Agencies: burn the old playbook

AdNews L!VE Sydney drew a sold-out room to Saltbox Sydney for a frank, hard-edged debate on the future of the agency model under the banner “Agencies: Burn the Old Playbook”.

Across a run of keynotes and two panels, the industry’s most senior operators laid out how the economics of media and creative are being rebuilt in real time — from the half-trillion-dollar rise of principal media, to the death of hourly billing, the client demanding proof over performance, and the holding-group bosses managing the biggest structural shift their businesses have seen in 15 years. Here are the highlights.

Accenture Song: agencies fired the starting gun on their own ‘race to the bottom’

Almost half a trillion dollars in global media billings will flow through principal media this year, even as nine in ten clients doubt the model is working in their interest. Accenture Song managing director media A/NZ Sam Geer and managing director media strategy A/NZ Chris Colter used the opening session to argue the industry has engineered its own decline — and that the road there was paved with good intentions.

Principal media, where an agency buys inventory in bulk at a discount and resells it to clients at an undisclosed margin, now accounts for roughly a third of global billings, Colter said, citing Forrester. The problem isn’t the practice so much as the trust it has eroded: he pointed to research showing 90% of clients are unsure whether principal media is acting in their best interest, and fewer than a third believe they can see how their agency actually makes money.

Geer traced the model’s arc from the 2015 ANA transparency report through the Covid cost squeeze to today, landing on a line that drew the room in. “What we basically went from was non-transparent to transparent to transparently non-transparent,” he said.

The pair were blunt that the damage is self-inflicted. A reduced retainer wins the pitch, which funds smaller and more junior teams, which lowers the quality of the work, which devalues it further, which deepens the dependence on principal media to make the margin back. “The starter gun was pressed by agencies themselves,” Geer said of the spiral.

Their fix is a return to charging for value rather than efficiency. Colter called for a more formalised industry code of conduct and, pointedly, for independent auditing of principal media “to ensure that the clients are getting their fair share of value”. Geer went further, floating a mandatory education course for clients before they sign a principal media contract, and reserving his sharpest words for the pitch process itself. “Media pricing exercises in pitches are a loss, loss, loss for everyone,” he said, describing a Dutch auction that punishes clients, agencies and media owners alike.

The closing rally was a challenge to the room: stop competing on cost. “Make your value visible and make it worth paying for,” Geer said.

"Media pricing is a distraction. If media pricing is the main event, you have lost."

Lauren Gilbert, EGM Marketing, Optus

Optus stripped media pricing out of its agency review — and wants the industry to follow

Optus pulled the media-rate exercise out of its agency review last year, betting that strategy and not CPMs should decide who wins the business. Optus executive general manager of marketing Lauren Dawber, who spent 18 years agency-side before moving to the client, used the client’s chair to argue the entire pitch model is broken — and to lay out what she wants from agencies instead.

Dawber’s headline call was to “move from pitching to proving”. The pitch process as it stands, she argued, rewards opening-night performers rather than the messy, iterative reality of how agencies and clients actually work. “The pitch process, as we know it today, is obsolete,” she said, describing a review built around working sessions and real-world problems rather than the polished theatrics of the big reveal.

She was equally direct that the brief is broken — clients throwing the kitchen sink at agencies in conditions that never resemble real business — and that the answer is to test for thinking, not for a perfect idea. She wants to meet the people who do the work, not the pitch stars who vanish once contracts are signed, and warned that catastrophic decisions get made when agency and marketing leadership cut deals without the people on the tools in the room.

On structure, Dawber argued for the village model — “curate, don’t consolidate” — warning that the false promise of simplicity can cost clients the specialist expertise they actually need. And she reserved her strongest language for pricing. “Media pricing is a distraction. If media pricing is the main event, you have lost,” she said, describing the nights she once spent gaming rate cards in spreadsheets. Stripping that exercise out of the Optus review, she argued, lets the client invest in a partner that drives growth rather than one shaving pennies off the CPM.

Her advice to peers extended to the finance side of the house: make procurement a strategic ally by educating them on value, and drop the jargon. Echoing the morning’s principal-media debate, she said telling a procurement team something is “transparently untransparent is just a shocker”. The close was a challenge to the room. “Stop trying to win the pitch and start trying to win the business,” she said — because the agencies that dominate the next five years won’t have the slickest decks, they’ll be the ones who prove they are the architects of a client’s growth.

Hourly billing will kill agencies in the AI era, warns TrinityP3’s Woolley

Agencies that still bill by the hour are walking into an existential trap as AI collapses the time it takes to do the work. TrinityP3 founder and global CEO Darren Woolley told the room he gave a near-identical warning 13 years ago to little effect — but that in an AI world, the stakes have changed entirely.

Woolley’s central provocation was linguistic. Time-and-materials pricing, he argued, means agencies are being compensated — paid to make good a loss — rather than remunerated for value created. “If you’re getting paid on the number of hours you do and the cost of those hours, you are not being remunerated, you are being compensated,” he said. The risk is that AI does that same “stuff” faster and cheaper, leaving hourly shops with nothing to charge for.

He turned the heat on his own profession too, conceding that pitch consultants keep agencies locked into hourly models — but only because agencies never propose anything else. Given the option to price differently, he said, almost none take it.

In its place Woolley laid out a menu of modern fee models: output or production-based pricing for high-volume work, tiered “bronze, silver, gold” premiums that stop agencies giving away strategy for free, and genuine outcome-based reward tied to real business growth rather than a token rebate. He cited a sustainable-energy retailer reframed as a direct-response business, where moving the agency from commission to payment on leads and conversions quadrupled the agency’s fee — and the client’s sales.

His verdict on the cost-recovery mindset was the line that landed hardest. If a CFO talks about recovering the cost of your people, Woolley said, “they don’t think you’re a human being, they think you’re a liability”.

"We are not at the end of advertising. This is the renaissance of advertising."

Chris Howatson, founder & CEO, Howatson+Company

AI is ‘divine intervention’, not a threat to agencies, says Howatson

AI is not the force tearing agencies apart — it is the reset that could hand them back the value they have spent 25 years giving away. Howatson+Company chief executive Chris Howatson set out to dismantle the doom narrative, arguing the real pressure on agencies is structural and decades in the making.

Tracking 25 years of change, Howatson described a slow hollowing-out: marketing budgets shrinking as a share of net sales, the collapse of the global federated brand network, and channel proliferation with no matching lift in budgets. A million-dollar TV production budget today buys what $140,000 did 25 years ago, he said, even as agencies juggle five times the channels. The consequence has been less resource, lower margins and agencies owning ever less of the value chain.

But his read on the present was deliberately optimistic. There has never been more scientific evidence for the value of brand, he argued, calling the current period a brand renaissance. “Advertising is not in crisis. Advertising is fully grown. We are in the golden era. We just don’t know it, because you never do when you’re in it,” he said.

AI, in his framing, is the circuit-breaker. He rejected the idea that it removes jobs, junior roles, creativity or craft, noting his agency now runs roles that didn’t exist two years ago and that AI frees juniors from the filing-cabinet grunt work he once did. “AI is divine intervention,” he said — an opportunity to reset margin and reclaim the strategy, ideas and orchestration that machines can’t own.

His real target was elsewhere. “The problem isn’t AI. The problem is capitalism,” Howatson said, pointing to the relentless demand for growth that forces clients to claw savings out of agency fees when their own growth stalls. The way out, he argued, is to lead with value: own more of the value chain, own a niche, or become an enabler — and treat creativity as the process that drives client growth, not the product itself.

Private equity is circling Australia’s independents as the ad pie grows

Private equity is buying its way into Australia’s independent agency scene, backing founder-led groups in deals that often never surface publicly. That was the standout from The Partner Rethink panel, which brought together Squad M&A CEO and commercial partner Virginia Hyland, Audience360 managing director Jenny Parkes, Blis group head QLD & WA Scott Mathison and Perion senior sales director Henry Hellegas to map where money and power are heading.

Hyland, who has watched the indie world from both sides, put the figure at roughly ten deals a year — many of them invisible because private equity backers prefer not to flag their involvement. The appetite is being driven by a growing market, now worth $19.7 billion, and a coming shift in where it is spent: away from the content channels that dominate today and towards retail, performance and AI. Her warning to indies was not to mistake efficiency for strategy. “One of the biggest threats is that we think that just being a little bit more efficient than we are today, using AI, is the way to do it,” she said, holding up US-listed group Stagwell as proof of what building AI capability from the ground up can deliver.

Parkes pushed back on the idea that in-housing is a new threat, arguing clients have pulled capability in and out for years — though AI now makes it stick. The opportunity for agencies, she said, is depth: specialisation, strategy and genuine transparency, which she described as “absolutely beyond a buzzword” after a data and privacy summit where the word was inescapable. Above all, she argued, it remains a people business, with clients now expecting senior counsel daily rather than once a quarter.

For Mathison, the platforms’ growing power is an opening, not a threat. The tech is “really sexy to look at”, he said, but the platforms don’t understand a client’s business the way an agency can. His pitch was a return to fundamentals: the money goes to those who ask for it, and the agencies winning are the ones turning platform data into a story the least media-trained person in the room can follow. His closing line doubled as the panel’s: “The threat is we stop communicating and we sit behind platforms and become invisible … people want people to win. Let’s stick together.”

Hellegas, fielding the AI question, was candid that some of the change is simply relief from tedium — he was, he said, “thankful for Claude” for the address cross-referencing that used to eat hours. But the deliverable isn’t getting worse, he argued; agencies are doing more in the same time. The real edge is expertise: agencies that invest deeply in the platforms and partners they use will out-execute rivals who only brief at face value. His threat for the next five years was fragmentation — ever more platforms — and his opportunity was building the right architecture of partners around each client.

"We've moved from transformation to just outright disruption. This is the new normal, and it's not going to slow down."

Kristiaan Kroon, CEO, Omnicom Media Group

‘We’ve moved from transformation to disruption’: holding-group bosses on the great agency reshape

Disruption is the new normal for advertising holding groups as merger maths, integration and changing client demands reshape the market.

Omnicom Media Group CEO Kristiaan Kroon, WPP Media CEO Aimee Buchanan, Publicis Groupe ANZ CMO Imogen Hewitt and RyanCap founder & CEO Simon Ryan set out how the shift to consolidated group models is playing out behind the scenes.

Kroon gave the most concrete read on the numbers, following the Omnicom-IPG merger that closed locally in December. The combined business now runs six media agencies and just over 1,500 staff onshore, with another 100 roles being hired, sitting inside an Oceania structure of roughly 3,500 people.

He said the merger's cost savings flow from three places: real estate, technology and data and people. Omnicom currently carries 17 offices across five capital cities, with more than 1,000 staff in its Melbourne building alone.

But Kroon was bullish on what the combined business unlocks. With the agencies now settled and delivering, the bigger prize is the ability to move upstream through a new consultancy layer being built within Oceania under Nick Garrett, bringing media, creative and measurement together.

The real shift is reframing brand from something a client rents through paid media into part of its business strategy.

"It's a very different conversation," he said.

Kroon was just as pointed on where the money actually comes from. The engine of the business, he said, is not just the headline-grabbing mega-account but the $5 million to $25 million client. He has 84 of them on his books, and they drive significant revenue share.

On headcount, Kroon was direct.

Forty-three people were made redundant locally out of a 1,500-plus onshore base, with the global reduction set to exceed 10,000 roles against 134,000 staff worldwide, the bulk of it in centralised US functions.

"Any redundancy is tough. I've been made redundant, and it wasn't great," he said, adding that the calls were structural rather than personal. "Redundancy is not about the person, it's about the role."

Buchanan framed WPP's retirement of GroupM and launch of WPP Media as less a restructure than a reset. Much of the back-end consolidation in HR and finance was already underway, she confirmed.

"The biggest change that was enabled through the rebrand was more of a cultural shift," Buchanan said, pointing to how the group decides which capability services which client.

She said the new model let WPP win a client it had previously pitched and lost, by building a bespoke structure around the client's three-to-five year ambitions.

"I don't think a single agency in our group would have been able to give the client confidence in our ability to manage and transact the scale of their business."

Against the global picture of 9,000 roles being cut, Buchanan said the Australian business had stayed resilient on the back of five straight years of growth, an earlier start on transformation and heavy investment in its tech proposition. The local arm is currently hiring 130 to 140 people.

Buchanan was also bullish on what that investment unlocks. WPP has spent the last 18 months building out its tech proposition, utilising global platform WPP Open in the local market, and she said the payoff is people finally freed from the manual work they always hated. AI has solved for that, she said, but the real value sits with the people deploying it.

"It's about the human ingenuity of those people to deploy that technology," she said, adding she remains a firm believer this is still a people business.

Hewitt argued Publicis holds a first-mover advantage, having run a single P&L since 2019. The harder part, she said, was behavioural, not structural. The group had moved from "agency centrism to absolutely categorically client first", and that took practice.

"There are a lot of behaviours that you have to unlearn."

She cited Arnott's, delivering triple-digit ROI improvements across media, creative, PR and shopper under a single chief client officer, and Cancer Council Australia, where a cross-discipline team produced behaviour-change work that won an ARIA and helped reduce skin cancer incidence.

On M&A, she said acquisitions such as Atomic 212 locally and MBM in New Zealand kept their brands, identities and leadership, with integration limited to the back end. "It is always additive, not about buying more of the same."

Ryan read the same forces from the outside, as an acquisition wave sweeping up Australian agencies on the back of the industry's appetite for scale. The 25-year veteran of IPG, WPP and Dentsu left in 2019 to build a capital business funding agency growth, and is now backed by private equity himself. He pointed to 87 global media acquisitions last year, many of them landing in Australia and largely targeting independents such as Atomic.

He framed that appetite as a vote of confidence in the sector. Capital is moving in because the pie is growing, Ryan argued, with private equity and global buyers investing to back the next wave of agency growth.

"You can be a good fixer or a good grower," Ryan said, placing himself firmly among the growers chasing the next deal.

On conflict and non-competes, Kroon said scale was the answer rather than the problem. Omnicom now holds 15 auto clients, up from 11 pre-merger, managed across separate agencies with different leadership, strategy and planning. Most client questions, he said, centre on delivery and governance, not conflict.

There was a shared verdict on where this all heads. Kroon said one of his teams had reframed the moment as a move "from transformation to just outright disruption" and warned it would not ease.

"This is the new normal, and it's not going to slow down."

Hewitt agreed, arguing few industries are better built to absorb constant change.

"We are a group of people that are very used to a constant state of change."