Inside U.S. Media Agency of the Year Initiative’s Remarkable 2018 Turnaround
The agency went from ‘basket case’ to ‘IHOb’ glory
In 2016, Initiative was on the ropes, and global CEO Mat Baxter knew it.
“It was a basket case,” he admits, with “a dysfunctional culture, not much of a product, if any, in terms of a defined product or a proposition, no real brand or reputation to speak of” and a “relatively dry new-business pipeline” that didn’t include “any prestigious new-business pitches.”
The future did not look very bright. “That’s a challenge, to get back up on your feet,” he notes.
And yet, Initiative did just that.
The agency went from losing 3.6 percent of its revenue in 2017 to a growth rate of 11 percent last year, a powerful resurgence that has earned it the mantle of Adweek’s 2018 U.S. Media Agency of the Year.
Call it a comeback
Initiative began laying the groundwork for its return in November 2016, designing “a world-class planning process.”
“We help clients think differently about their brand,” says U.S. chief client officer Hallie Johnston. “We might be even a bit disruptive in the pitch to help them think about where they can take their brand and their media strategy.”
Notes Baxter, “The one thing that we always hear from clients, whether we win the pitch or lose, is that we were different.”
The agency also instituted its Reverse Upfront, outlining to media partners what clients are looking for.
“I think the Reverse Upfront sent a clear signal to the market that there was change at Initiative,” Baxter says. “Never underestimate the influence of the media owners to influence clients’ perceptions and your own reputation.”
The program completely turned around Initiative’s relationships with media partners, which it now claims as a competitive advantage.
“The clients that do the best work are the ones that tend to recognize they need agencies, and agencies that do the best work are the ones that recognize they need media partners,” notes chief communications design officer David Stopforth.
Initiative also changed the way it works with clients, overhauling its client leadership team, with many new arrivals from client-side backgrounds.
“We want to have a consultative, proactive approach to clients. We’re not afraid to challenge their conventions or defend our POV in the best interest of clients,” Johnston explains.
Ultimately, though, it was “the people who really turned this around,” says U.S. CEO Amy Armstrong. And at the beginning, those people were skeptical about Initiative’s potential.
“[The agency] couldn’t be further from where it was when I walked into the role [in February 2017] versus today,” Armstrong says. “People didn’t want to work here. David Stopforth was my first major hire in April of 2017, and I remember going, ‘Please take the job.'”
“We were selling the dream as opposed to the reality at that point,” Baxter explains.
Together, he and Armstrong introduced a fresh “ethos and cultural perspective” that included biweekly town halls, a practice that continues to this day. The agency also shares information across the company, such as gender pay statistics, which happen to be a point of pride. Initiative claims virtual equity, with women earning more than men at certain employment levels.
The ‘new’ Initiative
Initiative’s culture- and strategy-driven approach tends to attract brands that share those values.
After retaining Amazon in November 2017, the agency went on to score a series of new-business wins, beginning with Lego later that month. By the end of 2018, Initiative had brought on Converse and Revlon globally and Liberty Mutual, CB2, Halo Top and The Honest Company in the U.S., among others.
The agency also grew relationships with existing clients, claiming organic growth matched its new-business revenue in 2018.
Initiative goes “far beyond” media expertise, says Amy Pascal, Lego’s vp, head of Americas marketing, to act as a “strategic partner” and “an extension of my marketing team to help us solve business and marketing problems.”
But not all clients are Initiative material. Baxter credits the agency’s new-business success rate in part to its selectivity, claiming that Initiative turns down roughly two out of three pitches.
“I think the thing that makes a great agency is what you say ‘no’ to,” he says. “‘No’ is the most powerful word in the world, and agencies need to learn how to say it a lot more.”
IHOP’s big cultural moment, and leaving Papa John’s
The agency’s work on IHOP’s “IHOb” campaign—promoting the chain’s hamburgers by temporarily renaming the restaurant the International House of Burgers—saw Initiative manage a media plan that included “everything from linear television to digital, including search and social” as well as experiential components and influencer relationships, IHOP CMO Brad Haley explains.
The campaign racked up 28.6 billion impressions in its first 10 days and helped quadruple burger sales in the three weeks following its big reveal, earning it a spot on Adweek’s Media Plan of the Year list.
“It’s one thing to change the name; it’s another to have people talking about [it] and to have that bubble through culture in such a way that you see it everywhere,” Baxter says. “What seems to be very organic is actually an orchestrated design to stimulate cultural conversation.”
On the flip side, Initiative chose to part ways with Papa John’s last year. After revelations last summer that founder John Schnatter had used racist language in a conference call, the pizza brand dropped him and assured Initiative it was taking the proper actions. And the agency initially stood behind the client, a decision Armstrong says employees backed her on.
But following further allegations that she said in a statement indicated “broader cultural revelations,” Initiative reversed its decision and resigned Papa John’s. When Armstrong announced the news at an Initiative town hall meeting, employees cheered.
“You’ve got to stand behind what you believe in,” says Armstrong. “If I’m going to get in front of the agency every two weeks and talk about the type of environment and what we stand for and not back that up, what kind of leader am I?”
The decision drew admiration from outside the agency as well.
“Clients also said that they were proud to work for an agency that stood their moral ground,” Armstrong says.
Looking ahead, and starting over again
As it looks toward the future, Initiative is realistic about the “headwinds” facing media agencies.
“Some of the bad practices that we’re seeing in pricing and the way in which some agencies participate in pitches, I think we’re going to see that continue,” Baxter says.
While Initiative has ambitious growth goals in the U.S. this year, including expanding its Los Angeles office, Baxter says the agency’s first responsibility is to its clients.
“We’ve already come out of the gates strongly this year,” he says, noting Initiative picked up media duties for UPS in North America and Europe, as well as a couple of accounts it can’t reveal yet.
So what does an agency do after creating a successful offering and attracting new clients?
Start over again.
“The market moves so fast. We’re actually totally redesigning our product right now, and we’re about to relaunch it,” Baxter says.
“When you start getting complacent, and you think that your product is right,” he says, “it’s time to rip it up and redo it.”
Key Wins (U.S.)
Liberty Mutual ($260 million-$285 million), Amazon Studios ($10 million-$30 million), Halo Top ($10 million-$30 million), KPMG ($10 million-$30 million), CB2 ($10 million-$30 million), The Honest Company ($10 million).
Key Losses
Papa John’s (resigned), Amtrak, Arby’s (due to conflict), Burlington, SeaWorld (resigned).
Strategic Moves
Stefan Burford hired as global chief strategy officer of IPG Mediabrands; David Stopforth added from Wieden + Kennedy as chief communications design officer; Pele Cortizo-Burgess came over from Wavemaker as chief strategy officer; Hallie Johnston recruited from Refinery29 as chief client officer, East; and Mike Storms brought on as chief analytics officer from Hearts & Science.
Active Pitches
Undisclosed gaming and CPG accounts with total billings of $880 million.
Global Revenue
$350 million-$400 million, up 8.1 percent, according to industry estimates.
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