Interview with Mélanie Dunn, from Cossette | Is this the end of advertising agencies?

Advertising agencies are undergoing profound transformation. They are moving away from the image we have of their work, that is, teams of creatives spending sleepless nights looking for THE good idea that will forever mark the minds of consumers and win a Lion at Cannes.

In 2024, marketing spending by large companies will decline by 15%, according to the firm Gartner, which particularly affects the traditional aspect of advertising agencies, notably brand development.

The slowdown in the economy has something to do with it, but also the upheaval in distribution and practices in the media, so much so that the question arises: is the end of advertising agencies soon?

In an interview, I asked the delicate question to Mélanie Dunn, CEO of Cossette, one of the largest in Canada, with its 800 employees and $800 million in media placements on behalf of clients.

“That’s a good question! This may indeed be the end of some agencies. There are several currents at the moment. If we stick to the way we did business before, we will quickly become obsolete,” the 52-year-old manager told me in a calm tone.

Mélanie Dunn, however, assures that this is not the end of Cossette. Over its 52 years of existence, the agency has weathered several storms, economic and otherwise, that have made it resilient.

“We have great professional maturity, with successes and failures, and speed when the time comes to make an investment or abandon a practice,” she tells me in her rather cramped office at 525 Viger Ouest, whose 4^e floor was sublet by Cossette to Shopify.

In particular, Cossette embraces new marketing technologies – called martechs – which use databases to directly reach consumers, on all platforms. An example? Sending personalized emails to consumers according to their needs.

Ces martechs have exploded in recent years, so much so that they now take up 24% of companies’ marketing budgets.

To keep up with these changes, Cossette relies in particular on its parent company, Plus Compagnie Canada (1,365 employees, including those of Cossette), including M^me Dunn is the president.

Concretely, Plus Compagnie notably acquired the Montreal company Munvo (125 employees), a year ago, an expert in martechs.

“Even if one of our group’s franchises is in decline, others are growing. The diversification of our services and our customers helps us,” says M^me Dunn, according to whom the entire group is growing, if we include acquisitions like Munvo.

25 years ago, she explains, a media plan targeted TV, radio and newspapers. Today, a media plan can target 200 platforms, some of which are very niche, which makes planning the media mix much more complex, especially since the audience is very fragmented.

Cossette always advises its clients on the best ways to reach their consumers. But the agency now has sophisticated technical tools allowing it to evaluate the best performance of a campaign, in terms of audience and quality.

Discussion groups (focus groups) so-called synthetics are a good example of the use of data and artificial intelligence. Thanks to a huge database, Plus Compagnie manages to predict the responses of a group according to its composition, the context, the day, the temperature, in short, to make a focus group…without a group!

“We also have communities of influencers with whom we work. And we try to understand. We have data on the number of people who follow them, the characteristics of these followers, the effectiveness of the influencers’ interventions,” she tells me.

The Chinese and the Caisse de dépôt

One of the important moments in the recent history of Cossette was the entry into capital, at the end of 2021, of the Caisse de dépôt et placement du Québec and the venture capital firm CVC Capital Partners. The two firms enabled the company to invest in new technologies, develop customer management platforms and make an acquisition.

Since 2014, Cossette has been owned by the Chinese company BlueFocus International. The presence of this shareholder allowed it to grow, particularly in Asia and Europe, but the agency suffered from the cooling of Canada-China relations from 2015, among other things.

“In the United States, we were barred from an acquisition, being in a sector with a high risk of incidents affecting confidentiality and information security,” M tells me^me Dunn.

In 2021, the Caisse and CVC therefore jointly acquired a majority stake in what became Gestion Plus Compagnie International.

This company now brings together 2,600 employees in 25 creative or specialty agencies, including Plus Compagnie Canada and Cossette. These agencies are located in 12 countries in North America, Europe, the Middle East and Asia-Pacific.

Today, the stake of the Caisse and CVC is held through a company in Delaware, United States, and the second shareholder of Plus International is Blue Valor, of Beijing, China, according to the register of Quebec companies.

In its financial statements, the Fund attributes a value ranging between 50 and 100 million to this investment.

Despite this Chinese presence in the capital, Plus Compagnie no longer encounters the same type of problems, Mélanie Dunn assures me, thanks to strict governance rules. Half of Plus International’s turnover is outside of Canada, compared to 25% for Cossette.

What will have become of the industry – and Cossette – in five years? Mélanie Dunn refuses to comment. On the other hand, she speaks of “constant optimization, adaptability to changes, the race for innovation, the ability to understand which innovations can create value”.

In short, for Mélanie Dunn, creativity must no longer only be used to make good spots TV, but also to find innovations to fuel the new technological capabilities available to the industry.