Tomasz Pawlikowski, past-Chair of Publicis Communications, and ex-CEO of Publicis Groupe, based in Central & Eastern Europe, is about to embark on the second chapter, Chapter 2, of his career. But first, he took the time to compare and contrast the two different centuries (20th and 21st) of advertising he had worked in, to assess what had happened and how it is happening again on a global and local basis.
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Transcription:
Darren:
Welcome to Managing Marketing, a weekly podcast where we discuss the issues and opportunities facing marketing, media, and advertising with industry thought leaders and practitioners.
Today, I’m sitting down with Tomasz Pawlikowski, past Chair of Publicis Communications and ex CEO of Publicis Group based in Poland. But now, he’s starting the second chapter or chapter two of his career, which is really exciting. Welcome, Tom.
Tom:
Welcome, Darren. Thank you for having me here. It might be an interesting discussion, I guess.
Darren:
Well, I think so because you and I have two things in common. The first is that we have a science type background in our training. I think you are trained as a psychologist, a clinical psychologist. I’m trained as a medical researcher. Both of us though ended up in advertising.
And I think we’ve worked in advertising during probably some of the most interesting times, because it was the end of last century and the start of this, when, from my perspective, the advertising industry has gone through some phenomenal changes. Would you agree with that synopsis?
Tom:
Well, I would, I think the comparison between those two periods, I mean, I sometimes feel myself anyway, like someone who is coming from another era and then trying to rebuild myself, post-2000.
The pace of changes was so imminent, was so fast that I was always telling to my guys when I was working in a large corporate environment, is that to keep up with those changes, I am basically reinventing myself every year. And I mean, this tendency, let’s say, for reinvention, has massively grown over the past five years compared to the nineties.
I started in the late eighties, let’s say, with having my own agency. And that was probably the climax, let’s say, of advertising. I mean, the fees were fat. You know, the commission was 17.65% on any media spend, clients were pouring money into this. Everybody was excited. And to some extent, forgiving, the business was less cynical.
Darren:
Yeah, absolutely. And yet, there were some massive things that happened even at the late eighties. We had the stock market collapse in ’87, and then the nineties were riddled with this great fear, the Y2K, which seemed to suck money out of the economy as everyone was rushing to make sure that their computer systems were compliant. Do you remember the late nineties when we had stories that planes would fall out of the sky, that the milk would go off?
Tom:
Absolutely, absolutely. I remember the agency unplugging everything on that night just to make sure that nothing pulls out or vanishes.
But I think that what is interesting because you mentioned at the beginning that both of us, were to some extent, with our life and our … let’s say, career, maybe, it’s an overstatement, but a business life — we are describing probably the most interesting period of this industry or to a larger extent, business industry.
Because the sixties and seventies, and maybe beginning of the eighties, were relatively calm. A lot of things were developing, but there was not a huge difference between the sixties and early eighties in advertising. The change started really at the beginning of the nineties. I mean, first of all, with this terrible split between creative agencies and media agencies.
And suddenly, creative agencies realised that they are poor and overstaffed and underpaid, while media agencies or media houses at that time, that’s what they were called — realised that they have all those bloody kickbacks in their pockets and in their bank accounts. And they can basically invest in anything they want, which we were doing actually as let’s call it, full-service agencies at that time.
So, that period, I think is more or less a period of reinvention, not only individual reinvention, but the reinvention of the industry, because the agencies had to find a new formula for existence. And remember the nineties and just close to 2000, how many new things agencies invented. For instance, we invented retainer fees and the way that clients will pay us for our presence, not only for our delivery.
Darren:
Tom, do you think in a way it showed that at the time, we had the rise of the holding companies as well at the end of the eighties into the nineties; WPP, Publicis Group, IPG, Omnicom, they all rose during this time to start buying up agencies.
I remember especially Martin Sorrell buying Ogilvy and JWT and the like. What seemed like from a financial perspective, a smart idea; buy up these big agencies that are fat with client fees and media commissions, and make the back end streamlined, and leave the front end to run the business, was the thought of thinking at the time, wasn’t it?
Tom:
Well, it was, but I think this was the period of ad agencies, then turning into ad groups in this power race because they were watching clients consolidating and building empires. They thought we will also build empires.
I mean, I will jump to 2022, it is really funny because when you look at this, yes, the groups have grown to a certain level, but they are not growing anymore. Because if you will compare, for instance, someone who is the biggest competitor today of those big elephants like Accenture, Accenture is 10 times bigger than the whole advertising industry altogether almost.
And this is very interesting because this was not the case in the past. And I think that there is a limit, a ceiling that cannot be passed through by those big networks especially today when you think about it. You started with talking about starting chapter two or the next chapter of life — I mean yes, I am no longer with the group. And I left practically, and finally this year, January 1st.
But this is all about people who are living in those big groups who are thinking that there is no more space for them, and they are no longer appreciated as they should be because of the gathered wisdom and experience. And these people are now, basically, fueling the rise of the indie agencies, which are becoming more and more important.
I think this is the phenomenon of the world, but funny enough, this has moved in circles because when you think about the sixties and seventies, even the very famous agencies, like Young & Rubicam, or Ogilvy or whichever name you will mention. Even Publicis were to some extent in the agencies.
Darren:
And yeah, they were, absolutely. They were the up and comers. They were the creative drivers, they were the ones that were out there stealing the big clients from the old traditional agencies.
Tom:
Exactly.
Darren:
But the business model is quite different, isn’t it? The holding company model is quite different. And it was the holding company model in some ways that made the decision to split. I was at J. Walter Thompson. What is it now? Wunderman Thompson. I was at J. Walter Thompson when they decided that JWT media would break off to become Mindshare.
And suddenly, the whole media department just walked down the road into a new office with a new delivery. And the business reason for doing it was that that way, they wouldn’t be limited in the clients that the creative side of the business had. They could take on all sorts of clients. You know, it was definitely a growth strategy.
But I think the stock market collapses, Y2K, the huge financial crisis we had in 2007 has made clients globally much more cautious about how they spend their money and they are wanting to really drive bargains. And so, that 17.65% that you were talking about in the eighties got watered down and watered down, and watered down to the point that we’re lucky if media and creative are getting 5% of the media-spend as fees.
Tom:
I mean, that’s one point. I think that somewhere, the whole intention of the rise of the industry was a bit lost in the translation of P&Ls and stock exchange markets. And the problem I see now, I mean, with people leaving the companies sometimes … and I’m not talking about us who are the old lions of this industry.
I’m talking about 30 plus people who are willing to go because they think that they have gathered enough experience and knowledge to be on their own somewhere in this equation of advertising/ communication/marketing.
And one of the biggest problems, because when I look back at Publicis Group and I’m thinking about what let’s say happened in this organisation, I mean, this used to be as an organisation made in France, in fact, and then later spreading around the world. It had this human touch, it was proud of this.
I mean, it was people who were closer to each other. They were working together. There were no barriers, there was none of this kind of code which is today a kind of a bureaucratic business code, which is used by all those companies.
Today, you cannot — sorry for that; we are both Aussie-minded … you cannot piss without the agreement of the bureaucratic structures of the corporate company. I mean, we were unable to hire people at very low positions, for very low positions without the agreement of the group and the decision-taking, the process, was taking many weeks and people were just flying away, I mean, the candidates.
And today, in other words, the entrepreneurial spirit has been lost somewhere. And I think this is one of the main reasons why people are leaving now big, fat network agencies or groups in fact, is because they do not feel any freer to do what they loved, even if this is a bit of an oversimplification.
Darren:
Well, I think absolutely, that’s part of what’s driving it. I think the economy, the financial structures are also driving it because agencies have traditionally had a pyramid hierarchy or structure. You’ve got senior people, then you’ve got the midlevel, and then you’ve got the juniors.
And agencies have tried to flatten that structure as a way of driving efficiency, cost efficiency so that they can compete with other agencies for clients’ budgets because we have to acknowledge that procurement has had a huge impact on the way agencies tender for business. In the old days before retainers, there wasn’t a lot of talk about finance because everyone just signed up for the media commission and service fee.
It wasn’t negotiated, but now, we are down to, well, how many FTEs am I getting and how many hours per month is that? And what’s your overhead and profit multiple on that, so that we can start squeezing one agency against another? And what that does is take away the money that pays for the talent.
Tom:
Well, but it also takes away the magic from this obviously, because the agencies are no longer as it was in the past, concentrating on delivering the best possible work, and the best possible ideas. They are now struggling. The main struggle is obviously agreed with the client, with marketers going obviously through the magnifying glass of procurement, how much money they’re going to cash. And this is obviously impacting the way they work.
This is not too characteristic today for so-called indie agencies because they have more freedom to choose whether they work with this or another client, whether they will charge this client with this or another amount of money, and they are concentrated really on the end result.
So, I remember when the other day we had that discussion about the difference between the outcome, which is usually retainer and everything, and the output and everything which is related to asset creation, which I think will be the future.
I mean, agencies anyway, even the network agencies, for some years already are aware or are still, let’s say, complaining about the fact that the clients are no longer entering into long term agreements or long-term relationships. They work on a project base.
And that, by the way, these are the waters, let’s say, rivers where small indie agencies or midsize indie agencies swim because they like it, because this is punctual, fast, idea-driven, and that’s what every creative person likes. And yes, and I remember a discussion I had with a couple of folks in this business from different agencies at the high level, what is the future of the big agencies and big networks.
And I mean, they will survive somehow because they have the critical mass that is needed for survival. If you are fat, you can have a diet and you will not die. If you are thin, you may die because you will be starving. They will never be starving. The problem is that all the magic is spinning off and they are losing the big advantage of what they had before.
I was recently reading about … which of us is looking at this; 15 most creative agencies. They are mostly autonomous or independent in the agencies bar one, which is Ogilvy. So, in the top 15 most creative agencies, you don’t have network agencies, and that’s how it looks, and that’s the best definition of what is happening to something which used to be a sexy business.
Darren:
Look, I absolutely agree that the big network agencies will continue because there is enough global clients who like the convenience of having a network agency to actually align to their marketing teams around the world. And that’s really where most of their businesses come from.
Most offices in individual markets will, of those network agencies, will have core global clients that sort of give them enough cash flow to maintain the office. And then their job is to try and pick up local clients, local accounts to really put the icing on the cake, so to speak.
But we’ve noticed in the last two years that clients, even those big network clients, those big network advertisers, are starting to understand that the smaller, independent, where the management is actually working in the agency have so much advantage. And part of it’s because of the pandemic.
When everyone was suddenly working from home and people were wanting that sense of connection, the local independent agencies were able to be more responsive, more able to give answers quickly. Whereas a lot of clients were saying, they’d go to their big network agency and they’d ask something and it would have to go up, to your point before, the bureaucracy would have to go up to the regional level and then the global level and get approved, and then handed back … clients wanted something that was like I want the team that owned the agency to be answering the question, not someone in London or New York or somewhere else.
Tom:
Absolutely. But look at the tech industry how it has developed. I’m talking about not only millions. There are zillions of apps, zillions of solutions. If you are a startup in the tech industry and you start thinking about something, you think it is so interesting and it is so modern and it is so contemporary, and probably, you will conquer the world — you then next morning, you realise that there are 300 other folks who are inventing the same thing. And some of them, are already scaling what you have just invented last night.
But there is one characteristic element of this, which is that a successful tech company is obviously agile and lean. Which are the two parameters of this industry. And that has been adopted and adapted by smaller agencies today. They are agile, and this is what you said. I mean, the management is working together with the teams.
The decision process is super-fast and clients understand that they get the value. And as the world obviously is moving faster, they need sometimes fast reactions. That’s why those indie agencies are like small little piranhas, biting the big fat bodies of those big advertisers then growing, and then biting even bigger chunks of their business.
So, the portion of the pie of their advertising spend is getting bigger and bigger in the indie part or independent part of the industry.
Darren:
But the solution that the big networks are coming up with is not to break it down and become more agile, is it? You were at Publicis Group and it was the power of one, it’s this idea of taking all of these moving parts and integrating them into a seamless one.
WPP under Martin Sorrel, I’m not sure if they’ve got a name for it now, but Martin used to call it horizontality, a word that I believe has been banned at WPP since he left. You know, we are seeing the same open, I think IPG, are calling it open architecture. This idea that we’ve got all these parts and we can just put them all together to accommodate every client’s need.
Tom:
Well, I mean again, open architecture compared to the power of one, these are two probably extreme ends of the same axis because, in the power of one, I was many times … when I was building the region for Publicis, I was practicing, like say, power of one, let’s call it like this — long time before Publicis invented the power of one.
Because my perspective was that we are not really the power of one because this is against the logic. We are the power of many, which is properly put together because, at the end of the day, you cannot neglect the personality of each of the brands. The risk in the power of one is that suddenly, yes, you are pleasing the client because you are delivering the best, what you have in one package.
But the problem is that at the same time, internally, you are jeopardising the let’s say, interesting and sexy and appealing cultures of the agencies that have a long history in building those cultures. Even if you look at the Publicis Group, but any agency group, actually, any network — each agency was working on building a separate outstanding, interesting culture, personality, DNA. And suddenly, how you can combine it in one place.
So, that’s why operations like Publicis Group are today dominated by the media agencies again because they are bigger because they have rebates, media rebates. Because they have hundreds of other benefits that the other agencies cannot have. And I think that is the main problem, the problem for those companies, but also the problems for the people who are within that.
That’s why the creative people are gradually steering themselves away from those corporate structures and trying to find their, let’s say, their last lap, like in our case like we were once joking about this; that they will go in an environment which will be more friendly and that will appreciate the amount of, not only the experience but also the amount of the packed DNAs of the creativity that these people are offering to those smaller agencies.
Darren:
Yeah, it’s interesting because the only network that seems to be resisting that sort of move towards integrating is Omnicom. They are still very much focused on BBDO has a very different culture to TBWA, which has a different culture to DDB. They’re actually managing to maintain a single holding company with multiple agency brands that each have quite different cultures to them. Do you agree? Because I mean, everyone else is flying in the other direction.
Tom:
No, I agree. But for me, a very interesting approach was taken by someone else. Do you remember when David Jones left Havas, and he started You & Mr Jones? And at the beginning, it was a community of the companies that they were buying. They started, I don’t remember with 500 million or something like that of investment.
And then starting to buy tech, ad agencies. And today, he renamed it into The Brandtech Group which is obviously an interesting move. But again, trying to show that he can specialise in offering the answers to the future for clients who are now running for technology.
What is fascinating though, is that I can see this with another completely different layer. And we once were even discussing that, which is called sustainability, which is now becoming a very important aspect of everything, what is happening in the world. Because we know that this planet is … can we swear here?
Darren:
Yes.
Tom:
It’s a little bit fucked up. So, the planet is a little bit fucked up and a little bit is an understatement. And because of this, I think that suddenly, the biggest driver of companies’ transformation is sustainability and everything around that.
So, when people like us think also, which is also very characteristic for people of our, let’s say, age, or with the amount of experience, let’s say, that we have; is to think more responsibly of what we are doing, which at the same time, is defining many moves that we are making further on.
We don’t want to now run for money only. We think that the money might be somewhere at the end of our journey because we’ll invent something interesting and we’ll build something. But in the meantime, we would like to do some interesting yet responsible stuff, which will not harm anymore the environment around us. And the environment is obviously, a very, let’s say, rich word.
Darren:
Yeah. Just to go back to David Jones and the change of name, a financial friend of mine that knows David, as well said, “Oh, clearly he’s changed the name to get ready for his IPO” because the last name was no good for a listing on the stock exchange. Whereas Brandtech is a great name for a listing on the stock exchange. So, just remember, you heard it here first; when the IPO comes, make sure you get in on your share allotment.
But you’re right. I mean, one of the big things we’ve seen over the last 20 years is that while a lot of them, let’s call it baby boomers or Gen Xers have actually come through the network system. There’s a lot of them out there now running these new businesses, creating new businesses that have got a focus other than just creating wealth.
The rise of the B Corp is interesting to see, the number of agencies that we’ve seen recently that have qualified as B Corps and are actually using creativity and strategic skills to actually help clients that are also wanting to change the world.
It’s a big difference when we see the cynicism that comes across from some of the holding companies saying that they’re going to come down hard on suppliers that don’t get to net-zero and at the same time, continue to do work for fossil fuel companies.
Tom:
Exactly. And I think the true transformation is where you are really doing this from the bottom to the top. The ESG formula is, as you know, is a reporting formula. And many companies will be just saying, yeah, we are sustainable because we are reporting this in the ESG parameter, which obviously means nothing. And that will be cynical, let’s say, as you said, characteristic for big networks and big groups that will follow that.
Darren:
So, Tom, we started this conversation talking about chapter two, that this is chapter two; what’s the vision for the second chapter of your career and your life?
Tom:
Well, the life of people like us, creative people, executives working in this business, account people, media people is a journey. I mean, I remember when I was talking to one of my bosses — I survived six CEOs in the group. And one of them, Rick Bendell once told me, “Ah, Thomas, you are going to retire in Publicis.”
And then I said, “No, I would like to do something else, something different. Not maybe else, but something different than how I’m doing this today.” And so, the good thing about the corporate world is that you are exposed in advertising or in communications; you are exposed to a lot of ideas that cannot be fulfilled or cannot be realised because of the lag of the organisation, and the bureaucracy and everything which is around that.
And because it’s heavy and because there are a lot of people, clueless people hiding behind their work. And they are basically stopping everything just for the sake of being there. Now, the great thing is that it’s a learning curve, and you can take out of that, a number of things that you think are the most important things in your work and in the potential transformation of the client’s equation.
Which today is much more visible in terms of those dark spots where you can still work on it. And so, my idea then, was okay, fuck it, I’m leaving and I probably don’t want to retire completely. I have the mentoring ability, I have the coaching ability, so I can find still a number of people to whom I can let’s say, transfer that knowledge and experience. And at the same time give some spark into some of the ideas that were put on shelves by me because they were prevented from any realisation or implementation because of the character of the corporation.
So, today, creating something which I’m calling a little ecosystem of chapter two, I have just concentrated on a number of things, which I think are very important and crucial for, first of all, the transformation of brands for the future, the world as we are going, for the world to come, because we don’t know in fact, what it will be.
And a friend of ours, Rishad Tobaccowala is calling this new strange. And as much as I sometimes disagree with the things he’s saying, I agree with this. It’s new strange; nobody knows what the world will be like later on. Look what is happening. I mean, we are facing a war in Europe, maybe there is a pandemic. We don’t know how many pandemics we will have in the future. The economy is completely screwed and the perspective of consumers or people is different.
We started to realise during the pandemic period that we can spend less money still being happy, which is very interesting. And so, the answers to those, let’s say, challenges are not with big organisations. They are with individuals who can then transfer those answers to smaller operations that can seamlessly implement that. I think that was probably the origin of my motivation.
Darren:
It’s interesting because one of the things that has always fascinated me is complexity theory, and a lot of people get confused about the difference between things being complicated and being complex, because complexity is actually a field of science, just as chaos theory is a field of science as well.
And what I see in the advertising industry is with growing complexity, there are now more choices for marketers to make than ever before. There are more things that they feel that they should do than ever before. And the solution has been just to build bigger factories to try and do all these things. And yet, the really smart thing to do in the face of complexity is not just to scale to grow with it, but to actually cut away the non-essential and focus on the core things.
And I think that requires agility, that requires the ability to pivot because the reason we build bigger factories is that we have a financial investment in factories. We have to keep building and building and biggering and biggering (to use a Dr Suess’s term) — biggering and biggering our infrastructure as a way of coping with the challenges that we’re facing. When in actual fact, what is it? Survival of the fittest is not the strongest, but the most adaptable.
And that’s really where I see the opportunity for chapter two, which is creating adaptability to take advantage of the opportunities that are going to arise out of this growing complexity and uncertainty.
Tom:
Yeah, sure. I think when we talk about complexity, I’m also talking about … when I talk to clients and explaining them the whole idea and everything — I’m also talking about the word I love actually, which is called interdependence because interdependence is the mutual influence of all the elements to do good, to trigger and support positive change.
And the more those elements are connected …. that’s why I was always very fond of power of many versus the power of one, because the power of many is still underlining the value and potential impact of smaller elements, of all the elements of the equation because each of them has its own, not only personality, but it has its own weight in terms of the experience, knowledge solution base.
And then if you combine those elements properly, then you will actually achieve what you are thinking about in terms of transforming the environment, the object, the subject, whoever; the client, or even consumer in the way that will be good, not only for him, but it will be also good for everything that surrounds him.
Darren:
It’s one of the things that keeps us motivated at TrinityP3, is helping clients navigate this uncertainty, and providing them with a view that they don’t necessarily come to the conversation with.
One of the problems we all suffer from, is we don’t know what we don’t know. And we live in a world where the options are becoming greater all the time. So, I think anyone that is able to provide clients with a view of what is available to them and how you can actually leverage that, has to be ahead of the rest, because it just feels like everyone else keeps doing the same thing over and over again, praying for a different outcome.
Tom:
But it’s a perfect description of what today makes really the difference; navigation, I mean, guidance because in the world, which is so uncertain, nobody sensible is looking for a solution, for the ultimate solution because everybody knows that the solution will never come in its final form. Everybody is asking, “Please help us navigate our business through the stormy waters or horror in the peninsula.” Do you know what I mean? Because it’s a little bit like this.
And I think that today, everybody, including also people who are surrounding us who are sometimes called consumers, they’re also looking for navigation. If you will ask your peers and your friends and whoever, nobody will expect you to tell them that the world will look like that. They are saying, “What should we do to survive all that shit that is surrounding us?” So, that’s all about navigation and not per se, solution creation.
Darren:
Absolutely. Tom, look, it’s been great having this conversation. It feels like we’ve just scratched the surface. We have so much more that we could talk about.
Tom:
Yes, thank you for having me here. It’s always lovely to talk to you.
Darren:
Before you go, I don’t know if you’ve caught up with this, but cryptocurrencies in the past month have dropped by 25% virtually across the board. I’m just wondering do you think there’ll be a lot of people rushing across to invest in metaverse as that seems to be the next hot thing?
Ideal for marketers, advertisers, media, and commercial communications professionals, Managing Marketing is a podcast hosted by Darren Woolley and special guests. Find all the episodes here