In an interview with MDC head Miles Nadal, AdAge’s Rupal Parekh wisely notes: “It’s kind of surprising how little you are investing in digital agencies. Why?”
“Because we have done it the best of anybody. We invested hugely in digital, but we did it organically. One thousand of our people are digital and 40.5% of our business is digital. We have the most integrated and media-agnostic capabilities — we didn’t buy digital as a bolt-on, we wove it into the fabric of our agencies. That’s why our growth rate is better than everyone else in the industry, our margins are better and our free cash flow is better.
“When I look back in hindsight at what others have paid for businesses in digital, we couldn’t rationalize the costs in relation to what the benefits would be. Investing in talent was a much better and more productive investment for us. But you will see us look at digital capabilities to provide a more comprehensive offering to clients, and now that nobody else is in the marketplace, it makes life a lot easier.”
Nadal’s buying spree has many lauding him as an aggressive player at a time when few others are taking such risks. Questions linger regarding how the $300 million in (so-called good) debt will be paid off. Rumors have flown that the holding company is setting itself up for a sale, rumors Nadal strictly denies here.
He made only one mistake from what we can see. And it wasn’t so much a strategic error so much as a semantic one. At one point he said, “to reinvent the model of the future,” — which should never be said aloud. Ever. It is the preeminent advertising-leader cliché and should be avoided at all costs.