is brands and clients, then your future is in peril.”
Baxter is not alone in questioning traditional media buying practices.
On Thursday, Uber ANZ head of advertising sales Michael Levine told the Cannes in Cairns conference that traditional buying models of CPMs that “far too many media agencies have held on to” are killing innovation. Other industry executives discussing Baxter’s fireside after the event have said his views on upfront deals make sense, although it would be a complicated and lengthy transition.
Media buyers and agency chiefs have long argued that buying in bulk allows them to provide clients with more value in the form of cheaper inventory while providing media owners with greater security over annual advertising revenues. However, there has been a gradual trend by media companies to provide greater flexibility and agility, while reducing the friction in how inventory is transacted.
At its upfronts presentation last year, Seven shared details of its Phoenix trading system, which uses inventory optimisation and AI audience prediction engines to deliver guaranteed outcomes.
Media agency holding companies chiefs have previously said they are committing less money upfront and more into floats, where money is held back to strike opportunistic deals throughout the year.
Why upfront deals are flawed
Baxter has an extensive career as a media buyer, strategist and most recently was global CEO of Interpublic agencies Initiative and Huge. Last month he joined Mutinex, which uses marketing mix modelling to help clients make decisions about where to spend their media budgets to get the best return on their investment.
Baxter told a packed house at Hemingway’s Brewery in Cairns the current practice of large upfront commitments is flawed for several reasons.
Firstly, media agencies end up with large volumes of inventory that they need to offload across the year prior to understanding their client’s media requirements.
Secondly, it places greater rigidity in a media ecosystem that has become increasingly fluid and dynamic.
And buying upfront also doesn’t take into account how different media channels are performing in real time.
He explained that when he was a media buyer in the 90s, it was much easier to predict how media channels would perform and buying media in volume upfront made sense back then. For example, TV shows like Seinfeld, the Sunday Movie or The Nanny.
But in today’s environment of fragmented media, declining audiences in certain channels such as linear TV, and changing viewer behaviour in how media is being consumed, a more dynamic and fluid approach to media investment is required.
Baxter is advocating for media investments to be constantly optimised based on what media is working, insights he said that the Mutinex GrowthOS tool provides.
“There (never used to be) the fluidity and a kind of schizophrenic-like behaviour of audiences that we’ve got now across so many different platforms. It’s a much more fluid and unpredictable marketplace,”
“But also we never used to know what was happening until the post-analysis, so I would have to wait a couple of months for my TV ads to run to see how it had performed and by then it is too late to do anything about it. Even if you look at reach and frequency – the currency the media has traded off for years and years – it was only an intermediate measure of performance.
“Now we’ve got systems and abilities to know what’s working and what’s not. If you’ve invested millions into something and know it isn’t performing well and you just sit back and let it continue – is that not an issue?
When asked why there is resistance to bin upfront deals, he said: “Muscle memory.”
“Muscle memory is a really powerful thing. If it was easy to change companies and transport companies, everyone would do it all the time. I know because I’ve done it in the States with Huge, and it was the hardest thing of my entire career.
“This is a small market and a tight market, we all know each other. We used to do business with certain people in a certain way. And those relationships and that muscle memory is just trained and continues. And sometimes you need a circuit breaker.
“Guys, we have got to rip the book up and think fresh about whether we need to adjust some of the ways we think and operate to create that survival for what we all want, which is a great vibrant industry into the future.
He said that each year media agencies are pushing deals harder to the point where it has been “maxed out” and threatens the viability of media owners. But that also provides another problem in which media owners are increasingly dependent on feeding in a shrinking trough.
“If you’re a big legacy media deal person, and you’re still getting dollars through muscle memory in part versus pure performance, then this might be a bit worrying for you,” Baxter said. “But I think the bottom line is media owners have the same ultimate end goal, which is the survival and prospering of brands to make them more commercially successful.”
‘Progressive’ CMOs on board
Baxter said that progressive marketers are already on board with evolving how media is transacted, claiming that Mutinex works with more than 90 brands across the world,
He said that other marketers who resist change “might be scared” to look under the hood and discover which channels are actually working.
“I think there’s a lot of mythology in companies about what works and what doesn’t work. And when you go in and mythbust those mythologies when you use something like GrowthOS that can create some political pain.
Sometimes people have invested very aggressively in certain things because they based off the information that they had, they thought it was very effective but learn that is not actually that effective after all.”
What is clear is that performance has become increasingly important to markets in the current economic climate.
Earlier in the week, the award-winning former Burger King and Dove CMO Fernando Machado advised marketers to make sure they deliver the “rice and beans” – Brazilian food code for traffic and sales – ahead of worrying how much they invest in brand and other areas.
Baxter said there are now the tools to help ensure marketers can always serve up the rice and beans of performance, and that evolution is inevitable.
“The sad thing is, if you look at the categories that are highly disruptive, almost always the highly disruptive category winner is a new industry. Netflix, Uber, Airbnb, you know, they’re all new brands, they’re not legacy brands. They’re completely new entrants. I don’t want that to be our industry. I don’t want the evolution of the industry to be not you remember those things media agencies. The market is evolving with or without, and I‘ve chosen to be with.
“I just hope that others can see that evolution is happening and that people get on board or the future does not look good.”
