Episode 1: Brad MacAfee on Purpose and Evolving Client Needs

On our first episode of Marketing Upheaval, CEO of Porter Novelli, Brad MacAfee joins us to talk about the role of a global purpose consultancy, new technologies in marketing and how millennials are changing corporate culture.

Transcript:

Rudy: Hey, this is Rudy Fernandez from Creative Outhouse, and my guest this episode of Marketing Upheaval is Brad MacAfee, who’s the CEO of Porter Novelli. Brad and I talked about the role of a CEO, and Porter Novelli’s positioning as a purpose consultancy. We also spent some time talking about how to staff in this era when clients’ needs are constantly evolving. How do you prepare for that? Well, listen in. Welcome to Marketing Upheaval.

Earcon: You’re listening to Marketing Upheaval, from Creative Outhouse.

Rudy: Hey, everyone. Welcome to Marketing Upheaval. With me is Brad MacAfee, the CEO of Porter Novelli. Now, Brad and I have known each other for a long time, and I’ve seen lead a practice, lead an office, be the head of PN North America, and now as a CEO of a global communications firm. If anyone has all the answers, it’s him.

Brad: I’m not sure about that, but it’s great to be here with you, Rudy.

Rudy: Thanks, Brad. I know you’ve had a lot of roles within PN, and you’ve been head of practice, you’ve been an MD, you’ve been a head of North America, and now the CEO. What is the primary role of a CEO? What does a CEO of a global communications company do? What’s your biggest responsibility, you think?

Brad: Yeah. Well, it’s interesting because I don’t think it’s too complicated, really. I think it’s about setting vision and inspiring, motivating those around you to embrace the vision, what you’re trying to do as an organization, set that tone where we’re going. I also believe that CEO has to be about building out the culture, and making sure that everyone lives the culture. I mean, lives it. If you have a set of values, how do you show up as an organization? In my role, I feel like I need to be the one who is an illustration of what it looks like to live those values each and every day.

Brad: If Porter Novelli is a global purpose consultancy, as, how do I show up and demonstrate that as well, but truly, when you have such a great team, I think it’s about setting vision and creating the culture, and then trying to inspire and motivate everyone to be as enthusiastic about that where we’re going as I am.

Rudy: Tell me about that, the global purpose consultancy. Porter Novelli I know has a history of, before it was called purpose, it was called social marketing, I guess.

Brad: Yeah.

Rudy: It was about helping clients that sought to improve the lives of the people they served. Tell me a little bit about Porter Novelli’s evolution to that, calling yourself a purpose consultancy.

Brad: Yeah. Well, first off, thank you for that, because I will say that when you look at at the evolution, yeah, it was about social marketing or behavior change, and a lot of it was really focused in on that behavior change around a lot of public health or health issues, and how do you change somebody’s eating behaviors? How do you change some of their sex behaviors, or unprotected, protected sex? Like, all these things. If you think about that, those are some of the most trying types of behavior change, whether somebody smokes or and doesn’t smoke, right? We were tackling some really, really big issues. Typically we will look at that as some of the hallmarks around social marketing, or bringing marketing-based principles to some of the biggest challenges of this time, and we certainly were on that.

Brad: As we’ve evolved, not just as an organization but as marketing’s evolved, you’ve seen other things. You’ve seen organizations focus on how their brand and their scale of their organization can also have an impact in society, or on the communities in which they’re operating in. That became kind of like CSR, but I think what’s even evolving next is, this whole idea of purpose, and that bigger, broader brand ambition or that organizational ambition that can drive, yes, strategy, drive results, impact results, financial results, but then also in doing so, can you have a positive impact on society as well, and have all of that intertwined into the promise of your organization, or the promise of your brand, so that it actually inspires employees but also creates a advocates on the customer side or the stakeholder side.

Brad: For us, that’s where we’ve seen the evolution. One of the things that we often hear as a bit of a challenge is, isn’t that purpose stuff just a little soft? We look at it and say, no. Not only that, because there should be a component of this that’s driving bottom line results, but it also could have a greater good that your brand stands for, your organization stands for as well.

Rudy: Yeah. You reminded me of, several years ago I was starting a venture myself. It was about that. It was not called purpose, actually. It was a different company name. When we shopped around to people we trusted, we were told, “Well, the only people who are going to care about this are maybe government people who want to change behavior, but no one else is going to care.” This was early 2007, 2008, so it wasn’t that long ago …

Brad: Right, right.

Rudy: Where it was very separated between government and people who wanted to change behavior for a societal reason, and then business was something else.

Brad: Right. Very split.

Rudy: What’s caused that change, you think?

Brad: Well, I think the dynamics of the world which we live in has changed a little bit. If you go very macro, there’s less and less comfort or belief or trust in some of the greatest institutions, right? When you feel like that is waning a little bit, then people turn to the brands or organizations or institutions they’re familiar with. They may ask for those organizations to step in where they might find a void. You see these brands, and we’ve seen this over the last several years, where maybe a state takes on a piece of legislation, and what their employees do, they go straight to that employer and say, “We absolutely do not like that,” and all of a sudden you start to see that the employer’s not going to expand in that state. It’s not going to have any more conventions in that state, and all of a sudden it becomes a big issue. It’s brands using their scale and a little bit of their power of influence to really tackle some issues at hand. I think one part is just changing dynamics on it at the macro level.

Brad: Then, we’re seeing a lot of things happening, like if you look at employees as one example. This could be the changing dynamics, we have a lot more millennials. By 2020, 50% of the workforce will be millennials, but if you look at that group, there’s a little bit more of an interest on, “I want to go to work with an organization that I believe aligns with my own personal values.” The crazy part about it is, when we’ve done some of the survey work, we find that people will actually take less pay to go to an organization that aligns to their own values, so you see that at the employee side.

Brad: Then on the flip side, you have individuals, consuming audiences or customers say, “I would switch brands to a brand that has my same value, or has a bigger, broader purpose.” Then on the flip side, you have, like, 79% of those that we’ve researched said, “I will boycott a brand if it doesn’t support my values.” All of a sudden, I think you’re starting to see more tangible examples of people saying, “Hey, I’m going to vote with my pocket book as well.”

Brad: You’ve got this void that people are asking to have filled. You have employees wanting somebody to fill it, and also to feel more inspired at work, and you have a consuming group out there that’s saying, “Hey, don’t forget about me. I’m going to vote with my dollars. I’m either going to vote you up or maybe vote you out.” I think those different dynamics are all coming to play at a very interesting time.

Rudy: Yeah, and also there’s more information now.

Brad: Yes.

Rudy: When you and I were younger, there was no information on a product, other than what they sold and what they put out.
Brad: Could you imagine trying to figure out the supply chain of, you and I, when we were trying to figure out which tennis shoes we would buy or which pair of jeans we’d buy back in the ’70s or early ’80s?

Rudy: No.

Brad: That would’ve been nearly impossible. Today, it’s a couple of clicks away.

Rudy: That’s macro. I’ve heard you say that the speed of change in PR has never been faster.

Brad: Yeah.

Rudy: What do you think are some of the most compelling changes?

Brad: Well, I’ll just say, the first thing that I think is, it’s all wrapped into technology. That’s probably not revolutionary, and I know this whole podcast is about this disruption.

Rudy: Yeah. I have a recording studio in this little office, whereas that would not have happened not too long ago.
Brad: Yeah. Can you imagine? If you think about it, so, three technologies that I think are really, really important right now, and I’ll get to the why, social media, mobile and the ability to reach people mobile, and then also analytics. If you look at that, if you take the combined of all that, I can reach you anytime, any place. I can even reach you at the moment of influence with my message, or the brand’s message. If you think about that, and now I can interact with you as well. I know more about you. I can laser focus the type of communication that you want, first and foremost, let alone what I want to present to you. and then I can get it to you when and where you might be thinking about making this decision.

Brad: If you go even further back, I think it’s all about broadband and broadband speeds, but just the fact that those three different types of technologies, the one-to-one communication, I know more about you and I can interact with you, has changed the dynamics of public relations. Well, heck, all of marketing.

Rudy: Yeah. Well, yeah, I was going to ask you that. There was a mass media and there was a mass market, and the world was divided into ad agencies and PR agencies …

Brad: Right.

Rudy: That hit that mass audience in different ways. How has that changed how you staff, for example, or how you go after new business, where now you’re not saying, “Here are the relationships we have with the publications?” Now you have several different vehicles, several different audiences that are all fragmented. How does that change your staffing, for example?

Brad: Yeah. You know, I would imagine that if you were to look at the staff of a Porter Novelli or or a public relations agency, and you looked at the staff of a direct company, or if you looked at a media company, or if you looked at an ad agency, you’re going to see a lot of similarities. Who knows influencer, who knows how to do digital buys, who knows how to create influence through third parties? All these capabilities. By the way, you have to be able to communicate visually, so you have to have some design capabilities as well. You have to have the ability to understand who you’re talking with and communicating with, so you have to have some analytics capabilities. All of a sudden, the type of people that are in our universe is very diverse.

Brad: Diversity, I would say, 20 years ago at Porter Novelli was, you had strategic planners, you certainly had creative, you had people who could design, and you had people who knew how to pitch the media very, very well. Right?

Rudy: Yeah.

Brad: Today, holy cow. Influencers, analytics team, research teams, planners, creatives, different types of creatives, media. It is bringing every capability together, and that diversity really can create something very special for the client, but I will say that I do perceive that, the type of staff that we’re hiring, you’ll see in other organizations, whether it’s in house or if you’re looking at other agencies.

Rudy: How do consultancies, you know, like Deloitte, who are now entering our turf of advertising, PR, how have they disrupted the industry?

Brad: Well, first off, it’s interesting. One of the things that they’ve done, they’ve come in and they’ve been acquiring. The first thing that they’ve done is they notice there’s an opportunity, CMOs are getting more and more of the budget. Those CMOs are getting more budget. It’s starting with technology, but it’s not only that, it’s structural. How is the organization set up? You see them acquiring additional capabilities that go beyond what was traditional consulting, to, “Can we do some of the execution work as well?”

Brad: Certainly it has been disruptive from the standpoint of a lot of promise. At Porter Novelli, we don’t see a lot of the big four, the big five in direct pitches. I know there’s some agencies that do, but what we do see, this mind shift from chief communications officers, chief marketing officers, the C-suite asking for that higher level thinking. They want the consulting mindset, for sure, and then they still want the execution. They would prefer, even on the execution, “Make sure that the things that feel more commoditized don’t cost me as much, because I’ll pay you more for the big thinking, the big ideas and the breakthroughs, because everyone’s looking for disruption.

Brad: If we think the agency side in marketing has been disrupted, corporations are seeing their whole worlds turned up upside down. If you think about a Hilton hotel or any of the hotels, and all of a sudden you’re dealing with AirBnB, and you’re looking at different models coming into your place. The taxi industry, the music industry, it’s so incredible. The rate of change, but the rate of disruption, has gotten to such a point where those organizations are still looking for an outside voice that has a little bit of a view of what the future could look like, and the strategic know how to say, “We can help you get there,” and not only not be disrupted out, but how do you switch it, change the organization as quickly as you can, participate, but then have the successful next chapter. There’s so many organizations that are struggling with that part of it.

Rudy: Let me ask you this, because you mentioned the commoditizing aspect of it, and PR and advertising, traditional again, let’s say in advertising, it was, we almost gave away the ideas, really. Then we made money distributing and producing those ideas, and then there was a studio that put things together. More and more I’m seeing, clients are bringing that stuff in-house. They’re saying, “Well, why am I paying you all these hourly rates? I could just hire people to do that,” or obviously, so much of what we do is automated now. How have you seen that impact, well, let’s say revenue, or how you manage clients?
Brad: You know, there are certain parts of the marketing mix, or even the mix within the traditional PR, it may make sense to move in-house, right? When we see some in-house moves, we see it as, where do they want to have a closer connection? That closer connection could be to a certain type of reporter or earned media contacts, or it may be that they want to do the community management in-house, or they want to deliver some of the content and content publishing in-house. It’s usually centered around where they see connectedness, and does it make sense, and can I move faster? Could it be more cost-effective if I did this in-house?

Brad: The part that we continue to see, and some of our largest clients may have moved in-house, we’ve seen in house staffs bloat up, if you will, or really gain increase in their size, but we haven’t necessarily seen as large of a percentage drop in our own fee, because what has happened is, they’ve shifted more to, “What do I then value from you as an outside resource, who might see the world from a different angle?”
Brad: See, multiple different markets can bring best practices from different disciplines together, and/or have tried multiple different technologies, like social media or influencer engagement, on so many different clients that you already have best practices built in, versus in-house, I may not have that. I may not want to pilot everything like that. I may wish to have an outside expert for areas where I think I needed that type of expertise, or that higher level thinking or strategy and creativity.

Rudy: They’re looking at, let’s say breadth of experience …

Brad: Yeah.
Rudy: Then, you brought up something earlier. How do you move clients from, “I’ll pay you an hourly rate,” to, “I will pay a premium for your great ideas?”

Brad: Well, I think first and foremost, they have to be great ideas, and they have to have a track record of that. If not, then that’s a hard thing to say. “Pay us based on value.” We’re seeing that procurement be slow to adopting more of a pricing model that is on a fixed fee, or a project basis. A lot of that is, they understand what the hourly rate structure looks like, and they kind of looked and said, “I can understand how to really manage the agency on that structure.”

Brad: What we’re looking at more and more is taking parts of our offering and really packaging them up. You can buy them a piece at a time, but if you do, so for example, we do a lot of reputation management or we might do a crisis workshop. Well, we now package that up and say, “Here’s what this costs.” The buying part of the client says, “Great. I know that, I know what a crisis workshop is, I know what the value is. I’m willing to pay for that,” and they pay for it all as one project. That helps us kind of move away from the hourly rate structure, which quite frankly I think is a broken model, because the hourly rate says you’re going to for the effort. You’re not going to pay for the outcome.

Brad: So often, we will go to a client and say, “If you want to have a performance indicator in there, where we get paid based on the performance of the campaign, we’re willing to do that.” Oftentimes though, believe it or not, our clients or companies aren’t yet prepared for that. They don’t know where to set the benchmark. Even though we’ll try to help, still they go, “No, we’ll go back to more of a traditional model and we’ll figure it out later,” and it doesn’t always get figured out. We’d be more than happy to pay for the value that we’re delivering.

Rudy: Yeah, attribution is probably the next big thing in our businesses. I mean, most of us don’t sell pizza. You’re usually selling things more complicated, so there’s this process. How do you measure each step of that process?

Brad: That’s right.

Rudy: That’s the next big thing, I hope. Earned media is more splintered every day. What are the basic steps you take to keep up?

Brad: Yeah. Earned is interesting, right, as much challenge as the perception is on earned. What you end up finding out though is, when you look and when we do the research and we say, “Where do you get your information,” and the number one place that people trust is their healthcare provider, like their physician.
Brad: If you take that out and you look at news sources, you do see television rank still relatively high, but when you start going down, you see Google and Facebook and Twitter and all that. Number one things that they have is, they are usually passing along a little Bitly link back to all the traditional sources, so that people, if they want to push something out, they still want to say, “I have a trusted source, so I pushed out this Washington Post article or the Chicago Tribune,” or maybe it’s an MSNBC or CNN piece.
Brad: What ends up happening is, this perception that earned is going away or it’s becoming less relevant, it’s just being consumed through maybe a different channel, but the pass-along has been incredible. We look and say, you have to have and build on those relationships.
Brad: The other part is, the very specific relationships become interesting, too. If you’re selling a particular type of food product, now you can get down there, and publications that get down, or or influencers that get down right to that level, right? Who you’re reaching out to may have changed over time. Who is a perceived expert now may not have been 10 years ago. You have to keep up with all that, but the most important thing is, are you getting your client or the message into the hands of somebody who can then help influence that moment of decision?

Rudy: How do you keep up with all that? Because the number of influencers exponentially grows by the day.
Brad: Yeah. I will tell you, it is not easy, and there’s something new coming out all the time. Thankfully there’s a few different technologies and products that you can buy that helps you sort through who the influencers are, and that and that really can kind of bubble it up for you, but then it’s tracking them well enough. For us, you do try to break it down into a smaller and smaller universe. We tend to do that more at a client level. The client that’s in food, you’re gonna try to go as deep as you can on food, food influencers, publications on food, who are the writers in food in the traditional publications, all that, where somebody else who might be in manufacturing or in financial services will do the same thing, but go deep in those sectors. It’s harder to go really, really wide. You’re going to have to have some level of expertise in the verticals.

Rudy: In this next part of our conversation, Brad and I talked about new business in this world of upheaval, but, and this is an important tip if you’re ever doing a podcast, always check your batteries. I lost a couple of minutes. What he said was that the biggest challenge is that clients often want to see your thinking in a pitch, which inevitably means, spec. Now, that’s an age old problem. The way PN works, or any responsible company for that matter, is you create ideas and strategies working with a client. His challenge, and mine too frankly, is how do you go in, talk about the importance of being a partner, and working together, then show work you created it in a complete vacuum? It’s probably better, I think, if a client gives a small real world assignment and asked agencies for their thoughts. Next we talked about millennials.

Rudy: There have been one or two or three studies about millennials, a good bit, and you brought up how they are more concerned about the mission of the company they work for, the purpose, and make sure that they align with their own values. How has hiring millennials, knowing that you’re going to have to be pitching to millennials at some point, how has it changed how you do business?

Brad: You know what? Years ago, probably 2009, ’10, that period of time when millennials were really coming in, and there was so much angst around entitlement and wanting to be promoted and all that. If you look at millennials, they come into the marketplace with more experience and more talent and skills and attributes than we ever had. I had to know how to pitch, I had to know how to write, had to know how to be resourceful. Today they’re coming in, they have analytic skills, they have all these additional skills. They have to pitch, but they have social skills, they know how to do website development, they know WordPress. They know all these different things that we didn’t need to know. You look at it and go, I’m not sure that that’s an accurate portrayal.

Brad: What we started looking at is saying, well, what’s a motivation? Yeah, some of that motivation is around purpose, I agree with that, but the other motivation that we kept hearing years ago is, when you would talk to them about a client assignment, they would go, “Oh, so I own that? I own this part of the assignment.” We kept hearing this ownership come back. What we decided to try, as a bit of a pilot, is to say, “Well, why don’t you give away more own ownership of the agency?” Meaning, there’s various things you have to do. You have this committee or that committee, an awards committee, you have a committee for diversity and inclusion. You have all these things, and you say, what if you didn’t do everything top down and say, “I’m going to appoint you and a senior vice president to run this committee,” but instead just open it up and said, “Anyone can form a committee. You just have to have a good idea.”
Brad: I looked at it, and during the three years that we are really focused on this, our retention was 87% retention, all the way up to 93% retention rate. I look at that and say, wait, maybe we need to think differently. Not about the, “What are they like,” versus, “How are they motivated?” If you tap into that motivation, like any generation, you’re going to find an employee who becomes unbelievably passionate, inspired, motivated, and actually will drive a lot of value to your organization. I think we had to really flip it on its head. When I hear about millennials now, I’m like, “We’ll take as many as we can get,” because I do think there’s a different level of passion and commitment that they have, but you might have to get at it at a slightly different way. When you do, and you really tap into it, I think the results are pretty incredible.

Rudy: Yeah. I’ve always been very grateful that I didn’t have to compete with this generation to get into college or get a job, because, dear God, I see what they do, and there was no way I would have competed at all. One of the things that I know that I would often wonder is, I think the defining part of their maturity was the economic collapse in 2008, 2009, because they were just getting into the workforce, or they saw their parents lose everything. Then, we, society, saddled them with an extraordinary amount of debt. I’ve wondered, how is that going to affect how they work, how they buy? They’re delaying buying homes, cars, things like that. How we’re going to be able to maintain, let’s say, our market for selling things to a generation of people who may not be ready to buy those things?

Brad: Yeah, I think you’re nailing it right on the head, but I think part of it is, they are still consuming. They just consume differently. They may not buy the car, they may use an Uber. They may not fully buy that house, maybe they look at a tiny home or they look at home ownership in a slightly different way. Maybe they even look at how they’re employed in a slightly different way.

Brad: I think one of the things that I’m always just fascinated by is, we’re living in a time of disruption, because a lot of times, if you looked in a millennial they would say, “Well, why can’t I use a mobile device, whether it’s a tablet or my phone, and go to Google docs somewhere, versus using a traditional PC with this type of Office suite on it that everyone has said that this is the way I have to do it?”
Brad: They do question, “Why do we have to do it this way if there’s a better way out there?” That to me, I think, is actually fascinating. It gives a lot of challenger brands a new opportunity to participate in ways that maybe they wouldn’t have had the same opportunity before. You see it in the number of craft beers there are. I mean, how many chips do we now have? We’ve got potato chips that are represented from probably every single state. I mean, that whole idea of craft, and very micro and artisanal, it’s taken off. I think there’s probably not going to be too many markets that aren’t going to be disrupted by just this generation, millennials, and Gen Z just saying, “Why? Is there a different way?”

Rudy: Yeah. One last question. As you look to the next five years, let’s say, and everything that transpires, what excites you and what scares you?
Brad: Well, what excites me is not going to surprise you. I’m excited that there’s a return to purpose, and really this idea that brands or organizations at scale can not only do right by their own organization, but can do some really meaningful, impactful things out in the world and in society. That, to me, gets me motivated. Honestly, that’s what wakes me up every single day. I wake up, I get excited, I get passionate about it, and I keep thinking, “What else can we have an impact on?” That’s exciting.
Brad: What makes me a concerned or what keeps me up at night, on the flip side, is, I do think at some point we are going to see an another recession upcoming. You just see the macro-economic issues and the geopolitical issues colliding, and you do wonder one that party’s going to perhaps stop a little bit. In those moments, it can be challenging. They can provide new opportunities as well, but that keeps me up a bit too.

Rudy: Yeah. Well, thank you very much. I should say, actually we started Creative Outhouse in October of 2001, which was right after September 11th, so some things come out of those doldrums. Thanks, Brad.

Brad: Thank you, Rudy. I appreciate it.
Rudy: Hey, thanks for listening to Marketing Upheaval from Creative Outhouse. If you want to learn more about Porter Novelli and the amazing work they’re doing, visit porternovelli.com. For show notes, previous episodes and previews of upcoming episodes, visit us at creativeouthouse.com/podcast. If you like this podcast, please give it five stars, subscribe and share it with others. Well, that’s it for this episode of Marketing Upheaval. Remember. If the current state of marketing has got you confused, don’t worry, it’ll all change. See you.

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Host: Rudy Fernandez

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