ME­DIA’S OR­CHES­TRAL MA­NOEU­VRES

Hearts & Science’s Scott Hage­dorn on the need to play the con­duc­tor

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“We took ev­ery­thing we had built and then fo­cused it specif­i­cally on Proc­ter & Gam­ble”

Scott Hage­dorn comes from a fam­ily of in­ven­tors and en­trepreneurs. His Linkedin page is il­lus­trated with a de­sign of one of his grand­fa­ther’s patents from 1947, a bed­cover clamp to hold a mattress in place. His fa­ther’s claim to fame is that, as a banker, he helped to fund the orig­i­nal World Wrestling Foun­da­tion.

The younger Hage­dorn al­ready looks to have se­cured his place in ad­ver­tis­ing his­tory as the man who in­vented Hearts & Science, a new breed of me­dia agency fit for a dig­i­tal world of datadriven mar­ket­ing and per­son­al­i­sa­tion.

His agency has had a dream start, win­ning $6bn of busi­ness, in­clud­ing Proc­ter & Gam­ble as its first client in the US in De­cem­ber 2015 and AT&T in Au­gust 2016. These brands have bought into Hage­dorn’s be­lief that cus­tomer re­la­tion­ship man­age­ment skills are now the key to mak­ing me­dia work.

“We live in an era where CRM as a prac­tice has col­lided with ad­dress­able me­dia,” he ex­plains. “We need to bring a Crm-ori­ented mind­set into the me­dia space.”

The Om­ni­com shop suf­fered a set­back this spring when it failed to win any of P&G’S busi­ness in a re­view across north­ern Europe, in­clud­ing the UK, but it is still the envy of most other big me­dia agen­cies. Ar­guably its suc­cess has prompted WPP to merge MEC, which lost AT&T, with Maxus and to try to turn dig­i­tal agency Essence into a ri­val to Hearts & Science.

The past 18 months have been “great and kinda hec­tic,” Hage­dorn says, fresh from win­ning two golds in the Me­dia Lions at Cannes for “Brad­shaw Su­per Bowl stain” for P&G’S Tide.

It is not just build­ing a new agency from scratch and hir­ing 800 peo­ple that have been hec­tic. Hage­dorn thinks the me­dia busi­ness is go­ing through the big­gest change in 15 years, since dig­i­tal ad­ver­tis­ing first went main­stream. “It’s chang­ing seis­mi­cally,” he de­clares.

The global me­dia agen­cies of the past decade have been built on plan­ning and buy­ing ser­vices. He says they now need to fo­cus more broadly on ser­vices and tech­nol­ogy in­fra­struc­ture and “the or­ches­tra­tion” of those com­plex parts.

Or­ches­tra­tion mat­ters be­cause most mar­keters now have their own data man­age­ment plat­form (DMP), need their sys­tems to plug into the rest of the dig­i­tal me­dia sup­ply chain and want dy­namic cre­ative that can be per­son­alised and dis­trib­uted at scale, he says.

If Hage­dorn’s ri­vals are play­ing catch-up, it’s be­cause he says he “spent five years con­ceiv­ing the idea” of his agency be­fore win­ning P&G.

He founded An­nalect, Om­ni­com Me­dia Group’s data busi­ness, in 2010 and while run­ning it he be­gan to re­alise the com­pelling logic of bring­ing data and me­dia to­gether at speed and scale with tech smarts.

“Hearts & Science is a weaponised ver­sion of An­nalect,” Hage­dorn says. “We took ev­ery­thing we’d built and then fo­cused it specif­i­cally on P&G.”

Even his early ca­reer looks like it was a prepa­ra­tion for Hearts & Science. When he did his de­gree at the Univer­sity of Florida in the early 1990s, Hage­dorn ma­jored in ad­ver­tis­ing and his mi­nors were in an­thro­pol­ogy and com­puter science. His agency now sits at the nexus of those three in­ter­ests.

Hage­dorn says he has built Hearts & Science on five tenets:

the need for agility, com­bin­ing strate­gic think­ing with mar­ket­ing science,

us­ing in­tel­li­gent scale, rather than “rate-based” buy­ing clout, to un­lock tech­nol­ogy ben­e­fits from dig­i­tal me­dia own­ers,

open stan­dards and trans­parency that en­able Hearts & Science’s sys­tems to work with a client’s tech­nol­ogy and data stack, rather than the agency hav­ing a closed “black box”,

• in­quis­i­tive­ness in in­ter­ro­gat­ing data and the broader dig­i­tal ecosys­tem.

His anal­y­sis of how me­dia agen­cies must evolve is rooted in a be­lief that clients’ needs have changed. Mar­keters are tak­ing more con­trol of their tech­nol­ogy and data, and agen­cies should help them do it, Hage­dorn says.

“Most of the other me­dia agen­cies have black-box op­er­at­ing sys­tems and we think those are ar­chaic be­cause they can’t adapt to the chang­ing pace of the en­vi­ron­ment,” he ex­plains. “I would say 75% or so of our clients now have their own ad tech stack. You have to be able to adapt how your agency works around your client’s tech­nol­ogy in­vest­ment. If you have an op­er­at­ing sys­tem within your agency that is a closed one, you are in­stantly non­op­er­a­ble with your clients.”

The role of the or­ches­tra­tor is now vi­tal in this more com­plex world, where cre­ative, data, an­a­lyt­ics, e-com­merce, CRM and me­dia need to be co­or­di­nated. But Hage­dorn thinks me­dia agen­cies are not guar­an­teed to be wield­ing the ba­ton.

“It’s up for grabs,” Hage­dorn warns, sug­gest­ing cre­ative agen­cies or even con­sult­ing firms could also be the or­ches­tra­tor. How­ever, he thinks talk of con­sul­tants en­ter­ing the sec­tor is more hype than re­al­ity, not least be­cause the fees in me­dia are lower than in con­sult­ing.

As for in­quis­i­tive­ness, he be­lieves there are still flaws in the dig­i­tal me­dia sup­ply chain that must be in­ves­ti­gated, es­pe­cially in on­line video, which he calls a “per­fect storm”.

“We have con­cerns about how Nielsen tracks video and con­tent con­sump­tion,” he says. “We think there could be a 40% out­age with mo­bile,” mean­ing that a lot of view­ing, par­tic­u­larly by young peo­ple who have given up on lin­ear TV, is not be­ing tracked prop­erly.

He is im­pa­tient about the slow pace of cre­ative change. “We’re still try­ing to force-fit ‘legacy’ TV into mo­bile,” he says, be­moan­ing how con­sumers are forced to view 15- or 30-sec­ond ads be­fore the video con­tent they want to watch. “It’s mak­ing con­sumers mad.” There’s a “huge op­por­tu­nity” to do it bet­ter, he adds.

Hage­dorn’s strate­gic vi­sion, com­bined with his un­der­stand­ing of the minu­tiae of dig­i­tal ad­ver­tis­ing and data, has im­pressed clients.

Gerry D’an­gelo, global me­dia di­rec­tor at P&G, says: “Scott is fairly unique as a me­dia agency chief ex­ec­u­tive in that he is as com­fort­able get­ting into the de­tails as he is of­fer­ing a strate­gic per­spec­tive.” Michael Kas­san, chair­man of Me­di­alink, which ran the AT&T pitch, says: “Scott is a maths man who re­ally gets strat­egy and un­der­stands client ser­vice. He is also sur­pris­ingly self-ef­fac­ing.”

Hage­dorn ran PHD in the US for two years be­fore found­ing An­nalect, and Mike Cooper, global chief ex­ec­u­tive of PHD, says his abil­ity to strad­dle cre­ativ­ity and tech­nol­ogy – the art and the science – is a ma­jor as­set.

“He is a guy who un­der­stands the tech­nol­ogy and the data but, most un­usu­ally, he knows how to be a cre­ative thinker in that en­vi­ron­ment,” Cooper says. “He is also very good at get­ting his team on-side. that’s prob­a­bly the qual­ity you need most if you’re run­ning one of the global net­works.”

Fresh think­ing and tal­ent

Peo­ple skills are im­por­tant be­cause build­ing a new agency re­quires fresh think­ing and tal­ent. Hage­dorn had a small team of only “about five or ten” peo­ple who worked on the P&G pitch. After that, he staffed up with a 50:50 mix of in­ter­nal and ex­ter­nal re­cruits. How­ever, the AT&T win meant he had to re­cruit heav­ily out­side Om­ni­com.

A lot of new hires have come from what he calls “the ad tech com­mu­nity” and, im­por­tantly, CRM shops such as Wun­der­man and Merkle.

“We find it eas­ier to train the CRM re­sources on me­dia than it is to train me­dia re­sources on CRM,” Hage­dorn says, ex­plain­ing why he has brought in tal­ent from out­side me­dia agen­cies.

Hearts & Science is head­quar­tered in its own of­fice in New York, rather than with an­other Om­ni­com me­dia shop, be­cause Hage­dorn felt it was im­por­tant for the agency’s cul­ture.

There is a sec­ond New York of­fice, in­side sis­ter cre­ative shop BBDO, to han­dle AT&T. Hearts & Science has also ex­panded to other US cities and nine more coun­tries, in­clud­ing Mex­ico, Canada, Ja­pan and the UK.

Om­ni­com an­nounced the launch of Hearts & Science in Lon­don, un­der the lead­er­ship of Frances Ral­ston-good, last Septem­ber and the UK agency has kept a low pro­file as it pinned its hopes on win­ning P&G.

Now Hage­dorn and Ral­ston-good, who also used to work at PHD, need a new plan. How­ever, Hearts & Science al­ready has a dozen UK clients, in­clud­ing Ama­zon Prime, Not On The High Street and Yakult.

Ral­ston-good, sit­ting along­side Hage­dorn, is bullish, say­ing many of her clients “have been hun­gry” for help on “this or­ches­tra­tion piece”, par­tic­u­larly when it comes to e-com­merce. “It’s al­most like the mar­ket has an un­met need,” she says.

The his­tory of Hearts & Science might have been dif­fer­ent if Om­ni­com, which wanted a third me­dia net­work to sit along­side OMD and PHD, hadn’t lost out to WPP in the race to buy Essence in Oc­to­ber 2015. But there is a sense he was itch­ing to build his own agency as he re­calls how “I put my ca­reer on the line” at An­nalect by per­suad­ing Om­ni­com to in­vest $20m in cre­at­ing its own DMP five years ago. That gave Om­ni­com a huge pool of au­di­ence data for his CRM peo­ple to use to this day, he says.

Some in­dus­try crit­ics won­der if the agency is all it is cracked up to be. “Hearts and Sav­ings” is one unkind nick­name – coined be­cause some ri­vals think pric­ing is al­ways a fac­tor.

Hage­dorn ad­mits there have been teething prob­lems with some “ex­e­cu­tional” prob­lems for clients although the num­ber of mis­takes does not run into dou­ble fig­ures.

Kas­san thinks Hearts & Science is a gen­uine pioneer: “The con­cept of art and science com­ing to­gether is an idea that was long over­due. As we say in the en­ter­tain­ment busi­ness, Hearts & Science is not a one-trick pony. It has legs.”

Now Hage­dorn must prove can re­tain clients and win more new busi­ness. He does not men­tion AT&T’S ac­qui­si­tion of Time Warner but that could be a test. Some agen­cies have strug­gled with a client that isn’t the right fit and he ad­mits: “I could see us po­ten­tially not go­ing after bricks-and-mor­tar re­tail. We have con­cerns about the sus­tain­abil­ity of the busi­ness model.”

As ev­ery­thing turns dig­i­tal, he thinks on­line must ask it­self hard ques­tions. “No-one has re­ally stud­ied the bran­d­e­quity ef­fect of on­line video,” he says. Watch­ing Mad Men “is not the same” as a Pewdiepie video on Youtube. With on­line ad­ver­tis­ing, “could we build­ing neg­a­tive reach?” and mak­ing con­sumers “less likely to buy”, he won­ders.

For Hage­dorn, the rev­o­lu­tion has only just be­gun.

“Most of the other me­dia agen­cies have black-box op­er­at­ing sys­tems and we think those are ar­chaic be­cause they can’t adapt”

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