Is regional agency leadership still necessary?

Last week Wunderman Thompson announced the role of departing APAC CEO Annette Male would be combined with that of its current EMEA leader, Ewen Sturgeon, into one international role led out of Europe.

This isn't an isolated incident either. This summer saw McCann Worldgroup reassign the role of Asia-Pacific president with the promotion of Alex Lubar, handing over APAC oversight to Ghassan Harfouche, group CEO of the Middle East Communications Network (McCann Worldgroup and Interpublic Group’s partner network in the Middle East, North Africa and Turkey). Harfouche already had oversight of 14 different Interpublic Group advertising, media and PR agency brands in 15 cities across 13 countries in MENA and Turkey but has now added another 26 APAC offices in 13 markets.

Also, earlier this year Havas replaced its India, Southeast Asia and North Asia CEO Vishnu Mohan (after removing APAC CEO Mike Amour two years ago) with a model whereby Dubai-based growth markets leader Alberto Canteli simply tacked on Southeast Asia and North Asia remits to his existing market portfolio of the Nordics, Central Europe, Eastern Europe, Russia and the Middle East.

What's behind these moves? Increasingly we are hearing that regional pitches are on the decline.  Clients themselves are restructuring into more global and local operations, and regional leadership adds a layer of bureaucracy and additional overhead costs that aren't necessary for today's 'glocal' realities.

Not surprisingly, many who have served in regional roles disagree and see the value they have and can provide. Thus these moves have sparked fresh industry debate (including this exchange on LinkedIn) over the relevance of regional agency oversight. 

So Campaign Asia-Pacific asked for industry opinion* from those in Asia-Pacific for their view, posing the question:

Is APAC agency leadership still necessary?

Bryce Whitwam, adjuct marketing lecturer, NYU (China) & former China CEO of MRM and Wunderman:

Regional gigs used to be coveted agency positions, but with the majority of revenue now coming from a few markets like India and China, they are sadly being exposed as expensive cost centers, increasing overhead, and making the 4As uncompetitive relative to the local shops. In pre-Covid times, regional leads used to travel the region extensively, some as much as 75% of their time, but that’s all come to a sudden stop now.

Regional gigs used to be about driving APAC strategy, but they now have become a conduit for the global office to maintain financial discipline (ie. hit numbers, cut staff, give bonuses). 

Clients used to award regional pitches, but now agencies have to pitch locally for everything, and if you win a regional pitch, the client’s China team often has magical veto power.

The regional 4A model needs to evolve to become more decentralised, investing (yes, the dreaded “I” word)  in localized market innovation, diversifying offerings in data, tech and commerce in the markets where the greatest opportunities exist.

Senior regional leader at a 4As agency:

Cut these roles out at your peril, agencies.

I think there's a huge amount of value in a regional role, which may be very different from the title and the person because anybody can do it well or badly.

But when you take away an opportunity to add human, client and commercial value to a network, you’re in danger of real unintended consequences. 

The role can provide human value in coordinating, connecting people, training people and acting as a coach and counselor who can also provide protection from global issues, threats or angry clients to allow people in-market to do their job of great communications.

On the client side you’ve got probably got someone with incredibly senior client wisdom and experience and status which can be particularly important to senior clients who want to speak with the right person with the status to fix their problem. These leaders can also anticipate problems before they arise and fix them ten times more cheaply than after they happen. 

And then there's commercial value, because these folks have an ability to identify commercial synergies and can potentially remove duplication from a complex agency since they have the oversight to not be sucked into P&L issues and squabbles over territorial boundaries. That can work in the interests of both clients and networks. 

So even if a regional client structure is no longer kind of in existence, a lot of these benefits of a regional role still hold true.  
 

D.Sriram, co-founder and managing partner at Searchlight Management Consulting, former chairman, Ebiquity China and former Starcom APAC CEO:

In a word, yes. However, the APAC agency leaders of recent years lack real, in-market experience across key Asian markets and business cultures. Most agency APAC CEO or functional leaders today have essentially worked in one market (hopefully at least still in Asia) and then moved (typically to Singapore) to "oversee" the region. Even the most intelligent and well-meaning of such individuals lacks the understanding and experience to meaningfully help their colleagues in, for example, India, China, Thailand or Indonesia.

It's partly a cyclical trend driven by cost reduction and partly down to individuals in those regional roles and their market-level experience. When I ran Starcom in APAC I came to that role after in-market agency leadership roles in India, China and S.E.Asia, so I knew the markets well and could get involved at a pretty granular level with what we were doing. 

Do the in-market leaders need that kind of support? Yes. Are they getting it? For the most part, no. That combination of experience in multiple Asian markets and an international perspective is very powerful, but unfortunately, not seen in most agency APAC leadership teams these days. In that scenario it's better to have strong local leadership for key markets reporting directly into HQ rather than insert a management layer that adds no value. I think that works equally for all businesses, not just advertising.

Tripti Lochan, Asia CEO, VMLY&R:

It’s my view that the ‘whole is greater than the sum of its parts.’ Countries can of course survive in silo, but to thrive they need to show that they are bigger than a single office with capabilities confined to their four walls. Regional leadership then, allows agencies to see the bigger picture, share expertise and cross-pollinate knowledge and connected experiences across markets for clients and their consumers.

The pandemic has erased working boundaries, making it easier to work remotely across multiple markets than ever before, so having an APAC-level team to guide this process with insight and knowledge from strong senior market leads is invaluable, allowing teams more perspective and insight into countries, cultures and communities, along with the ability to draw on network strengths and expertise to deliver the very best support for clients.

However, this is not the time for centralisation of control, as was the way of regional leadership in the past. Today’s regional leaders need to coach, connect and mentor, working in tandem with in-market leaders who understand granular nuances of the cultures and communities they work in. Only with the distribution of capabilities through centres of excellence can agencies create truly connected brands that make a real impression, while simultaneously maintaining the known, global brand identity.

 

Neil Cotton, founder, OpenWorks and former Asia chief strategy officer at Y&R, Lowe and Bates:

I'd answer the question with another question.

What if Wunderman Thompson EMEA was folded into APAC under the leadership of a CEO based in Shanghai? How would that go down in London? What would it say about the importance of Asia versus Europe?

The Wunderman Thompson move seems counter to the trend of the last couple of decades where power gradually seeped out of the traditional centers of London, New York and Tokyo into the regions—where growth was often higher and potential greater.

I suspect decisions like this, where regional teams are scaled back and power is re-centralized in a westerly direction, are decisions driven by money more than by client satisfaction.

Regional 'seagulls' (I was one for a long time) get a lot of flack—often for good reason. However, good regional centers can be extremely valuable when they give local teams access to expertise and resources that they would not be able to pay for on their own.

All of that said, I've been around long enough to see the power balance and structure bounce around from global to regional to local and there's no reason to believe the bouncing will stop with this.
 

Gordon Domlija, Asia-Pacific CEO, Wavemaker:

Completely objectively, setting aside any potential vested interest, the need for regional leadership, particularly across a landscape that is as nuanced and diverse as Asia-Pacific, has never been greater.

It comes down to the individual businesses and the people within them as to the value that any structure brings. A few poorly performing agencies restructure and cut costs, and a bunch of disenfranchised people jump on this non-event to offer sage commentary. Nothing new in this industry.

Undoubtedly the nature of what ‘regional’ means has changed. Thankfully it is no longer about ambassadorial market visits, it is about building culture, capability, performance and consistency in every local market to deliver exceptional work for our clients.

From my personal experience at Wavemaker, we have been through this cycle before. We disbanded the regional team, went global to local—and it was an unmitigated disaster. The loss of connectivity, the distance from global to local, and the lack of anyone in global with any understanding of markets or the region, stalled growth. We reintroduced a regional structure in January 2019, leading to a period of continued and unprecedented growth.

Every one of our (very lean, and not at all expensively resourced) regional team come directly from market experience in the region, we each bring a level of expertise and experience that cannot be replicated in every one of our 18 markets, but does bring value every day to our people and clients in every one of those local markets.

Amrita Randhawa, Southeast Asia CEO, Publicis Groupe

To me it is a question of organisational direction.

It comes down to three key things – scale, synergy and strategy. Does the network have enough scale, depth of client and market footprint where the complexity is enough to warrant the leadership?

Are there pockets of business development and innovation that could be scaled regionally or globally and inherent synergies that can be leveraged for client delight?

Is the region a strategically important enough one for you and your clients to warrant the investment to not just manage the now but plan for the future?

If the answers are 'yes'then why would you not think its important. If the answers are 'no' then that’s a whole other Sounding Board subject isn’t it?
 

Stephen Drummond, chief strategy officer at Holmes&Marchant and MSQ Asia:

It comes down to the structure, scale, and the functions of the regional people. Some of the larger groups have such scale in sub-regions like China, Japan, and SEA and ANZ they simply don’t need an extra regional layer of expensive management for ‘reporting purposes’. On the other hand, some networks need a heavyweight layer to fill experience gaps and it might be the best option to spread their skills across the network. Then you have regional clients who need agency counterparts to service them.

Either way for holding companies it’s the advertising equivalent of God’s waiting room. A nice place to put the old folks before they work out the least expensive way of removing them.