Agency: Fallon London
campaignlive.co.uk, Friday, 15 May 2009 12:00AM
Last month, the M&C Saatchi client Mandarin Oriental left the agency for London Advertising, the first breakaway shop to emerge from the most famous breakaway of them all.
The shock decision offered a stark reminder of the problems that continue to plague M&C Saatchi's global offering.
That offering is set to expand further with the launch of a new digital agency, M&C Saatchi-I, from the network's existing office in Shanghai and its new one in Beijing. The venture aims to capitalise on a Chinese internet population that has reached 300 million.
To some, rather aptly, the issue for M&C Saatchi is brutally simple. "The truth is that since the British Airways loss in 2005, we've never had the big global business," a senior source at the agency says.
"'If you look at the other smaller networks, Bartle Bogle Hegarty has and Wieden & Kennedy has, but we need to get the momentum of being seen as an attractive alternative to the big players."
While Mandarin Oriental may not have brought a lot of money into the agency's coffers, its highly effective "fan" campaign demonstrated how M&C Saatchi's "brutally simple" creative mantra could genuinely succeed across international boundaries.
By late 2008, however, the agency was confident that its key client RBS would provide the kind of elusive backbone spend that would unite the network. Today, with the bank selling off the bulk of its international units, those plans are in tatters.
Into this breach has stepped Moray MacLennan, who was promoted to worldwide chief executive at the end of last year. He took on global duties in tandem with the Australia-based veteran Tom Dery, who became the global chairman.
Notwithstanding the murmurings about the duo's relationship, it is a partnership that - one source says - "looks weird, but has potential". By combining MacLennan's uber-suit with Dery's legendary new-business abilities, the UK's fifth-biggest agency is hoping that it can finally forge a successful international identity.
It will be a tough task. In contrast to the undoubted prowess of its UK and Australian operations, M&C Saatchi cuts a rather lonely figure in many overseas markets. The lack of a lucrative anchor client, coupled with London's preference for backing start-ups, mean that the network resembles a loose federation of offices that are highly reliant on local business.
"The good ones are fantastic but we could use more power offices," the Asia chief executive Chris Jaques, who was forced to close Singapore and Thailand last year because of dwindling returns, says.
"We have underperformed in terms of winning international business through a lack of focus," MacLennan admits, before pointing to Qantas, Havana Club and Yves Rocher as current multimarket spenders. "We've also been poor at driving awareness and marketing ourselves."
At its best, in Australia and the UK, the agency's culture of limitless self-confidence is intoxicating. "But exporting that unbridled arrogance is very hard," the agency source says. "The engagement of London has been an issue, particularly when you have small offices struggling to make their way."
MacLennan is willing to concede that London has "probably felt quite distant" at times to many of M&C Saatchi's 16 international offices, but points to Malaysia and France as examples of operations that have begun to thrive. "You don't always want a heavy hand from the centre," he adds. "What we haven't exploited is a sense of cohesion - but no-one's had this title and role before."
One former agency staffer is more frank, recalling a board meeting where each agency was asked to present three ideas for how they had adopted the M&C Saatchi culture. "I was really disappointed," he recounts. "I'm not blaming the individual offices - it is a franchise operation without any central guidelines."
International ambitions have also been limited by a marginal US presence in Los Angeles that recently lost its largest client, Ketel One vodka. "It has squeezed them out of half of the world's advertising," the London Advertising chief executive Michael Moszynski, who spent 23 years with the Saatchi agencies old and new, points out. "If you are selling yourself as a conventional network, then it is hard to get global business."
MacLennan says he has his eyes on New York. Already, since he took on the role, M&C Saatchi has opened in Brazil, Switzerland and Japan, and is set to revamp its China operation. "In the 12 weeks since he took over, there has been a transformation," Jaques says.
M&C Saatchi's rather unique business model may also prove valuable. The agency generally attempts to take an 80 per cent stake in new start-ups - in a bid to attract the kind of senior entrepreneurs that have grown jaded with holding company bureaucracy. "In the next year or so, the only expansion is going to come from start-ups," Jaques says. "So right now, it is probably the best model you can possibly have."
And a relatively pragmatic one too. M&C Saatchi's 2008 results were positive, thanks to a turnaround in Asia and Australia, allied to the UK's continued success. But while its 2004 IPO has injected more funds, the agency still favours investments that, says an agency source, are "guaranteed break-even" in year one.
MacLennan does not lack drive. He is set to announce a global leadership structure that houses Simon Dicketts and Tom McFarlane on the creative side, Richard Storey for planning, and David Whittle and Jon Sharpe on digital. He is also considering new operations in the Middle East, South Africa and Russia. And he is investigating which of M&C Saatchi's many subsidiaries - such as sponsorship, brand consultancy and PR - could be successfully exported.
"The team is in place to go after global business and that's quite a big change," he says.
Listening to MacLennan, it all sounds rather simple. The reality, as he is no doubt aware, could be brutally complex.
This article was first published on campaignlive.co.uk