About a year ago the Singapore marketing community was alerted to an ambitious new project: The Marketing Group, a loose merger of four disparate marketing services agencies, was listed on the junior Swedish stock exchange First North under the ticker TMG.
Get rich quick for marketers
The merger, or the ‘agglomeration’ as its founders called it, made quite a few waves, not only because three out of the four agencies were Singapore based, but even more because of the audacious claims that surrounded the listing. As it turned out, quite a few marketing entrepreneurs in Singapore had been approached before the listing took place, to take part in what not only had been presented as a ‘get rich quick scheme for agencies’, but was also claimed to be the new agency model that would offer a welcome alternative to getting bought by one of the big agency groups. (Disclosure: the author was one of those who were initially approached, and respectfully declined.)
What was so special about TMG? According to its founders, TMG would cross the divide between the large, complacent, global agency networks like WPP and Publicis on one side, and the struggling, scale starved little minions that make up the rest of us. Rather than creating another marketing group that bundles forces and exploits synergies between its members, TMG was supposed to become a loose alliance that offered scale by virtue of presenting everyone as part of one holding company. Risk was to be spread by leaving every component member to their own devices. Easy does it, and Bob’s your Uncle.
The scheme was thought up by two active wheelers and dealers, Jeremy Harbour and Callum Laing, operating under the Unity Group moniker. One of the reasons the proposition was compelling for some was that it required no money upfront, at least not from the participating entrepreneurs. All Unity Group required for their services was 20% of each participant’s share capital. Nothing else would change: Unity guaranteed to set up a Board that would not to meddle with the respective businesses. Everybody would keep on doing what they were doing at the time – the only difference being, they’d become a lot richer.
Mission not accomplished
It was not to be. Fast forward to more than a year after the listing. TMG’s share price, briefly living up to the hype and rising to no fewer than nine times its IPO price, just as quickly fell back to a fraction of its initial value and has been lingering under water ever since. The non-meddling Board has been completely replaced by a meddling one, a CEO has been appointed with actual experience in the business, and he and the various entrepreneurs are frantically trying to align their businesses to actually create synergies. In the meantime TMG is increasingly starting to look like a middling miniature version of the big agency groups, having found the worst of both worlds with the disadvantage of the traditional agency model but minus the advantage of scale.
What Does It All Mean?
So far, so unsurprising. So why all the fuss? Thing is, all of this is happening in the midst of a sector wide discussion, and a lot of uncertainty about the current agency model. Marketing is undergoing a sea change: brand focus is losing its top position to customer focus; technology is becoming rapidly more important, data drives it all, and the big agency networks have a lot of trouble adjusting to the new circumstances, even to the point of fearing for their lives in the long run.
TMG can be ranked as one of many attempts to find an answer to this. But its initial motives were purely financial and the failure of this attempt cannot be seen as indicative for future agency models. TMG was basically built on appearances not reality. The stock exchange rewards scale in that it prefers large companies over small ones; but TMG is not a large company; it is by definition (the ‘agglomeration model’) a collection of small companies left to their own device. So in presenting itself a larger entity it’s basically selling something to the investors that doesn’t really exist, hoping the market won’t figure it out. Unfortunately, the market always does.
But the discussion is a real one. The industry, after all these years, is still woefully unprepared for an era in which data rule the day and marketing technology (‘martech’) becomes a primary driving factor.
In a way, the TMG case did provide a clue about how this affects people. When it was launched, its founders and one of their more outspoken entrepreneurs made bold claims that this was the best thing in marketing since sliced bread. The trade press duly reported on these claims with articles and interview, but the really telling part sits in the comments sections of these posts. Most comments have three things in common: they are negative in the extreme; they are emotional, often very personal; and they are anonymous.
Disagreeing in public is one thing, but you generally want to keep it civil. To do it in the open, under one’s own name, is the minimum rule to observe. Instead, TMG commentators tend to hide behind monikers like ‘Broken Reed’ and ‘Last Laugh’ (creatives?), or – wait for this – ‘Anonymous’ (non-creatives, probably).
The comments, and the desire of their originators to remain anonymous, are a tell-tale sign that some nerve has been touched. The industry is ripe for change, but no-one seems to know from which direction the change will come. Fear is rife.
How the War Was Won
TMG’s approach may not be the way to win the war, but in a way one has to commend Messrs Harbour and Laing for at least trying, even if it started out as a form of get-rich-quick-scheme. It’s interesting to note that at least three of the four original entrepreneurs represent alternative agency models.
So what will win the war? One clue would be the direction, or directions, from which the current agency scene is threatened. As usual, it comes down to either bottom up, or top down.
From below, change is coming from lots of alternative agency models, all of whom lack scale but show immense promise. Some are technology driven, some are simply digital natives (which is often mistaken for technology driven, but isn’t). Others seek their solution in innovative partnership models, with telcos or internet giants. One consequence of this is that the agency world is starting to see much more variety in agency types. That variety may be there to stay, or it may be weeded out by survival of the fittest. Either way, it’s one possibility for the type of disruption that is taking place.
From above, the threat is coming from both the aforementioned internet giants, and the large consultancies. Together the likes of Facebook and Google command the brunt of valuable online inventory, and their power is a threat to the agency world in itself. What will happen if they seriously start buying agency groups? Or will they just let them wither on the stem and erode their business? If it comes to buying agencies, the likes of Accenture and Deloitte have already started. System Integrators (SIs), as they’re also called, are strong in technology. But SIs don’t speak the language of marketing (yet). The fact that hey now have started to buy agencies shows they realise this. Agencies, on the other hand, are strong on marketing but weak, very weak on tech. And to that they haven’t really found an answer yet. Those who doubt that last statement just have to look at the way Programmatic was handled by the collective agency world, and the chaos it has resulted in.
Against the odds
And TMG itself? Have we seen the end of it? On the surface, the odds are not good. Reputations have been damaged; the stock has gone through wild gyrations and is haunted by the fact that it has lost 95% of its highest value. The current management is restructuring the company, and getting rid of recently acquired deadwood. But Adam Graham, the newish CEO, has his work cut out for him. He’s the man in the hot seat, who has to prove that the company is worth at least an order of magnitude more than people think it is now. He has no money in the bank and is herding cats – and a bunch of wildly different cats at that. Whichever way you look at it, it’s not going to be easy.
But then again, it never is. Like your Mother always said, don’t believe anyone who promises easy riches. Even if your world is being disrupted and it’s a way to kickstart change.
Publisher: Jos. Birken