Scott Hagedorn’s losing sleep.
The CEO of media agency Hearts & Science says his mind is plagued by the looming threat of consultancies, like Accenture and Deloitte.
"I’m constantly thinking that we compete in a world where you have to have mastery of the infrastructure required to operate media as well as the service models on top to do it," he told Campaign U.S.
"I’m always kept up at night by the systems integration capabilities of these providers. They could come in with implementing marketing software and then slide the services model on top of it. That keeps me up at night, but we haven’t encountered that yet. I haven’t felt the Accentures and Deloittes in any pitch capacity. We’ll be thinking through what our infrastructural level capability is," he added.
It’s one of many obstacles looming on Hagedorn’s horizon as he continues to navigate the rise of the Omnicom Media Group shop. His agency has just secured the last piece of the puzzle, propelling Hearts & Science to global status less than three years since its launch. Operations in Shanghai confirms a presence across all five regions in 12 countries and 18 cities around the world.
China is a huge sigh of relief for Hagedorn, who grappled with implementing his data and analytics platform in a way that worked for the market. "For a while, we’d been exporting the platform we’d been using around the world into China and it just didn’t work," he confessed. Adapting the cloud-based insights and activation platform - created via Amazon Web Services - to use globally has been one of his biggest challenges to date. But he’s smiling now, because it’s finally at a level of maturity to launch in the Asia market.
New U.S. wins from Amgen and an undisclosed brewery adds more than 150 employees to the now 1,200-strong agency. No longer do they appear to be riding on the coattails of their dream launch - $6 billion of business from big names including Procter & Gamble in December 2015, and AT&T in August 2016. In fact, the U.S. has added half a billion in incremental billings since Q3 2017. Around $1 billion of its overall billings comes from outside the States.
Even the U.K. market has leveled up after a sluggish start (it failed to secure P&G). It now looks after the Co-op and UKTV. Its golden goose, however, is Amazon Audible. Hearts & Science merged with Rocket to help lock down a foothold on British soil. Hagedorn said he was drawn to the agency for its like-minded point of view on content development, but also because "they’re kind of spunky, like the Hearts team."
So what lies ahead for this mounting shop? We had questions - Hagedorn had the answers.
What are you doing about Marc Pritchard’s want to bring media and creative back together?
[P&G] has such a diverse portfolio that they’re experimenting with a lot of different things. The key for us has been to try to be flexible and not fully paranoid. Since we have at least two really big clients in the U.S., we always feel like we’re trying to add a little chaos into one of them, and then bring a little bit of order into the other. We’ve been flexible and adaptive and are trying to help think through a test design on what ultimately they’re trying to achieve. I think that media agencies are transforming and we have to be diligent about always showing what our value is.
What does the Facebook/Cambridge Analytica scandal mean for agencies’ approach to data?
I think people are going to be more attuned to how they’re being marketed to. If you think about Maslow's hierarchy of needs like physiological, safety, belonging, self-actualization - it’s all been replaced by apps from Headspace at the top to Uber and Seamless at the bottom. All of those are delivered by mobile devices. Right now, we’re dealing with a world in which ads are still largely trans-created from TV or other assets and broadcast through platforms, and the whole Facebook and Cambridge Analytica stuff is for a non-mobile world. I’m interested to see what delivery or what amount of execution of that was done on desktop versus mobile devices, because I think the identity rules around mobile are very different than desktop, and a lot of what’s been engineered is solely for desktop.
What are the media resources of the future?
User experience design, anthropologists and somebody who’s dealing with marketing ethics are going to be the top three things to have. Understanding how to make content feel like it wasn’t designed by Microsoft - no dig on them, but it’s very left-handed versus an Apple-based design where it’s all somewhat intuitive. The anthropology of what people’s relationships look like with apps on their mobile phones and what’s appropriate and what’s not appropriate is the battleground of the future.
Has YouTube cleaned up its act with brand safety?
There’s still no magic A.I. that can classify what language a video is in. If you have an English ad running next to relatively safe content that’s in Arabic, it still throws you off a little bit because it doesn’t make any sense. So it’s been quasi-cleaned up but not fully-cleaned up. I haven’t seen as much super questionable content where you’re like, "What is that doing there?" So, I think they did do a lot of work going back and editing the corpus to eliminate a lot of inappropriate stuff.
What’s the most difficult part for YouTube?
The hard thing on YouTube and maybe all videos is that the classification of the content is up to whoever’s uploading it. Unless you have something that’s able to run all video and understand the intent of what’s being said on the video, how can you classify for what the tonality of a video really is? And how can A.I. be the beholder for brand safety? There’s no real classification system that’s universally-checked, and it would be physically impossible to watch the amount of content that’s being uploaded to all the platforms, not just YouTube.
Is display dead?
I worry that we went too far too quick with digital and we really don’t know if it’s really effective. Did display ever really work? It might have been interesting or somewhat new for a period, but display’s become wallpaper - we have clients wholeheartedly opting out of all display now and just looking at creating a private marketplace for online video.
What are you really curious about?
Something I call the era of mass precision into the era of personal persuasion. We have to be thoughtful that the purchase funnel is no longer linear. Given all the fake news that’s out there, are there going to be a lot more consumer-initiated requests asking Alexa what a brand’s sustainability strategy is, and whether or not the content has been orchestrated to fill in the gaps?
What’s the secret sauce of Hearts & Science?
Hearts & Science: the facts
Imprint operations across all 5 regions/12 countries/18 cities/750 people US/1200 globally
Brands GLOBAL/US HQ: AT&T, P&G, Amgen, Intuit. EMEA: Yamaha, SEGA, Amazon, Toshiba, Qatar Airlines, Ugg, UKTV, The Co-Op (retail). MENA: Du (telecom), Mai Dubai (water) Americana Group, Yumi. LATAM: Cencosud (supermarkets), Kia, Regional Telecoms Provider. North America: Barclays, NYT, Brewery Portfolio, Tourism Nova Scotia
Wins Total $7b billings, with $1b coming from outside America. US has added a half billion incremental billings since Q3 2017