The need to interrupt down the barrier between brand and performance marketing has modified the shape of agencies, with a standard creative focus more incessantly complemented by data-oriented work that’s driving a bigger share of growth for the category. Mekanism is amongst the agency brands which have seen their remit transformed by climbing demands for full-funnel offerings, with the shop aiming to mix the “soul” of marketing with science, as CEO Jason Harris terms it.
Mekanism last yr was acquired by Plus Company, a fledgling, privately held ad network based in Canada that has used the agency, which began in San Francisco but now has offices in Chicago, New York, Los Angeles and Chicago, as a way to grow its U.S. footprint. In a patchy ad market that has roiled a few of the larger ad-holding groups and cooled M&A, Mekanism has stayed energetic and even expanded abroad. Account wins for 2023 include Harmless Harvest, Fossil and The Wine Group.
Mekanism in September acquired the Madrid-based design firm Zapiens, a deal that wouldn’t have occurred without Plus Company’s backing, based on Harris. Mekanism can also be tapping right into a recent predictive intelligence solution developed by Plus Company that goals to modernize mixed media modeling and measurement. Called Plus AIOS, the tool has helped early client testers reduce cost-per-conversion by 29% and improve campaign efficiency by 23%, optimizing an estimated $2 billion price of media spend.
Marketing Dive caught up with Harris at Advertising Week New York last week to debate the Plus Company deal a year-plus out, what motivated the Zapiens acquisition and why he’s optimistic for 2024.
This interview has been edited for clarity and brevity.
MARKETING DIVE: When we last spoke about the Plus Company acquisition, you said it took 20 years to construct Mekanism, but now that you simply’re pushing for a full-funnel offering, you would like that to occur in only a couple of years. What’s the progress been like?
JASON HARRIS: It’s been really good. We recently updated our positioning. We’re still about soul and science. Soul is the long-term brand-building that we’re known for after which we’ve added all of those other services which are the science side, including always-on digital experiences like one-to-one marketing, loyalty programs, CRM. Our recent offering is that we’re a contemporary creative agency that drives business growth.
Marketing budgets have gotten really scrutinized. With every dollar that goes out, you might have to point out what the value is. We’ve added those lower-funnel services slightly quickly, and we’re getting a variety of wins by offering each of those. CMOs have a lot to fret about now. They just want an agency that may do more. They don’t wish to have 10 agency partners. In the agency landscape, when you’re just focused on the brand-building skills and never adding those other pieces, that’s going to be a harder proposition to win business on.
MARKETING DIVE: I’ve heard that sentiment rather a lot at Advertising Week, that the wall between brand and performance is coming down a bit.
HARRIS: I believe it has to. With performance agencies which are known for delivering lower-funnel work, I do not know if clients buy that they’ll do the brand-building work. For us, we now have to prove to clients that we are able to drive short-term business growth as well. That’s been an enormous change.
The network [Plus Company] invested a variety of money in constructing a measurement platform called Plus AIOS, which stands for All In One System. It’s a measurement system to plan, optimize and measure campaigns and it’s built with predictive intelligence. It’s to assist CMOs understand the value of the dollars they spend after which predict, based on that have, where they’re best suited to putting their dollar and what the final result goes to be. Without being acquired, I believe we’d be farther behind where we should be. We definitely would’ve spent hundreds of thousands and hundreds of thousands of dollars to construct this technique.
MARKETING DIVE: It looks like the Plus Company deal got here in right under the wire.
HARRIS: You can’t do a deal now. No one can borrow money, it’s too expensive. You’ve got to know what you’re doing once you’re getting acquired. If you’re not laser-focused on growth, then it’s going to be bumpier. Because it’s never smooth. There are all the time cultures coming together.
For us, we did it at the right time. It’s been good, when you get past the internal selling and explaining to people why you’re doing it. For our team, it’s really future-proofing their skills. If they’re only in brand-building land they usually’re not learning the lower-funnel digital stuff, they’re going to be limited in the event that they stay at Mekanism or go elsewhere.
MARKETING DIVE: How did the Zapiens acquisition come together?
HARRIS: We weren’t looking [for agencies to acquire] until we did the Plus Company deal. And then we were taking a look at the near-shore firms we could find that were smallish and digital experts. What struck me about Zapiens was their design. They know UI/UX, they’re great at digital capabilities, nevertheless it wasn’t sacrificed by their design capabilities. We went over there a few times, broke bread with them, and said, “Oh, these cultures are going to mesh well.”
We’re recent to it so we’re trying to search out synergies: What clients we could bring them into, how we could grow their business, how we sell their services.
MARKETING DIVE: It’s also interesting that they’re in Madrid. Is that international footprint recent territory?
HARRIS: It’s recent for us. The U.S. is dear, in order that was one reason. But really what drew us to them is their design. European design eyes are sharp. It was recent services, inexpensive and good product, the trifecta.
MARKETING DIVE: It’s been, in the macro sense, a tricky yr. How have you ever navigated winning recent business?
HARRIS: One trend I’ve noticed in Q4, and I consult with a variety of agency CEOs, is generally there’s a variety of organic growth and an enormous bump because clients, whatever money they’ve left over, they spend it. That trend has been way down this yr. I have never seen it like that in perhaps a decade.
There are a few things percolating. Our clients, they’re sticking with us, but they’re not adding incremental dollars. The other trend is recent business is insane. The amount of pitches and the opportunities for brand spanking new clients is way up in Q4, but the organic spend is down. To me, that signals if clients are doing less spending, they’re using Q4 to search out recent resources so that they can hit 2024 with recent partners.
I believe 2024 goes to be an enormous yr. I’m feeling hopeful. But it has been a tough yr. Interest rates are way up, it’s really hard to borrow money. At the end of the day, when you can’t borrow money, it’s going to be harder to do M&A activity, it’s going to be harder for firms to grow and also you’ve got to give you the chance to stoke the economy. That has to return down.
MARKETING DIVE: Say that the situation does ease up a bit of bit. What are the areas where you can be curious about investing in or acquiring next?
HARRIS: Performance media. We have a robust media group, but we want to get sharper and higher at performance media, specifically. Now that we’ve got the digital experience, the lower-funnel work going, it’s time to bolster up media with performance. That’s our next area to focus on when we are able to breathe a bit of more.
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