Close-Up: Scott stands firm on Engine's global ambitions
campaignlive.co.uk, Friday, 26 February 2010 12:00AM
Can Engine make its planned US office a success or is the idea really Peter Scott 'blowing up a balloon', John Tylee asks.
It's hard to know what's caused the most surprise about The Engine Group's announcement that it plans to replicate its UK offering in the US - that it should have two sixtysomething one-time Madison Avenue big-shots who've not worked in the agency business since the 90s leading the Stateside operation, or that it should even be embarking on such a venture at all.
On the face of it, now doesn't seem like a propitious time to be funding international growth when, according to some industry commentators, Engine would do better using its money to repair its balance sheet.
Engine reported a loss of more than £2 million for 2008, although the group attributes much of this to moving offices and writing off some lease-related costs.
However, one UK marcoms group chief comments: "With that kind of performance, I can't see how Engine can have more than modest international ambitions."
But Peter Scott, Engine's chairman, is having none of it. "We're a profitable business. If we weren't, the banks would be after us," he says. "We certainly have sufficient capacity to get through the first stage of our US development."
He claims Engine has been looking at the US for some time even though the credit crisis forced plans to go on hold. Now, more of Engine's clients want the company to have a US presence. Indeed, Scott suggests the group lost its GlaxoSmithKline business last year because of its shortcomings in the US.
However, it may not be easy for Engine to establish a credible US bridgehead. "I'd struggle to come up with a list of anything worth buying," one New York agency boss says. "The US is a very different market to the UK. If you want business from national advertisers, you've got to have scale."
Also, will the Americans buy what Engine has to sell? Possibly. "Ninety per cent of pitches in the US require an integrated response," the head of a New York-based agency network says. "The problem for Engine is whether it can convince US clients that it can deliver. Unless it has lined up a number of stellar acquisitions, what it has to offer looks rather thin."
Then there's the question of the suitability of Martin Puris, 66, the one-time Lintas Worldwide chief executive, and John Bernbach, 61, the former boss of DDB Needham Worldwide, to take up the challenge.
Puris has a long connection with Scott. The fledgling WCRS "borrowed" Puris' "the ultimate driving machine" strapline for BMW and there was talk at one time of WCRS and the then Ammirati & Puris coming together.
Puris and Bernbach, whose consultancy business advising clients on non-traditional media forms is the basis of Engine in the US, will have a stake in the UK operation.
But aren't they a bit long in the tooth to be taking on such a task? Not a bit of it, Scott claims. "They have experience, wisdom and reputation," he says. "They won't be running the business day to day. They'll be the architects of it."
Some, though, believe Scott's plans mask a hidden agenda and rumours are rife that Engine is for sale - a suggestion Scott emphatically denies - because of what one describes as Engine's "ticking bomb" created when the company began building a marcoms operation around its WCRS flagship.
The problem, they suggest, is the shares in lieu of cash that were offered to the owners of the Engine operating companies when they sold out. Industry sources say they did this on the expectation that Scott would find a willing buyer for the group. This hasn't happened.
"WCRS people mortgaged themselves to buy into Engine when the agency came out of Havas in 2005," a former WCRS senior manager points out. "So they need to sell it at a good profit." Much the same might be said for Scott, now 62, and his partner, the WCRS founder, Robin Wight, 65, who will want profitable exit paths.
Hence the need for Engine to create what Bob Willott, the marketing services sector analyst, calls "an aura of excitement" around itself.
"I think the US venture is a exercise in presenting Engine as bigger than it actually is," a top manager at a major marcoms holding company says. "This is just Scott blowing up a balloon."
Scott is dismissive of all such speculation. "There will always be people who are out to pull the rug from under your feet," he says. "The fact is that all our shareholders are alongside us on this. We're just getting our heads down and getting on with it."
Certainly, Scott has ambitious aims and claims having a US presence is just the start of his attempt to put down markers in China and India, as well as in key markets in the Far East and Latin America. "It's perfectly possible," he maintains. "No global client tells you that you must have offices in 40 countries any more. We believe we're readying ourselves for the next step of our journey."
- Martin Puris
A one-time copywriter turned agency chief, Puris is best known for penning BMW's famous tagline "the ultimate driving machine".
His career began in the 60s with Young & Rubicam, Campbell-Ewald and NW Ayer. He later teamed up with the art director Ralph Ammirati to work for Carl Alley. With support from Y&R, the pair broke away to form Ammirati & Puris in New York in 1974.
Twenty years later, the agency was bought by Interpublic and assimilated into Lintas New York. Puris went on to become the chief executive and chief creative officer of Lintas Worldwide, resigning in 1999 when IPG merged its Lintas and Lowe subsidiaries.
- John Bernbach
The son of one of the world's most iconoclastic creatives, Bernbach junior spent 22 of his 28 years in the ad business at Doyle Dane Bernbach, the last eight as the president and chief operating officer of DDB Needham Worldwide.
In 1986, he led DDB into its merger with Needham Harper, helping to create Omnicom and becoming one of its five founding directors.
During his career, he helped to develop marketing campaigns and strategies for Volkswagen, Anheuser-Busch, Avis and IBM.
This article was first published on campaignlive.co.uk
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