By MARGARET PATRICK, campaignlive.co.uk, Friday, 24 November 2000 12:00AM
Tim Bell's ambition for Chime Communications, the advertising and PR group he runs with Rupert Howell and Piers Pottinger, is to become 'the Harrods of the marketing services business'.
He says: 'We want to be big, but we don't want to be up there with Omnicom or WPP; on the other hand, we don't want to be so small that we're not a player. We see ourselves as a super niche business.'
Chime has just consolidated its position as the UK's largest listed communications independent with a pounds 24 million triple acquisition of the ad agency Roose & Partners, the PR company Quentin Bell Organisation, and the creative consultancy Girardot & Partners.
While not the sort of deal to send a frisson through adland, it has been warmly received in the City, which is keen that Chime continues its growth - 20 per cent a year since the company started.
Lorna Tilbian, a senior media analyst at West LB Panmure, says: 'They've bought good brands and the price was reasonable, which is very important. Roose does packaged goods and traditional stuff and is a nice contrast with HHCL, which has a lot of hip products like Go and Egg. QBO extends the group's consumer PR offering.'
Girardot will merge with Chime's First Financial, formalising the existing working arrangement between the two.
According to Howell, the joint chief executive with Pottinger, the group is now more balanced between advertising and public relations. It also includes AMD, the UK's largest property marketing agency, Opinion Leader Research, a research consultancy, and Chime online, specialising in new media and technology.
It has come a long way since 1989 when Bell, now the chairman, did a management buyout of his PR company from Lowe Howard-Spink and Bell plc. The company went public in 1994 and became Chime Communications. HHCL & Partners was bought in 1997, the most prominent of a series of acquisitions that have led to the capitalisation of pounds 285 million, with forecast fee income of pounds 85 million next year.
Further acquisitions are likely to be in areas such as research, direct marketing, design and media. Howell says that they are in the happy position of having people come to them.
He says: 'We've become the natural home in the UK for engaged entrepreneurs - people who have started their own businesses, grown them successfully, want to realise some of the capital they have created, but also want bigger opportunities.
'This position used to be held by the Abbott Mead group - who were the perfect people to do the deal with - before they became fully part of Omnicom. People come to us because we're a benign owner. We leave them with their operational independence.'
Peter Mead, an AMV founder and vice-chairman of Omnicom, supports the strategy of building a broad communications group. He says: 'By the time we ceased to be a public company, well over 60 per cent of our profits came from activities other than advertising.'
However, he warns: 'Bear in mind that the advertising and PR interests are the jewel in the crown. They create the high-level contacts that feed the whole group.'
Chime's long-term strategy is to replicate its UK success in a few key sophisticated communications markets. In Europe, it has targeted Germany because of its business potential, its deregulation and the removal of capital taxes on business next year. It is talking to the second-biggest PR company, Hunzinger, and is also looking to extend the local business of Harvard, the hi-tech PR company that it bought earlier this year, which already had offices in Munich and Paris.
In the US, its other target for expansion, discussions are going on with another hi-tech PR company and a corporate, political and financial PR group.
Bell says: 'We are looking at developing our new-economy businesses in America because we are too late to get into the old-economy world. The big players have gobbled everything up.'
Both he and Howell are adamant that they don't want to go global. As Bell explains: 'We enjoy a high rating and a good margin, so we feel we should only operate in markets where we can avoid margin and rating dilution.'
Nor do they require an international network to service clients. Thanks to its largest shareholder, WPP, Chime can call on the resources of any of the worldwide giant's networks if clients have an international demand.
But isn't it inhibiting, not to say threatening, to have WPP owning just under a third of the company?
Howell points out that he invited the WPP chief, Sir Martin Sorrell, in three years ago when HHCL wanted to join Chime but the latter was underfunded. 'We wanted to keep our independence and Martin agreed to take 29.9 per cent,' he says.
For Sorrell, who believed Howell and Bell would build a good business, it was a smart investment. The initial 42p share price has gone to 218p.
It also kept WPP's competitors out of the deal.
Both Bell and Howell say Sorrell treats Chime as an outside investment. They say: 'WPP has two directors on the board, but Martin lets us get on with it.' They add that it also helps deter predators. 'They think twice before taking on WPP.'
To some industry observers, however, it seems inevitable that Chime will eventually become part of the WPP empire. Tilbian says: 'Where do I see them going? In the long, long term, part of WPP. When Rupert is Peter Mead's age and the downturn comes, he'll fall into WPP's lap the way Peter fell into Omnicom's. But that could be ten years away.'
This article was first published on campaignlive.co.uk