What you need to know:

• Mat Baxter has called time on 14 years at IPG after leading the likes of Huge and Initiative globally. The former UM Australia CEO is mulling numerous offers – brand-side and agency – but won’t get back in the saddle “any earlier than 1 July”.
• Whichever side of the brand-agency divide Baxter chooses, he’s vowing to change a focus on cost over quality and strategic firepower. Procurement, per Baxter, should not be doing the CMO’s job.
• Meanwhile, he’s seen first hand AI’s rapid rise from low-end grunt work to “high touch, high value” work. “Things like strategy, creative concepting, platform and proposition development. All of those things that historically were high touch, high cost, and importantly, high margin services for agencies.”
• Unless both agencies and marketers adapt to the new reality, warns Baxter, the future will be short and likely painful.

As erstwhile Naked partner in crime Adam Ferrier put it, Baxter’s unlikely to spend much time on the beach sipping pina coladas. But after 14 years at Interpublic Group – taking UM Australia from also-ran to strategically best in class, leading Initiative globally out of New York before running Huge, IPG’s experience, design and digital marketing agency, he’s planning a few months off.  “No earlier than 1^st July”, per Baxter, before going again, potentially driving a brand rather than another agency. Provided that brand is prepared to break things.

“They'd have to come in with their eyes wide open that it's going to be an agenda of disruption and really shifting a brand if I was going to be there,” said Baxter.

He suggests the industry – both brands and agencies – is guilty of “alarmist navel gazing” and endless discussion. But without the follow through, nothing will change. At least not for the better.

Shaking up brand-agency structures and remuneration would be first Uber off the rank – and anyone hiring Baxter should probably warn their procurement teams that things will be a little different.

“It's all well and good encouraging your agency to evolve, but if you send in the procurement department with a spreadsheet, you're probably going to get the same sort of outcome,” he told Mi3.

Baxter would accept nothing less than “full control of the financial planning and decision-making, so that the tail isn’t wagging the dog with the procurement department essentially, during a review process, taking on the quasi-CMO role and actually driving the decision as opposed to the marketing team.”

Which is what happens “all the time”, per Baxter.

“You've got a CMO and a marketing team committed to doing something different and then they get substituted in the decision-making process by a group of people with a totally different set of objectives.”

Which is where everything starts to go wrong – and will stay wrong – unless someone challenges convention. Whichever side of the brand-agency line he lands, and Baxter is leaving plenty of wriggle room, he will challenge it. Either way, Baxter says agencies are facing accelerated disruption as AI begins to rip through the middle order, with incoming deep impacts for client-service dynamics.

AI bleeds upstream

“I've seen some stuff in the last few months with large language models that are moving from what I would call low cost menial tasks to higher value, high touch tasks. Things like strategy, creative concepting, platform and proposition development. All of those things that historically were high touch, high cost, and importantly, high margin services for agencies, AI is starting to spread its tentacles into. And it is doing a very good job,” said Baxter.

“So there is pressure at both ends of the spectrum … how do you adapt for that? How do you leverage it to your advantage, as opposed to it becoming something that further commoditises what an agency does, and allows clients to create essentially AI agencies within their own business that can do a lot of the things historically they would have gone externally for?

“So it's not just pressure on head hours at that lower end, it's now starting to bleed upstream.”

Strategic imperative

Within marketing or agency functions, Baxter believes winners in the AI age will be those that can best marry strategic capability with the machines.

“In a world where AI starts to do more, we have to fundamentally rethink how we shape our skill-sets and our structures to be complementary to what is going to happen with or without us. For that to be successful, there has to be adequate strategic muscle in those businesses to run that race alongside AI.”

Hence his first priority sets itself.

“The first thing I do when I join a company is bolster strategic capability. I don't care about anything else. It's got to be strategy, because strategy done well elevates everything. It elevates your ability to analyse data for insight. It impacts your ability to write a great creative brief. It impacts your ability to have tough conversations with clients. It impacts your ability to be innovative and disruptive. It is the source of the first foundational steps in being effective in marketing and communication,” per Baxter.

“Unfortunately, it's expensive. Unfortunately, it requires a lot of experience, which means senior people have to be engaged. And unfortunately, the pressure that's been put on the industry as a whole means those things are often the first to fall away in the way that brands are managed, built and sustained,” he adds.

“If you want to work with an agency that can help your brand break conventions, guess what, it's going to be an agency with more talented people. Guess what, their overheads are going to be probably higher as a result, therefore the fee is going to be bigger. So if you go and make a selection based on who's the most efficient from a headcount perspective, guess what, you get a less capable team. I want to see high salaries and top talent on the team, because that's how you get good teams.”

Which, via another furrow on his prospective CFO’s brow, inevitably returns to cost and procurement. Without a realignment of priorities, Baxter thinks it’s why serious problems with digital media investment – described this week as “a massive global marketplace that is out of control” – are unlikely to go away any time soon.

That assessment of the programmatic supply chain, spurred by US peak advertiser body the ANA’s latest probe, is “bleak, but realistic,” per Baxter.

“But brands have to realise that they are part of the problem. The supply chain is the way it is because agencies ultimately mirror the demands of clients. Yes, there are agency deals and all these things, but ultimately, the client is driving the bus. The client has to ensure that they set the right conditions up for success.

“One of those conditions is to understand that procurement is important. But procurement is one of many considerations that should shape a decision about the supply chain, about strategy, about the talent that you choose to work with,” said Baxter. “It's just an input, not the sole input. It's been allowed to become primary in decision-making, both at the client level and the agency level. As a result, we end up with these situations.”

Hence Baxter’s belief that marketing and its supply chain is over-ripe for disruption.

“Talk is cheap. What are we doing? Show me a pitch in the market that's changed. Show me a marketer that has completely restructured their marketing team and integrated it with their technology team, their IT group, their research and customer insight group, their chief technology officer group. Show me where the changes and actions are actually happening, versus a lot of alarmist navel gazing and discussion without the follow through that actually makes the difference.

“What are we doing about it?”

If Baxter walks the talk as a marketer, a procurement manager somewhere will likely be updating their CV around 2^nd July.