Media Buying Briefing: Agencies bet on PR with acquisitions and AI investments

This Media Buying Briefing covers the latest in agency news and media buying for Digiday+ members and is distributed over email every Monday at 10 a.m. ET. More from the series →

Media agencies are buying public relations shops and investing in AI as the rapid growth of digital media presents new opportunities to engage consumers and expand their specialities.

In the case of integrated agency CG Life, the impetus is keeping stride with the faster pace of social media and communications with consumers as the health and life sciences space has grown in recent years. David Ormesher, CEO of CG Life, said this growth is sparked by a current “renaissance in life science innovation” — making health care communications and personalization for consumers an integral part of a health agency’s digital strategy.

This May, the life science-focused agency announced the acquisition of PR agency Berry & Company Public Relations as part of its ongoing strategic expansion. The New York City-based PR firm also specializes in life sciences and medical technology companies, with services ranging from traditional and sponsored media to content development. In March, CG Life acquired digital agency Toolhouse to expand tech and omnichannel areas and doubled the organization’s size to a workforce of 150. (Financial terms of these acquisitions were not disclosed.)

Personalized health content

U.S. health care advertising is projected to grow from some $23 billion in 2023 to $29.2 billion by 2028 — with a growth rate of 4.6%, according to The IMARC Group. Much of the online growth is driven by direct-to-consumer advertising and more digital platform options. Yet with significant investments and resources, agencies in this space need to find effective ways to market, tell stories and connect data to the “broadest possible audiences,” Ormesher explained.

With some of these technologies, agencies can now leverage digital channels and reach consumers more effectively using audience targeting for personalized content. Ormesher believes the life sciences and biopharmaceutical industries will lean into more PR and marketing to connect people with specialized therapies or clinical and advocacy content, for instance.

“We are also in what many consider to be a golden age in healthcare innovation,” added Bill Berry, principal and founder of Berry & Company. “We are making historic progress in developing new and better treatments for many diseases.”

The Shipyard’s digital strategy

In May, independent agency The Shipyard made a similar move acquiring PR agency Fahlgren Mortine as it continues focusing on building its brand and content strategies. Last year, the agency developed an analytics tool designed to measure what it calls “brand love,” including metrics from awareness to loyalty. As the agency continues to expand, Shipyard was very strong in paid media but newer to developing owned and earned media, said Rick Milenthal, its founder and CEO.

“That’s what intrigued me about [Fahlgren Mortine] — while they were known as a public relations company, which sounds fairly traditional, actually at their core, they were a great digital company,” Milenthal told Digiday.

Last August, The Shipyard got a minority investment from Alaris Equity Partners that funded the acquisition. The Shipyard maintains the Fahlgren Mortine brand and gives the PR firm access to expanded media buying volume, creative support and data resources — with the combined company now totaling $350 million in billings and 400 employees in 10 offices in the U.S.

Fahlgren Mortine, previously owned by communications network Eastport Holdings, already shared a client base with The Shipyard in B2C and B2B sectors, including tourism, financial services and retail.

With this combination of PR areas, Milenthal believes the agency can significantly increase its digital asset output and grow the digital media business overall, despite a crowded digital market. Agencies have to find a way to manage output for a number of clients — and it doesn’t make sense to “have 80 storytellers for different clients,” he added.

“The digital world is still about storytelling,” Milenthal said. “There’s no such thing as a successful media agency that isn’t focusing on digital media, that isn’t focused on content.”

Integrating AI into PR

There is also a growing appetite for PR services as agencies find more generative AI applications. Stagwell Marketing Cloud’s PRophet platform has been using AI across its influencer discovery efforts and in developing campaign management and news monitoring products. 

PRophet founder Aaron Kwittken contends that a lot of focus on AI is in generative AI, and many holding companies are attempting to develop their own systems. Yet they may be “missing the larger point,” because predictive AI may have a greater impact on communications as agencies and brands tackle questions like, “Which trends should I lean into before they become trends? What’s the next threat I need to prepare for?” Kwittken explained.

By enlisting in AI and data, agencies may be better able to control outcomes — whereas there are no “guarantees” in earned media, for example. That’s part of what PRophet is able to provide: the data to predict “mediability” of a pitch so that users can get the media placements in less time. The platform can also help with creating pitches using AI to predict which reporters or influencers will likely engage with it.

However, the spread of AI is already leading to agencies observing wastage in ad spending and production with more text, audio and image used across platforms. Gabriel de la Rosa, principal at PR agency Intelligent Relations, warns that there is a lot of spam and waste across PR content going to publishers and consumers, as well. Intelligent Relations’ PR platform uses AI to draft pitches and content and monitor media platforms.

With AI, de la Rosa contends the saturation of content and spam will get worse — meaning agencies and brands have to go beyond using generative AI for content production and research if they want to reach people.

“You’re going to need to get very, very creative if you want to reach out to people in the coming months and in the coming years,” de la Rosa said.

Color by numbers

GroupM agency Mindshare has adapted Maslow’s hierarchy of needs through the lens of Gen Z’s relationship with the digital world, coining the phrase “phygital pyramid.” Working in partnership with JUV Consulting (now UTA’s Entertainment Marketing Next Gen practice), the GroupM media agency surveyed 160,000 Gen Zers globally, while JUV did qualitative work to come up with:

* Base needs = access and accuracy: the cohort needs to be able to find its community and constantly communicate with each other. Respondents reported daily screen time of 4 to 6 hours, with 31% at 7+ hours, which is as much or more than they are in school or work;
* Safety needs = communes of comfort: Gen Z likes to gather where they feel safe online — and that’s not in many places. Discord is one place they feel safe. 84% of respondents use Discord, and nearly half (41%) use it multiple times per week. Also, 59% of global Gen Zers find it easier to talk to others about their feelings in an online environment rather than face-to-face.
* Love and belonging = formulated fandom: this is where creators and influencers come into play. Gen Z is 38 times more likely to purchase products that borrows outside IP and 80% have made purchases via creator-led livestreams;
* Self esteem needs = phygital forums: Gen Z finds its validation through a combination of online and offline presence. Brands can meet this need by providing products and experiences that enhance a consumers’ confidence within a certain group, even if it isn’t hyper-specific to them individually;
* At the top of the pyramid, self actualization = hybrid advocacy: the study finds this is where brands should try to convert Gen Z fans to brand ambassadors. A good example is the popularity of the Stanley cup (TikTok’s #StanleyTumbler), which experienced 275% growth from 2020 to ’21.

Takeoff & landing

  • Dentsu’s Carat landed media duties for Ikea furniture in the U.S., replacing GroupM’s Wavemaker effective the end of August.
  • Personnel news: IPG’s Acxiom unit hired Courtney Keating to be its new CMO … Publicis’ Zenith unit in the U.K. tapped managing directors Sannah Rogers and Jon Stevens to jointly lead the agency, choosing not to replace CEO Natalie Cummins, who left the agency.
  • Are you scheduling your Cannes plans yet, or just want to stay in the loop on all things Riviera this year? The Digiday Cannes Briefing is returning, keeping you informed of all the industry buzz surrounding the Cannes Lions International Festival of Creativity. Sign up here to receive a daily Cannes Briefing beginning June 14 and running the week of the Cannes Lions International Festival of Creativity.

Direct quote

“The big question that all of us who are looking at acquisitions is how do you price an asset today versus what it was priced at two, three years ago? And then the sellers, the owners of those businesses today, are they willing to transact at a price that’s different than the one that they thought their business was worth two or three years ago? I don’t know whether that has thawed completely.”

— John Castleman, CEO of digital and IT consultancy Bridgenext, on the potential of the mergers & acquisitions market possibly heating up again.

Speed reading

  • I wrote about how FullThrottle.Ai is developing an audience targeting tool for media agencies using a generative AI assistant.
  • Seb Joseph looked into how a panic-induced cull of agencies reacting to ad-tech snafus quickly turned into a full-blown supply-path optimization exercise across the programmatic spectrum.
  • Kristina Monllos dug into how fintech firm Klarna went about applying AI to reduce its marketing costs by 37%.

https://digiday.com/?p=546475

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