The Rundown: GDPR is hitting agency holding groups
The General Protection Data Regulation has created two logical approaches for agencies when it comes to data: Do they own, or do they rent? It was a trend clearly seen in agency holding group earnings over the past week. And in some ways, Publicis Groupe seems to be on the back foot.
At Publicis, a slowdown from the first quarter at 1.6 percent growth to a negative second-quarter with -2.1 percent growth was due, according to Publicis CEO Arthur Sadoun, to the implementation of GDPR. Media activities in Europe were affected, but Sadoun was quick to say the agency was completely compliant with GDPR, as have other major holding company executives. Publicis said it suffered about a $11.6 million revenue hit as a direct result of GDPR.
There was a significant amount of buck-passing at play: Steve King, CEO at Publicis Media, said that publishers lacked technology and were ill-prepared for the GDPR, which then meant that they couldn’t get the consent needed for targeted advertising.
But what’s more interesting is that Publicis seems to have no intention of owning its own data. A race for “identity” is underway in digital advertising, and — accelerated by GDPR — there’s a growing number of players that are amping up their access to as much first-party data as possible. Publicis appears to be headed in a different direction.
Publicis, of course, was one of the agency giants that demanded that publishers would collect users’ consent to be targeted with ads and to assume liability for collecting that consent. Essentially, for publishers, consent’s the problem, regardless of what the agency does with it. Sadoun, however, makes it sound like a positive: “We thought that it was important for us to really have a strong point of view and make sure that we take in the interest of the client,” he said.
But under that, it seems that Publicis would rather someone else own the mess than doing it themselves.
It’s a stark contrast to IPG, for example, whose $2 billion acquisition of Acxiom Marketing Solutions means a clear emphasis on owning, rather than renting data. First-party data management is about 70 percent of Acxiom’s business. The idea is that IPG can then use AMS as a core for first-party data and work with AMS to address client needs around data solutions. And it’s a big play to make in the race for first-party data, especially as agencies have complained for years about the kind of data they get from outside partners and have bemoaned its quality.
The biggest agency holding group by a long shot, WPP, whose agency, GroupM, asked publishers to sign a contract that would force them to share control of audience data with the agency group — or cease trading with them — is also in the middle of figuring out its approach. WPP has overall always been a strong proponent of data ownership. There remains speculation that its market research and data offering, Kantar, could potentially split from WPP as part of a buyout — speculation fueled even more when it sold its AppNexus stake to AT&T earlier this month.
In April, co-COO Mark Read reiterated that Kantar is an important source of data. However, for analysts, Kantar is a competitive advantage for WPP, and IPG’s Acxiom purchase may actually stem sales talk and instead renew a focus on better integrating Kantar into WPP’s overall offering. “There will, therefore, be a question of whether the other agency groups will take similar steps, and it may also influence WPP’s decision on what it does with its Kantar Data Management business, where WPP has historically claimed the value of owning data,” Liberum analysts Ian Whittaker and Annick Maas, wrote in a note.
WPP reported a first-quarter trading update in April and will issue an statement for the first half on Sept. 4.
The caveat here is positioning. IPG now owns, for example, Infobase, an aggregation of customer records that theoretically, at least, anyone can access through public records or publishing partners. But what Infobase, as well as AMS does, is aggregate, clean and maintain that data. Management of data is a very attractive potential capability that IPG can then package with Mediabrands and sell to clients who have plenty of their own data and are looking for ways to maintain it. “Any large client that has data needs better organization,” said Pivotal analyst Brian Wieser.
Speaking about IPG’s $2 billion acquisition of Acxiom Marketing Solutions, King said that Publicis “believes in the power of choice” — it wants to continue to work with data partners, and be “data-agnostic.” Read: Leave the dirty data work to someone else.
“We decided not to own that data. We believe that’s the best interest in our clients, and our focus is on helping our clients grow, but for our sector I think it’s probably a positive thing that IPG has the confidence to make this bold acquisition,” said King.
At the same time, Publicis is positioning itself toward being more about “business transformation” rather than data ownership or management — which can be attractive for a CMO. The question is whether that big bet will pay off better than IPG’s.
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