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- [00:11]
A
Hello. Hello and welcome to another episode of the Digiday Podcast, a show for anyone trying to justify a Holdco in the age of AI. I'm Kamiko McCoy, senior marketing reporter here at Digiday.
- [00:21]
B
And I'm Tim Peterson, executive editor of Video and Audio Digit Media. So, Kimiko, this week you're taking us back to Cannes.
- [00:30]
A
Let's do the time warp again. I am taking guys back to Cannes where I had a interesting conversation with Omnicom Media North America CEO Ralph Pardo. One of the things that a lot of people have been talking about is the role of a holdco in the age of AI. And who better to ask about, defend that defensive position than the CEO of Omnicom Media in North America? So real, real juicy for you.
- [00:57]
B
Yeah, so I'm curious what he has to say, because I feel like usually the agency, holding companies, you know, say, you know, talk about their size and especially their leverage when it comes to being able to secure inventory at scale. Like, basically these are the people who can go into the media version of a Costco with like a wheelbarrow or while the rest of us are in like usual shopping carts. And they can just like really be buying in bulk. And so the idea is like, if you want to be buying Disney or NBC or YouTube or TikTok, we can get you those, and we can get you those at probably a better deal because we're buying so much from them, which is valid. But if I can just use AI to do a lot of the things.
- [01:46]
A
Well, I was gonna say, is it. That's kind of the whole argument that is that brands and clients are now asking, right? Because if AI can do it, why am I paying you a shit ton of money to do this? And that's kind of the argument here. So if the promise of a holdco is scale because they've got a seemingly endless flood of people working on your account. Right. Pardo is making the argument that agencies, especially hold codes, are no longer in the business of just placing an ad. Now they're doing this thing that I've heard agencies kind of repeat where we're strategists now, if AI is handling the grunt work, you still need a person at the end of the day to do the higher level thinking. So at this point, they come, they become AI strategist and for like first party data and things like that that more clients are concerned about. They're like the gatekeepers of this. So I think of Ralph's argument now, as you know, being a gatekeeper, being an Interpreter. When it comes to AI and data as opposed to a media buyer, do
- [02:52]
B
you think that exposes the agency holding companies to the consultancies? Like there was that period of time and he's still going on like Accenture Song is very much still doing this. But where it was like, oh, is McKinsey, Boston Consulting, Accenture coming after the agency holding companies, businesses?
- [03:13]
A
I think that starts to be a bigger concern going forward for a Holdco. You know, it's the same thing. If you look at the parallel with publishers where they started trying to sell white label services and their CMSs and things like this, competing with those already existing structures, there is no choice but to pivot in the age of AI. Right now, I think we're in a wet spaghetti noodle at the wall kind of stage as they figure this out amidst things like layoffs, you know, do marketing with less marketing dollars. So I think it was a really good conversation in talking with Ralph.
- [03:50]
B
So this is a conversation that agency holding companies have been having for years. At this point. I feel like every earnings call that these companies host, they're having to kind of defend their position, their business models. Kimiko, was there anything that Ralph said in the conversation that surprised you or felt like a new take on this topic?
- [04:12]
A
I think the thing that I thought was interesting is that at a Holdco, he felt like the term Holdco was outdated. It's no longer about agencies. You know, hold co's kind of like owning agencies and having them all under one roof. Now they've really got to position themselves as like specialist here when typically the pitch has been scale, now it's specialization. So that's, that's what I found most interesting in the conversation with Ralph.
- [04:40]
B
Interesting. Well, I am interested in hearing this conversation, so let's get right into it.
- [04:51]
A
Ralph, welcome to the show.
- [04:53]
C
Bonjour Comico. Oh yeah, that's right. Fancy, fancy. No, when in France.
- [04:58]
A
As I say, when in France indeed. I'm super excited to have a conversation with you today. I feel like media buying has been on the fritz for a little while. It's fragmented, it's hyper personalized. Everybody wants to be the media platform and you are sitting at Omnicom. So start at a high level for you right now. And what do you make of the media landscape right now?
- [05:21]
C
Look, I think it's never been a more interesting time to be in our business. And to some degree I'd. I think of media as a flashpoint. It's a microcosm because media has frankly moved to be much More closer to the business model for many clients. And especially as Digital Direct has grown and consumer behavior has gravitated to more digital touch points, media, data, technology kind of all sit at that epicenter. And so we're fortunate to be at that nexus point of all of these kind of disruptive forces of change. But I'm a glass half full kind of guy, right. Versus empty. And yeah, there's a lot going on, but I think that just means there's a lot of opportunity, a lot of opportunity to think differently, to gain competitive advantage, to be able to counsel clients on how to tackle these disruptive forces and to be able to work with marketplace partners to create new capabilities and the new routes to growth, so to speak. So I think it's probably never been a more exciting time to be in this industry.
- [06:29]
A
Absolutely.
- [06:29]
C
I am Team Bloom. No. What is my. I'm not doom. I'm more Bloom.
- [06:36]
A
More Bloom.
- [06:36]
C
I'm more of a Bloom thinker. Yes.
- [06:38]
A
Rose at fold.
- [06:39]
C
That's right. That's right.
- [06:41]
A
One of the reasons why I wanted to get in front of you specifically is because you're coming from the vantage point of a Holdco, right? Omnicom. What's so interesting right now is that a lot of platforms want to be media platforms themselves with automated media tools. I'm talking everything from the brand design down to the media planning, targeting. All automated. Right. Or does that leave a Holdco?
- [07:03]
C
You know, I guess maybe one thing. Let's start to challenge immediately this concept of the Holdco, right? We're not holding anything. We are actually capability companies is the better way I would describe it. And that's really, I think, the right way to think about what holding companies have been and are becoming more of in this current landscape. The idea that to be successful in marketing, you really need to have a variety of different capability and expertise sets. And as a company, we've been on the forefront of that for the past couple years. I think most recently, obviously, the whole industry is aware of the IPG acquisition, but prior to that flywheel as well. And when there was an acquisition, there actually was a really good culture of innovation and incubation and creating capability from within. All of that is in service to clients and helping clients achieve their business outcomes. And I think those kind of simple concepts are not changing. The kind of environment and how we accomplish those is absolutely changing. But I think we can't forget that ultimately, kind of what kind of business are we in? Right. It's not just a media, advertising, data business, technology, business, pr. We are in the business of providing divergent counsel. We're in the business of helping clients unlock growth. And the way we do that is through a bit of this kind of divergent thinking. It's a bit through cultivating and creating experiences that drive distinction and competitive differentiation. And that's what helps clients and businesses win versus their category competitors. I think one of the interesting things about kind of where we are right now is AI is lowering the barriers to entry in almost every category, probably including our own to some degree. But when the barriers to competitive entry are lower, you end up with more competition. When you end up with more competition, differentiation matters even more. And having the ability to find the right people to not be wasteful about your marketing, to be able to leverage the right data sets to do that, to be able to have a good feedback loop of what's working and what's not, those things actually become really powerful drivers of business and things that clients need more of and not less. And those are the areas that we are really focused on as a company. And I would say it's less about, you know, it's a really good question about like, what's the state of kind of planning, buying and measurement today. But it's less about the, I think the specific of those discipline areas and more shifting towards what's the totality of the outcome that we want to get to and what's the best way to orchestrate all of these capabilities and needs to be able to deliver that. And so in that space, to kind of your point on the hoko with my air quotations, because I know this is an audio podcast, I think we are probably very well and best positioned to be able to help businesses unlock competitive advantages in this climate.
- [10:39]
A
What are clients asking for in this climate? Right. If I could theoretically go to Meta, put a dollar in, get a dollar out as far as like ad spend. Right. And they've got everything from again, being able to create my creative and buy it and target. What then becomes the pitch from. How did you phrase it again? Capability company.
- [10:58]
C
Yes, yes, that's just my little phrase. But listen, there's. We live in a world of kind of big ecosystems and you know, certainly companies like Meta and others are examples of that to your question. And they provide a lot of value, I think, for businesses who are looking to leverage the digital supply chain for, you know, whether it's equity building, commerce, conversion. But the reality is consumers navigate multiple touch points in ecosystems and there's a world outside of Meta, there's a world outside of Google There's a world outside of other big platforms and you still need to be able to stitch all of that together and identify which partner, which platform is the best one to help you achieve your objectives. And I think that's also core to the value proposition of companies like ours today. It's the ability to kind of help take advantage of all of the toolkits in the system, but help create the plan that's right for your brand, your business, your audience. And in some cases that's going to be a different constellation of partners and companies. And in other cases, you're even trying to work within the platform itself to figure out what's the best way to leverage it. And so I think there's still value in that and there will be for the foreseeable future. Everybody kind of loves to have a point of view on, let's call it the doom part of the business. And algorithms will end up kind of auto optimizing and doing everything themselves. Certainly there'll be an opportunity for Algos to remove a lot of the repeatable work quickly. And we're seeing that, we're seeing announcements that help identify that. But I do think there's still a core element of strategy that's really important. That's where the balance and alchemy of human and machine still matter. Again, that's a core value prop of the agency. I do think there's a benefit of what you bring to the table in terms of data and technology. I think that that is important for clients who are looking to connect the dots. And remember, we're not just talking about paid media here. We have to talk about paid, owned, earned ecosystem. And how do we start to think about the role of creator channels or even your own media channels and how you're showing up in an LLM environment. So ultimately, I still think that's a core value prop of a trusted advisor and counselor. And I do think that that's still one of the anchor points of what we bring to the table. Remember, a lot of the clients we work with, you should be the best at making cars, you should be the best at making devices, or the best at creating fashion. Doesn't mean that you will be the best at finding the right person, who needs that, who wants that, and building a connection with that person to help them to choose that car, that phone, that piece of clothing over the next person. Yeah, that's the business we're in.
- [14:11]
A
Yeah. I like, I like where you're kind of going with this. And I do want to ask, as far as like next steps in terms of like the grunt work and things like that and more of the manual hands on keyboard type deal. If more of that's handed off to automated tools, not just from the platforms, but also Omnicom Omni in its own, you know, internal systems. What does building your team look like from here? Is it, you know, hands on keyboard, media buyers, planners, you know, how does the junior get trained?
- [14:36]
C
It's a, it's a good question. And look, I think we're all still trying to figure this one out. Couple things that I think will still hold true. I still think you do require some level of what we'll define as entry level. It's an origin point into an industry where you have the ability to learn that industry, to learn the aspects of service that go along with an industry like ours as well as kind of the landscape and marketplace. So I do think we're still going to have a need for talented individuals that we can nurture and teach the business of the business to your maybe core question around how teams change. I think one of the things that will be relevant for businesses like ours as well as clients are a shift from perhaps really siloed structures. And I think as an industry we've compounded that over many years. First it was separating digital, then it became things like influencer specialism and health specialism and data and technology. And little by little, if you look at any client org right now, one of the things I think you find pretty consistently in almost every organization is lots of silos, lots of bureaucracy and the inability to see the whole picture. And I think that's one of the areas that we've looked inward and why we've made changes to even how we're structured and how we organize our teams to kind of better deliver on that. In terms of talent, I think one of the things that we're perhaps seeing a rise of is much more strategic thinkers, folks that are M shaped, I like to say kind of a major and maybe two minors. You may be great at media, your tradecraft, but you also now need to be a pretty good expert in data and maybe have a great understanding of content or priority. And so this kind of multi hyphenate in our business I think is something that's going to be growing and something we want to nurture. Those people are well positioned to be business leaders to help clients navigate and orchestrate across all these different touch points. We're also, and I'll use the word prompt engineering is kind of an interesting one, right? I'm like, where did that come from? Right. But like the fact of prompting and being able to ask great questions. Yeah. This is also a skill set now that we are training for. That's different than, you know, managing an active performance dashboard. Right. Where you're looking for signals and numbers. Now we need to train people to query platforms where all the data is available. And so that's another area that we're investing in. And you know, I think solution architects and folks that can kind of stretch across is probably the best way to describe it. But those are a few that we are absolutely focused on right now versus perhaps some of the repetitive tasks that come with managing lots of volume.
- [17:42]
A
Now you've got a kind of clear picture of what this looks like going forward for the internal team. But as far as. Let me back up. One of the benefits of working with a Holdco is that they've got scale and strength in numbers essentially. Right. To kind of better negotiate better incentives, better deals when it comes to working with platforms. What is the relationship with platforms right now as they take on more of that deal making process with the automated tools?
- [18:09]
C
Look, I still think that matters.
- [18:11]
A
Okay.
- [18:12]
C
I still think there's an opportunity where. And maybe I'll describe it in terms of intelligence scale.
- [18:18]
A
Okay.
- [18:19]
C
Right. Yes. We all remember the days when folks would kind of get bludgeoned to kind of reduce rates and get better deals on inventory. And look, I think there's still a natural element of negotiation that takes place in valuation where making sure that there's a fair price for client value is critical. But on perhaps what I'll call the intelligence scale side, I think there's still an opportunity and a market for collaboration on data. Yeah, we know lots of data is not going to leave certain environments, especially kind of given privacy concerns. But clean rooms are a great way to connect that. Direct piping connections that anonymize are a great way to do that. And so that data relationship with lots of media partners, I think is incredibly important. I think technology connectivity is incredibly important as all these systems start to get more automated and more connected. Ensuring you have the right plumbing of direct access to that inventory I think is going to be critical to ensuring that we strip out waste from the supply chain. So I would describe the relationships with media partners to be much more comprehensive now around a totality of a business relationship and where we can collectively unlock value for clients. That's kind of the core of how I see things changing.
- [19:47]
A
I do want to also ask about pricing here. Right. Because the business model of a Holdco is essentially having to change as more things get handed on. There's less, you know, hands on keyboard. How is Omnicom and your team thinking about charging for work that's been done when AI is handling some of that?
- [20:04]
C
Yeah, look, it's a fair question. I would say the answer to that is fairly would be kind of the way I think about it. But look, there's no doubt that there's new elements now that need to be considered in terms of a commercial relationship. And in that commercial relationship there's still kind of, we'll call it an aspect of obviously paying for people. There are aspects now that are shifting to paying for outcomes. There are aspects now where certainly data and technology costs need to be accounted for in the relationship. Tokens are not free. Being able to query LLMs comes at a cost. And these are all elements that we are working with. You know, our client partners and procurement teams, frankly, are great partners in this conversation. To start to highlight, look, this is the cost of doing business, right? There's a transparency around much of that and investments that we are making as a company. And those things need to be fairly compensated for us to be able to provide high quality service that delivers business results. And I'd find that there's been good receptivity to that across the board from many clients because they're grappling with some of the same questions and the same decisions on their end. But the core to that discussion, I think is one that has to be open, right and transparent about some of the decisions and some of the areas of cost, frankly, that we are all incurring as everybody adapts their business models.
- [21:51]
A
Absolutely. You know, I've got to ask a future facing question. Even though things seem to change day by day, minute by minute, if you will, where do you see Omnicom's media business in the next five years?
- [22:04]
C
Thriving?
- [22:05]
A
Naturally.
- [22:06]
C
Naturally. Come on, Kviko, where are we going here?
- [22:09]
A
The priority here, how does your role change? What roadmap are you looking at?
- [22:13]
C
Listen, media is kind of maybe kind of where we started, still at the intersection of where commerce, experience, even kind of connection and joy are still taking place. I believe that that makes the media business set up for success in the future. I do believe the dynamics of how we deliver service will evolve quickly over those five years. So kind of the, you know, what it looks like and how it's delivered may change quite a bit, but the value that it provides and unlocks I think is still going to be there. We will definitely see an increase in the role of agentic systems, thinking into the mix. And as part of that, you know, I could see relationships where technology is a much bigger part of kind of our commercial relationship. Certainly the role of data and the uniqueness of that data is going to be incredibly important. One of the things that I see for media relationships is this kind of alchemy of data, media and tech, but enabling clients to own more of their data and the decisioning associated with that. I think that's one area that we are definitely focused on and we're going to start to see grow more in the future. Because if you have that kind of core data foundation gives you the ability to start to really develop these agentic ecosystems on top of that that are going to be different for every category, every brand, every business. So yes, yes, look. Will it look differently? Yes. I'm trying to think of, you know, what did the business look like five years ago versus where we are now? And I think sometimes we say we think that the pace has changed, sometimes faster Right. Than it actually is. And I still see a strong value prop for agencies for the solutions and services we provide, you know, but certainly we'll be adapting that to meet clients where they need us to go. Absolutely.
- [24:31]
A
Ralph, thank you so much for joining us for the show.
- [24:33]
C
Kimiko, it's great to chat with you. I'm glad we were able to sit down in the south of France here and appreciate the time.
- [24:46]
A
Well, that brings us to the end of this episode of the Digiday Podcast. Thank you to everyone for listening. And please don't forget to share this episode with someone who you think would enjoy it. You can even rate us and leave us a comment on Apple Podcasts. We'll be back next week with another episode of the Digiday Podcast. Thank you so much for joining us.