CMO interview: GroupM CEO Mark Lollback on marketing, media, transparency and technology

The former McDonalds chief marketing officer and now chief of GroupM shares his views on business transformation, the agency-client relationship, transparency, technology innovation and data utilisation

Mark Lollback
Mark Lollback


Viewability and transparency

Of course, many other trends are thrusting the media agencies in the spotlight, and not necessarily for the right reasons.

Ad viewability is one, and GroupM is taking a strong stance on addressing the issue. The group partnered with Moat, to track viewability as well as brand safety and ad fraud and is working with publishers including Ninemsn, MCN and Guardian, to ensure ads meet stricter definitions. It’s also kicked off 100 per cent viewability campaign trials with Twitter.

But it’s the issue of transparency and media agency earnings that has really captured the industry’s attention over the past year. Non-transparent kick-backs and rebates, governance and over-charging have ruptured the trust that exists between client and agency, raising questions about the long-term approach needed to agency management and relationships.

What’s created a lot of debate around transparency is that media companies in general have done a very poor job of explaining to clients how they make money


Lollback sees two parts to this equation. One of these is compliance, and he claims GroupM is the most transparent media company in the country, with a full-time compliance team and daily compliance testing practices.

The other is how agencies make money. “What’s created a lot of debate around transparency is that media companies in general have done a very poor job of explaining to clients how they make money,” he says. “We are a media service organisation, and we do have multiple revenue streams, not just client revenue.

“What’s exacerbating that is as fees get smaller, and as cost gets driven down, agencies rightly need to find other products and services to generate an income to pay their bills. From what I have seen inside GroupM, we’re very open here with clients, they can check their contract and we’re clear with them. But also we need to be able to talk to them about other revenue streams we have, which are all legitimate and compliant.

“I know there is some non-compliant money changing hands in the industry, which doesn’t happen here, and that should be washed out.

“When our revenues start declining in one source, we are going to have to create products and services to generate income that are higher margin and interesting. Buying and selling media is one thing we do, but having proprietary media with Plista, which has a revenue stream, is another, and of course we need to invest in tech and analytics.

“We have nothing to hide, I just don’t think agencies have talked about it.”

Lollback agrees things were much cleaner 10 years ago, when clients agreed a fee to pay the media agency, and the agency then took a 10 per cent commission from the media vendor.

“What has happened over time is that the 10 per cent doesn’t exist, or if there is a discount or commission, clients want it to come to them. They’re paying a fee and they expect additional revenue to be passed to them.

“It’s like we’ve created this through bad business terms and negotiation. We’re getting close to a reset – we are going to have to sit down as an industry and with clients to work out the right remuneration model for the industry.”

The quest for long-term effectiveness

Another industry-wide concern raised during this year’s Australian Effies awards was the declining emphasis on long-term effectiveness. Media agencies play a part in this trend, but Lollback says clients need to provide the solution.

“The problem starts at the top, with CEOs,” he says. “All the analysis shows the world is moving towards shorter and shorter cycles. For most clients, they’re publicly listed businesses that have to report and demonstrate results on a quarterly basis. It’s driven the whole industry to quarterly activities.

“Having been a CMO, I used to pride myself on long-term effectiveness and not short-term strategies. I nearly broke McDonalds by going short term, where we were launching things every 3-4 weeks. Stepping back, moving to platforms, focusing on stuff we could invest in that has longevity and building on those over time, were fundamental pillars that turned the business towards sustained, long-term growth.”

Another challenge is that many CEOs haven’t come from a marketing discipline and don’t understand the power of brand or why it needs to be nurtured, Lollback says. But the roots for change are there, with big US investors such as Warren Buffett calling on listed companies to go back to long-term thinking and invest in the future.

Why CMOs need to be braver

At the same time, Lollback is convinced CMOs aren’t showing enough bravery and leadership, particularly when it comes to defending media spend.

“One of my questions around this pressure in procurement at the moment is: Where have the CMOs gone?” he asks. “What I’m seeing is as we get to the end of negotiations, the CMO isn’t involved and it’s purely procurement led.

“Procurement comes in, everyone is looking for cost savings, and one of the biggest expenses is marketing. Within that, media is often the biggest expense, and it’s the easiest place to go and cut. Then we get into this pitch situation and it’s a run to the bottom for everyone. No one is going to win this game. As margins go down, you can’t hire good people, it’s harder to invest in technology and so on.”

Lollback encourages CMOs to come back to the table, or risk ending up getting less value.

“If there has ever been a time brands and marketing teams need help from the best people, sophisticated technology, insights and brains that agencies can provide, it’s now. But it comes at a cost,” he says. “There is a tension building around this and it’s an area we definitely need to tackle.”

Going from CMO to CEO

With his appointment as GroupM CEO, Lollback has become one of a small group of Australian marketers who’ve made the leap up to the top job. The big difference he’s noticed so far is the breadth of subjects to make informed decisions on.

“Coming in here, it’s another helicopter level higher and your scope is everything, from insurance to legal, people, rent, clients,” he says. “My days are just as busy but the scope on a daily basis is amplified.

“The other thing – although I always did this anyway – is you have to be able to be very focused on whatever you’re doing at that moment. It’s focus, detach, focus, detach.”

As a final comment, Lollback says it’s vital for CEOs to have good people around them that they can trust. “These are people you can talk and give direction to, feedback or share a concern or question, and ask a question, and know you can go away and come back and there’s work done,” he says.

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