Arun Sudhaman 16 Dec 2019 // 10:04AM GMT
It was a week to debunk the assumption that agencies are resistant to change, thanks to major exits at Omnicom (PR CEO Karen van Bergen and Porter Novell chief Brad MacAfee) and Interpublic Group (Golin co-CEO Jon Hughes).
And while there is always a temptation to group moves like these under one headline, each case befits its own reading, even if some of the underlying trends are undoubtedly shared. If nothing else, they underline the notion that holding group agencies are under persistent internal pressure, amid consolidation, restructuring and — of course — senior departures. Business as usual, then.
After analysing IPG's moves on Friday, today is Omnicom's turn — arguably the more surprising of last week's agency bombshells. First came the muted announcement that Karen van Bergen was stepping down after almost four years as Omnicom PR Group's first CEO, to become dean of Omnicom University. That was followed a couple of days later by the exit of Brad MacAfee, her successor as CEO at Porter Novelli.
There is little doubt that the Omnicom University dean role is highly coveted, reporting directly to CEO John Wren and viewed as one of the holding group’s plum assignments.
And yet, the curious manner of Karen van Bergen’s shift to the position — rapid timeline, no transition period, no effort to share the announcement — raises questions about the nature of her departure. Despite returning to growth since van Bergen took on the newly-created position in early 2016, Omnicom’s PR unit has lagged the performance of its other divisions.
Van Bergen installed new leadership at many of the agencies, and oversaw a considerable amount of consolidation, including mergers of FleishmanHillard, Ketchum and Porter Novelli in four countries, Porter Novelli and Cone Communications, and Portland and Gplus.
Also to her credit, van Bergen assembled a heavy hitting team of OPRG leaders, including COO Joseph Russo, chief innovation officer Erin Lanuti, international president David Gallagher and Asia-Pacific president Lynne Anne Davis.
And yet, when van Bergen took on the top job to much fanfare, she pointed to three priorities — talent, acquisitions and innovation. Despite hundreds of thousands of airmiles, Omnicom made only one acquisition — healthcare firm Rabin Martin in mid-2016 — under van Bergen’s watch.
As for innovation, it is hard to make the case that agency consolidation counts in this regard, even if the six sigma-styled corridors of holding group bean counters may beg to differ. While Lanuti’s recent arrival has improved the outlook in this regard, much of what passes for innovation at Omnicom's PR firms appears to occur in isolation of its sibling agencies, rather than as part of a cohesive, group-wide strategy.
Indeed, agency CEOs may prefer it that way. One of the more persistent concerns about van Bergen's tenure reflects the difficulties inherent in 'leading leaders'. "It's not an easy role," says a senior source at an OPRG agency. "You have to be collaborative and listen to people and seek advice."
Meanwhile, other OPRG sources point to the elusive quest for sustained growth as a critical factor, particularly at the three global firms — FleishmanHillard, Ketchum and Porter Novelli. “The lack of growth across the global agencies must have been the reason,” says one. "My guess is she has ‘lost' a bit of a battle with the agencies,” adds another.
Whatever the reasons, OPRG's next CEO will have plenty to do. Any inventory of priorities may well start with Porter Novelli. In less than six months, OPRG's third-biggest PR firm has parted ways with its CEO (MacAfee), president (Jennifer Swint) and chief operating & client officer (Nick Propper). While a new CEO is expected to be unveiled soon, Porter's decade-long malaise is likely to require considerable attention.
Much will depend, no doubt, on whoever OPRG ends up hiring for the role. More than one of the group's agency sources wondered aloud whether the position will actually be filled, reflecting — perhaps — the dubiously high esteem in which cost cutting and restructuring are held by holding group leaders.
Meanwhile, in another curious move, OPRG pointedly noted that van Bergen's successor will come from outside the company. Further conversations suggest it may come from outside the PR agency world altogether. "This may be an opportunity to shake things up," says one OPRG agency source — pointing to the broader transformation that is required of traditional PR firms.
Whether any internal candidates covet the role would, accordingly, appear to be a moot point. That many do not illustrates the disconnect between holding group leadership roles and the proximity to clients and talent afforded by agency CEO positions. Not many agency leaders get into this business because they cannot turn down the siren call of operational spreadsheets. (Although it should be said that many eventually find it difficult to resist the lure, if running a P&L is the most obvious path to advancement in the holding company world.)
As an outstanding client leader herself from her time on Phillips, McDonald's and Coca-Cola, van Bergen presumably knows this better than most. And that may well help to explain why she has moved into the Omnicom University position that will see her focus squarely on talent.
Yet, it also underlines the difficulties inherent in holding group leadership roles, where financial acumen often appears more prized than industry insight. The risk, at a time when the publicly-held model is under significant pressure, is that the lack of meaningful investment ultimately sacrifices innovation in favour of efficiency.
This is, of course, not unique to OPRG, as anyone paying attention to the agency world will know only too well. Ultimately, though, van Bergen's tenure will probably be remembered for consolidation above all else. Is there much to suggest that her successor will fare any differently?