Best of the Week: The last media network; American idiots; Ita’s white pride; Growthops’ loss; 72&sunny’s setback

[View web version]( BEST OF THE WEEK And another thing... Welcome to Best of the Week. Want to know what’s better than having builders working with angle grinders outside your window while playing even louder 90s techno? Give up? The answer is, of course, enjoying that experience whilst recovering from flu and trying to write Best Of The Week. I have, truth be told, been more of a spectator than a participant this week. I kicked off the week scouting in Tasmania for a potential future Mumbrella event (watch this space…) and starting to feel decidedly below par. Once back in Sydney, it was a week of video calls from home rather than infecting the office. Black pyjamas aren’t too obvious on camera, right? I only got dressed once - to keep a promise to appear on the live Entrepreneurs show on the Your Money channel. No doubt [the sight of a feverish, croaky Brit]( was just what viewers were hoping for as they ate their dinner. And it was a big news week. Monday - Hearts & Science finally launches We kicked off the week by breaking details of how [Omnicom Media Group will finally bring its newest media agency network, Hearts & Science, to Australia](. It may prove to be the most interesting thing that happens in the media agency space this year. I suspect it will be the last time we see the launch of a new global media network, at least within the current creaking media model. [As outgoing AdNews writer Lindsay Bennett put it this week](: “The media model is fu*ked. They had to beg me to take this role,” one media agency CEO told AdNews in the secrecy of a dimly lit Sydney pub. When asked why she accepted the job if she didn’t think the media agency model was sustainable, she smirked and said: “I like a challenge”. Putting aside the fact that there are very few female media agency CEOs, and even fewer newish ones, so it’s quite easy to guess who Lindsay was quoting, the thoughtful piece spells out just how tough the world has become for media agencies at the moment. Maybe even tougher than the challenging landscape creative agencies face. In that environment, why go through the drama of another launch? In part, because it’s been in the works for a while. The US founder of Hearts & Science, Scott Hagedorn, spoke at Mumbrella360 nearly two years ago, in what the market took as a signal that a launch was imminent. He was impressive (remember his frankness about how programmatic had polluted the industry?) Since seeing him speak, I’ve been keenly waiting for the local launch. In the US, Hearts & Science was the hottest media agency launch in a decade, almost immediately snatching the two biggest media accounts in North America - Procter & Gamble and AT&T - worth an estimated US$5bn. In large part, the attraction for clients has been in the Hearts & Science philosophy - the recognition that while mastery of data and targeting at scale is one essential half of the equation, the other is figuring out how to treat consumers like humans. So the arrival of one of the industry’s most interesting media agencies is something to be genuinely excited about. In Australia, the launch will see the M2M agency name disappear and most of M2M’s clients rolled into Hearts & Science. It’s a similar course to that taken in London where M2M folded into Hearts & Science in 2016. M2M started life as a specialist in luxury, fashion and beauty in 2003. It later broadened its focus and went global in 2008. But it never really flew as a global network. Indeed (although it was still overshadowed by its OMG agency siblings of OMD and PHD), M2M Australia was arguably a better performer locally than M2M elsewhere. But it still felt very much like the third string. Over the last couple of years OMG contemplated a number of different means of bringing Hearts & Science to the market, including buying one of the few remaining independent media agencies, waiting for an appropriately large new business win to do it with a foundation client, or the rebadging we are now seeing. However, to see it as a simple relabelling of M2M is to miss the point. That should be just the starting point. Sometimes a rebadging is just a rebadging. One industry observer I spoke to this week suggests the similar recent process of merging the WPP media agencies Maxus and MEC in Australia as Wavemaker hadn’t yet created an agency with a distinctive new culture or offering. “It’s just another Group M agency,” was how this person put it. While other factors were no doubt at play, the fact that clients Nestle and Campbell Arnotts didn’t stick around in the Wavemaker fold says a fair bit. Which isn’t surprising, with the same personnel, working out of the same WPP office block, how could Wavemaker be anything else? So can Hearts & Science do it differently? Maybe, if it can repeat recent local Omnicom history. For one thing, the starting point is different. Wavemaker was a result of a cost-cutting global merger, which is working hard to find a point of view. (And admittedly Wavemaker’s local “we’re the experts on the marketing funnel” positioning being propagated by chief growth officer James Hier is interesting.) But Hearts & Science has a point of view as its reason for existing in the first place. At a time of the brand purpose brandwagon, that helps. More to the point though, OMG went through a similar process a decade ago when it brought PHD to the Australian market. PHD had made its name in the UK as a strategy-led media agency at a time when the “gorillas with calculators” still dominated. Authentically replicating that here was a challenge. In Australia, PHD looked at whether to buy a local agency, or launch from scratch. In the end they went with buying and rebadging. They bought Barry O’Brien’s Total Advertising. And the major achievement was that PHD Australia did not simply become Total by a new name. PHD’s now worldwide strategy and planning director Mark Holden came to Australia for three years to ensure the DNA of the new agency was genuinely PHD. The pairing of the old school trader of O’Brien and the quantum physics loving Holden was about as likely - and almost as fruitful - as that between Barack Obama and Joe Biden. (Declaration of interest: Mark’s a friend, although my admiration for PHD began before we knew each other.) Another key step for PHD Australia was changing offices to give a fresh start. The strategy-led PHD soon bore little resemblance to the retail shop that came before. To change the dynamics for existing staff, I suspect Hearts & Science will need to do something similar with their environment. And of course, the local agency was also able to tap into PHD’s global planning tools, which included its gamified collaboration tool, Source, which is more impressive than the jargon I just used makes it sound. Similar factors will decide whether, as Australia becomes the 15th country in the global network, Hearts & Science can be more than simply new M2M. Not that it will have all the DNA in place from day one. PHD took years to begin to figure out how to put the systems in place to replicate its products in every market round the world. And I bet there are plenty of markets where they aren’t close yet. And Hearts & Science is a much younger network, still figuring out how to scale up its culture. In Australia, with some zigs and zags, PHD has got a little better, and a little closer to its parent DNA, with each passing year. It felt like a long time coming when they finally won media agency of the year at the Mumbrella Awards in 2017. Similarly, the challenge for OMG will be how to ensure that the new operation contains more Hearts & Science DNA and less M2M with each passing year. It’s no bad thing that the agency will be kicking off with new leadership, with Jeremy Bolt moving across from Omnicom’s digital operation Annalect. Bolt’s career background is consultancy (Deloitte) and search (Bruce Clay). It’s noticeable that his career history has nothing significant within a traditional media agency. There’ll be no “But that’s how we’ve always done it…” However, being leaders on the technology side also takes the sort of investment in people that wasn’t necessarily available to M2M. The launch phase is going to be expensive, or rather, it should be. That same industry commentator suggested to me that a key indicator of how seriously OMG is taking Hearts & Science locally will be the level of investment in hiring data professionals, something that M2M was not known for. (“I don’t know if they’ve even got one at the moment,” the commentator told me.) Hearts & Science will be one of the stories of the year to watch. Tuesday - The fall of Pell On Tuesday, a long-awaited development of an entirely different type finally came. The suppression order was lifted regarding the conviction of Cardinal George Pell on charges of sexual abuse against children. You may remember the crop of newspaper front pages late last year about there being a major story they were not legally allowed to tell. This was the fact of Pell’s conviction. The news is a watershed moment for Australian society, and for the media. And it generated some extraordinary reactions. It will redefine the Catholic Church’s position within the culture. And it might be the event to finally lead to an overhaul of anachronistic rules on suppression orders in court coverage. The media reaction and coverage itself became part of the story. First, it turns out that the editor-in-chief of The Daily Beast Noah Shachtman is kind of an arsehole. He was the one who chose to ignore the suppression order and publish the news back in December, which meant that the rest of the world has known about the Pell conviction for a while. Which isn’t necessarily what makes him an arsehole. The suppression order was applied because Pell was also the subject of another legal case. The court ruled that publicly revealing Pell’s conviction could derail the chances of a fair hearing in the other case, as it could taint a jury. It’s a long established system. Back when I was a court reporter, there were ten basic facts it was permissible to report about somebody when they were charged with an offence - things like their name, age, address and what the charges were. But you were not allowed to report anything - such as previous convictions - that could potentially influence a jury that would later decide on a case based only on the facts in front of them in court. Knowing Pell was already a convicted abuser would clearly damage that. But these were rules created before the internet, and before sites like The Daily Beast, based well outside the jurisdiction of Australian courts, could choose to go public. (The Daily Beast, if it hasn’t crossed your radar, is owned by IAC, the same people who own digital brands such as Vimeo, Tinder and OK Cupid.) Mind you, that’s not necessarily what makes Noah Shachtman an arsehole. Many editors make daily decisions about what they should or shouldn’t publish. There will always be somebody in authority who doesn’t want something published. Often it’s in the public interest to publish it anyway. In Shachtman’s case, he was free of the legal constraint faced by local journalists because he was overseas. So it became a matter of making a judgement on whether the public interest of telling the story immediately outweighed the risk of derailing the other trial. (Personally, I don't think it did, but he was free to make that call.) So the Daily Beast went for it, and published. The writer was Lachlan Cartwright, an Aussie and former News Corp journo. Others, including The Washington Post and Slate followed. The fact of the gag order, and the fact that it had been breached online, was widely published locally. For interested readers in Australia, finding out who the case referred to was then simple. When I went looking for it online myself, it took me seconds to find it. Thanks, Google. Nonetheless, that’s not what makes Shachtman the arsehole. That came in the grandstanding this week in which he behaved as if The Daily Beast had performed acts of brave investigative journalism while Australian journalists looked the other way. He created a furious reaction from Aussie journos when he pompously posted on Twitter: “Journalists who decided to accept the government's gag order called us every name in the book for reporting the truth about the monstrous acts of one of the Vatican's most powerful men. I hope they are equally vociferous in their investigations of Pell.” Which was factually wrong of course. There’s a difference between the government and the courts, and it’s easy to be fearless from outside of the jurisdiction. Australian journalists who “reported the truth” at the time would have gone to prison for contempt. Shachtman has previously conceded to the Washington Post that he checked with lawyers first that he was safe. Very brave. And of course, the journalists have indeed done their investigations, of Pell, and of the wider Catholic Church. Far more than anything The Daily Beast wrote in its one-fact story. Some of Australia’s best journalism has been done around Catholic abuse in recent years. I remember how loudly the room celebrated The Newcastle Herald’s Joanne McCarthy five years ago when she took top prize at the Kennedy Awards, for her investigations into sexual abuse within the Catholic Church. She later won a Gold Walkley too. And many others have investigated the institution extensively too. As one headline on The Guardian Australia put it this week in a piece by Melissa Davey: “[We sat in court for months, forbidden from reporting a word](.” That was the actual journalism commitment - with most major news organisations committing precious journalistic resources to being in court to hear a case they couldn’t report. And as Davey retorted on Twitter: “Absolutely vile, uninformed comment from Noah [who was not in the case for a single day], and absolutely disrespectful to those who were. We didn't break the order because doing so would jeopardise justice for victims in the next trial. Not to mention, we'd absolutely be jailed. “By the way Noah if you’d read a single transcript or been in court for a single day you’d realise both prosecution AND defence wanted the suppression and that these suppression orders are standard in cases where multiple jury trials need to be held. Your ignorance is breathtaking.” What I feel certain of is that the decision to tie up journos for months sitting through a mistrial and the retrial was a greater contribution to the public interest than a single piece of gung-ho reporting. Not that I’m arguing that suppression orders work. The system is broken. It’s crazy that the identity of “Lawyer X” in the Melbourne informer scandal was only finally allowed to be published last night. Again, anybody who wanted to know could easily have Googled it. And don’t get me started on the challenges to press freedom in Australia. I know at first hand, but can’t talk about, how the libel laws have been weaponised as a means of stopping negative coverage. And just before I move off the Pell case, one other aspect will be talked about for a long time. A couple of News Corp commentators - Andrew Bolt and Miranda Devine - went a remarkably long way this week in arguing that Pell was innocent. It seems a risky precedent, particularly around the signals it might send to abuse victims. Only the jury got to hear the video of the main witness’s testimony. Journalists covering the trial did not. Making such pronouncements of innocence based not on having new evidence, but on Pell’s character and their second-hand interpretations of the evidence of the trial seems dangerous. Wednesday - Trimanitum’s loss Almost a year after Trimantium Growth Ops, or Growthops, as it now brands itself, floated on the ASX as TGO, I still don’t know as much as I’d like to about the company. On Wednesday morning we covered [Growthops’ announcement for its half yearly results, which included a loss of $48m](. It did reveal some new information, albeit not as much as I’d hoped. To refresh your memory, Growthops was a coming-together of several companies. Most prominent was AJF Partnership, one of Australia’s biggest and best independent agencies. Also involved were a number of companies linkedin in one way or the other to founder Phillip Kingston. I’ll stick with what we do know. The floatation last year raised $70m, floating at an offer price of $1 per share. Initially it looked like happy days for the investors, with trading opening at $1.22, and soon peaking at $1.35. Since then though, the share price has steadily declined. It hasn’t been above $1 since November, and on Friday it closed at 66c, less than half its peak. The company’s market capitalisation sits at $75m. That puts Growthops well behind BMF owner Enero - one of the few other ASX companies which own marketing operations - which is currently worth $119m. We learned from the announcement that Growthops has reported a $48m loss to the taxman, as a result of writing down the value of the assets of Asia Pacific Digital which it took over in a share swap last year. We also learned that while the company had $21m in the bank six months ago, it now has $15m. And thanks mainly to debts inherited from Asia Pacific Digital, the company has non-current (in other words, more distant than one year) liabilities of $25.1m. Putting aside the writedown, its normalised EBITDA profit was $2.6m off revenues of $36.3m, down from $5m profit in the previous year. There are not many clues as to how the individual offerings within the company are faring. My guess is that AJF Partnership is the main engine though. According to the accounts, Growthops’ creative operating segment brought in revenues of $12.7m and a healthy EBITDA profit of $3.5m, which sounds like a well run creative agency. By contrast, the technology segment delivered larger revenues of $17.2m, but actually lost $1.4m. The management consulting segment wrote revenues of $4.2m, and profits of just $222,000. We also learned in the announcement that founder Phillip Kingston is stepping down as managing director on March 18, although remaining as one of the four directors. There’s no reason offered. This change will come two days after the one year anniversary of the float. This March 16 anniversary will be interesting in another way. When Trimantium Growth Ops floated, the vendors - including the three founders of AJF - got their payment, half in cash and half in shares. The $47.8m in cash to all the company founders was paid immediately. But 50% of those shares (which of course are now worth half what they were just after the float) end up in the hands of the vendors on March 16. They get another 25% in another year, and the final 25% the year after that. That means another 23.9m shares go onto the TGO register on March 16. With 113m shares on the market currently, that potentially means a lot more liquidity, if any of those vendors are minded to cash in their stocks. Generally, where more people are selling rather than buying stocks, the price goes down of course. This sort of arrangement can create something of a prisoner’s dilemma. If everybody hangs on to their stocks the price stays steady. But if somebody sells, the price might start falling. So do you get out now, or hang on? I suspect that come March 16 we may learn something about the esteem or otherwise in which the company founders hold the Growthops management who bought them. It will be interesting to find out.. Thursday - Ita at the ABC On Thursday, the government confirmed it was overruling the official appointment process for appointing a new chairman of the ABC and [putting its own choice in instead - Ita Buttrose](. While I suspect ABC staffers will be encouraged to see somebody at the head of the board who’s been a working journalist for the entirety of her lengthy career, I’m not sure she can offer any recent evidence of leading big, complicated organisations. More concerningly though is the way the three names put forward in the selection process were ignored by the government. If there’s no independence in the selection process, then what hope that the organisation’s own independence will be protected? Buttrose is well liked in many quarters. I suspect she leans well in the direction of Liberal voters, more so than some may realise. This week I’ve been re-reading the 1998 edition of Buttrose’s autobiography, A Passionate Life. In the book, or the 1998 edition anyway, she discussed controversy over a column she wrote for the Sun-Herald in which she called for a referendum on immigration and warned that some inhabitants “may be made to feel like aliens in their own country”. Complaining that political correctness has “silenced us as a nation” she said in the book: “Some people would consider me a racist for having said that but I fail to see why.” She went on: “I always got the impression that I had something to be ashamed of for being a white Australian; that somehow, as a group, we had an inadequate history.” I note that an updated edition of the autobiography was reissued in 2012. Those paragraphs about white pride were no longer there. I wonder why. That said, the chair of the ABC - unless they turn out to be interventionist in the disastrous style of Justin Milne - is not the real issue. The bigger battle, coming fast down the track, is who will be the next managing director? Friday - 72&goodbye Which brings me to yesterday afternoon, and a story we broke about [the removal of 72&sunny from Optus’s creative roster](. It’s helluva blow for the agency, which is a huge name in the US, but has had most of its eggs in the Optus basket since launching locally in 2017. Given that telcos usually have a terrible reputation as organisations for agencies to work with, it would be easy to write it off as some whim on the part of the brand. But as telcos go, Optus is usually loyal. It was with M&C Saatchi for years, and its wider roster has been stable. It doesn’t chop and change in the way Vodafone used to be slated for. While there’s been some nicely produced work - the “prison break” ad with the bloke from The Bill looked great - I’ve been less sure about the strategic direction. I wasn’t convinced telling customers that telcos are like prisons made sense, even to make the point that they can leave your jail. And I’m sure it’s no coincidence that ECD Micah Walker departed 72&sunny just a few days ago. That was, I suspect, the final straw. As the slogan in the ad said, “If it’s not right, walk away.” Weekend wonders Which catches me up. Tomorrow sees me get back on the plane. I’m off to the UK for the Marketing Week Live expo and the Advertising Week Europe conference. I’ll be reporting from both. First stop though is Perth to give a talk at Edith Cowan University. (Mind you, I’m the idiot who didn’t realise it was a public holiday there on Monday - no wonder I was struggling to get meetings.) As ever, I welcome hearing your thoughts at tim@mumbrella.com.au And my colleague Abigail Dawson - abigail@mumbrella.com.au - will be running the newsdesk this weekend. Have a splendid weekend. Toodlepip... Tim Burrowes Content director, Mumbrella Sponsored Post The [Cooperate]( platform transforms how marketing teams visualise their customer journey, deliver content at each stage of the journey, and see how it performs - from one place. Australian enterprises like [Monash University,]( [SFI Health](, The Heart Foundation, UNSW and TicToc Home Loans can finally manage content across the customer journey, empowering their teams to visualise the entire journey from start to finish, and manage all of the marketing work in-between. Mumbrella | 46-48 Balfour Street Chippendale NSW 2008 Australia This email was sent to {EMAIL}. If you would rather not receive Mumbrella's Best of the Week email you can [unsubscribe]( or [manage subscriptions](. [Facebook]( [LinkedIn]( [Twitter](