The World: Can Nitro and Sapient live together in harmony?
By Arun Sudhaman, campaignlive.co.uk, Friday, 17 July 2009 12:00AM
Nitro's acquisition by the technology consultancy Sapient has brought together unlikely bedfellows.
If nothing else, you could argue that the technology consultancy Sapient has timed its acquisition of the boutique agency Nitro to perfection. Just days after announcing the deal, Nitro's Australian operation CumminsNitro won three Cannes Grands Prix for its Tourism Queensland "the best job in the world" campaign.
At a stroke, the awards haul helped deflect questions about why a Boston-based digital consultancy bought a micro-network that has rarely attracted the creative plaudits of many of its boutique rivals. Nitro, as its chief executive, Chris Clarke, is fond of pointing out, is not your average advertising agency.
Founded by Clarke in Shanghai, the seven-year-old shop has built its business largely through global client relationships, despite possessing just seven offices around the world. Clarke's hard-nosed new-business nous would not necessarily raise eyebrows, mean-while, were it not for the fact that he also - as the occasion dictates - leads creative and planning.
So Clarke's decision to sell his agency for $50 million to Sapient makes a certain sort of sense. Because Sapient Interactive, the unit that Nitro will integrate with to form SapientNitro, is not your typical digital marketing agency.
For a start, it hails from a consultancy background that features competitors such as IBM and CapGemini. Since beginning operations in earnest three years ago, Sapient Interactive has notched up global revenues of approximately $350 million, thanks to an offering that owes much to technological heavy-lifting, marking it out as a rather different animal to digital players such as AKQA and MRM.
In the UK, the deal has caused some bemusement, perhaps because the two principals are largely unknown quantities. Nitro's UK performance has been more spluttering than explosive, following the acquisitions of Soul, River Communications and Mook.
Similar instability in its Shanghai stronghold over the past two years, combined with a continuing inability to compete globally in the manner of Wieden & Kennedy or Bartle Bogle Hegarty, goes some way to explaining why Clarke opted for a deal that will give him a substantial shareholding, along with CEO duties, at SapientNitro.
"This allows us to scale up on pitch consultant requests for proposals, and that was a big factor," Clarke says. He realised two years ago that his agency needed to radically improve its digital capabilities if it was to keep growing. "We've not been differentiated enough, and we're not going to succeed as a smaller version of BBH or W&K."
Like many good boutiques, Nitro's success rests on being different. The agency counts major global business - including Twix, from its anchor client, Mars, alongside Volvo and Foot Locker - thanks to a diverse service offering and a collaborative creative culture favoured by progressive clients.
During the lengthy courtship, Sapient also made approaches to W&K and Modernista! - agencies with a considerably more creative profile than Nitro. According to Sapient Interactive's worldwide creative officer, Gaston Legor-buru, it was Nitro's Asia-Pacific strength, coupled with its culture, that tipped the scales. "There were great agencies we talked to where I was in awe of the level of creativity, but we were not going to be able to live together," he says. "We were very careful in terms of aligning with an agency that fitted."
If anything will determine the success of the union, it is the cultural fit. Can Sapient's stiff-necked management consultants and engineers make merry with Nitro's more freewheeling ad types? "If the engineers and consultants run the business, they will fritter away the creativity they thought they had bought with Nitro. If the creatives lead, then they lose their credibility in the high end of business consultancy," the Publicis Modem chief strategy officer, Tony Effik, says. "It's a delicate balancing act."
Legorburu agrees, but points out that perceptions of Sapient itself need updating. Sapient's heavy presence at Cannes, and a gold Design Lion for a nifty touchscreen Coca-Cola vending machine, will not hurt that process. "We've been hiring creatives, but that's not enough - when we say we want to take over your advertising, they say you're crazy," he explains. "But now we've bought an agency that's won every award in Cannes."
On paper, the purchase has potential. While Sapient Interactive has shifted its appeal from the back end to the front, clients are still loath to hand the keys to the brand over to a digital agency. Yet the PR agency Porter Novelli's head of digital, Mat Morrison, questions whether clients are seriously looking for everything from ideation to e-commerce. "The marketing director and the chief information officer are not friends," he says.
Sapient, whose work includes Coke's "happiness factory" and the Healthy Choice meals campaign, is betting that it will prove easier for a digital player to make inroads into brand strategy than the opposite route being ploughed by holding company agency networks. There is considerable speculation, for example, that AKQA may make a similar move, although its European managing director, Guy Wieynk, notes it is not a "priority".
It may also be that Sapient has surmised that it will never truly compete with the likes of IBM and Accenture. "Buying Nitro differentiates it from business consultancy heavyweights and also allows it to play against the creative agencies," Effik says. Legorburu adds: "If we can be that creative business consultancy - that tends to customer and brand experience, comms and commerce - we will have an offering that's unlike anyone else."
Whether it emerges successful remains to be seen. Clarke plays down the notion that the move is risky, but accepts it is straight out of left-field. The most dramatic conclusion is that Silicon Valley, after revolutionising the media industry, now has its sights firmly on adland.
"The rise of digital agencies was an inflection point for the advertising business, but the entry of technology firms into the business promises to be an even bigger one," Effik says. "It's a battle between the engineers and the artists."
HOW TWO DISTANT PATHS CONVERGED
2002: Chris Clarke launches Nitro in Shanghai with Mars as its anchor client.
2004: Opens in London to service its newly won Unilever ice-cream business. Later in the year, it expands into the US on the back of more Mars wins, with Clarke relocating from Shanghai to New York.
2005: Buys the Bartle Bogle Hegarty breakaway Soul Advertising in London, renaming the new shop Nitro Soul. It is led by Bruce Crouch. Nitro also acquires the UK direct marketing shop River Communications.
2006: Buys the London digital agency Mook, whose managing director, Tom Adams, becomes the global head of digital.
2007: Buys AKA Advertising in New York, forming a 100-person agency that counts business from Masterfoods, Unilever, ConAgra, Foot Locker and Nike. Wins global Volvo business in conjunction with Arnold. Buys the Australian shop Cummins & Partners.
2009: Top-tier reshuffle results in Kevin Dundas' appointment as the president and chief executive of Nitro London. CumminsNitro wins three Grands Prix at Cannes.
1991: Jerry Greenberg and Stuart Moore co-found the technology consultancy Sapient Corp in Cambridge, Massachusetts, financed through $40,000 of personal savings.
1996: After doubling revenues, Sapient's IPO raises $33 million in fresh capital. Begins offering e-commerce services.
1997: Expands beyond the US, opening a UK office.
1999: Buys E-Lab and launches the largest virtual shoe store on the web for Nordstrom.
2001: Dotcom bust forces Sapient to lay off 720 employees and shut the Sydney office.
2004: Wins £1 billion contract to provide tech design, development and support for BT's London NHS business.
2006: Launches an interactive unit after buying Gaston Legorburu's PGI agency. The company veteran Alan Herrick becomes the chief executive.
2008: Starts working with Coca-Cola on "happiness factory" digital campaign.
2009: Buys Nitro for $50 million, to create a 6,400-strong global workforce.
This article was first published on campaignlive.co.uk
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