CLOSE-UP: LIVE ISSUE - Why are ad agencies turning to advisory boards?

Advisory boards provide an altogether different view of things.

Grey London has just installed one, Chris Ingram's recently formed The Ingram Partnership had one from its launch, St Luke's is headhunting for one and the former cabinet minister Peter Mandelson is a member of one at Clemmow Hornby Inge.

If you are convinced by the preachings of the converted, then there is a "must-have" accessory that will improve client relationships, broaden horizons and provide essential contacts in all the right places: an advisory board.

For without an advisory board, how else can an agency draw, at liberty, on the experience and business communications skills of someone such as Charles Dunstone, one of Europe's most dynamic and charismatic entrepreneurs?

The founder of The Carphone Warehouse represents one-fifth of the strong and eclectic advisory board at CHI, along with Mandelson; the chief executive of the Prudential, Mark Wood; Rowan Gormley, the founder of Virgin Wines, and Ellis Watson, the general manager of Mirror Group Newspapers.

Still in its infancy in the corridors of adland, the presence of advisory boards and non-executive directors in and around the boardrooms of FTSE-100 companies is well documented. Companies from Granada Television to the Royal Opera House have them entrenched in their working practices.

Indeed, as far back as 1981, Isabel Bird launched Bird & Co International as an executive and leadership research consultancy to headhunt senior-level people for such roles.

Advisory boards, Bird explains, expand both an agency's contacts and knowledge base and can help broaden an agency's perspective.

"Particularly agencies that have been around a while might ask people in who can broaden their perspective," she says.

"Many such agencies want to see themselves in a new light and re-affirm their place in the food chain," she adds.

At CHI, all of the board members are former clients and, according to the agency's managing partner, Johnny Hornby, people he and his fellow partners, Simon Clemmow and Charles Inge, hold in high esteem.

In return for a "tiny" share in the agency, each board member attends a meeting every quarter to offer impartial advice on everything from how the business is run to what tack to adopt on a pitch.

To date, the combined experience of the CHI advisory board has helped the agency avoid some major pitfalls.

One early example came when CHI set up. The partners were considering purchasing a share in a dotcom company. Thankfully, they didn't. Dunstone vetoed the idea and the rest is history.

As it is, with the board's input, the agency's new-business record has been impressive. British Gas, BT Yahoo! and The Daily Telegraph have all been lured to CHI. Hornby also says its board's advice helped CHI secure the Safeway account.

However, he takes issue with the suggestion that CHI's advisory board's real value lies in its members' access to "friends in high places".

"People often say that advertising agencies don't sit at the top table," he says. "And it is fair to say that our board has introduced us to people that we wouldn't have met before. They have recommended us to their friends and are very valuable for contacts, but people don't just hire an agency on that basis. You need to have the big ideas to go with it."

This view is echoed by Mandelson, who displays his willingness to support CHI by calling Campaign on a Monday morning. He insists he comes bearing wisdom rather than an inexhaustible address book.

"My role has not been so much to open the voluminous book of contacts, as I don't have those," he states.

"Instead, what I have done is contribute about communications practice and about developing the role of advertising in a wider context, as somebody who has experience of the reconstruction of a political brand along with brand marketing and media experience."

If CHI's board lends the agency business experience, Grey's board unites top academics to assist both clients and staff on problem solving. Its board comprises a brain researcher, an economist, a university don and a business strategist.

Baroness Susan Greenfield, a professor of pharmacology at Lincoln College, Oxford and a director of the Royal Institute of Great Britain, is joined by Joe Yasin, an Oxford scientist and new-product development specialist.

The team is completed by Dr Theodore Zeldin, the author of An Intimate History of Humanity, and Professor Richard Scase, a business strategist and the writer of Britain 2010: The Changing Business Landscape.

"More and more clients are searching for greater degrees of specialism and we are looking to structure Grey to reflect that need," Garry Lace, the chief executive, explains.

"Most of our clients have got a non-executive board and I know they get a lot of value out of them. Ultimately, we want to give our business the best possible advantage."

Lace opted for an advisory board model as opposed to electing a non-executive director because he wanted to reap the benefits without the financial accountability.

Non-executive directors have a more formal grip on the companies that they work for. Unlike advisory boards, they vote on important decisions and have greater financial control. Most have a responsibility to shareholders.

This is something that appeals to Neil Henderson, the joint managing director of St Luke's. He believes that the introduction of a non-executive director will help safeguard the interests of the agency's shareholders, while making its structure more robust. With its two most senior executives, Andy Law and David Abrahams, gone, it seems St Luke's is looking for the kind of experience it lacks.

"Essentially, in our non-executive director, we are searching for someone who has been involved in business for ten or 15 years longer than us and who understands clients' needs," he says.

Henderson believes a non-executive director should fulfil two basic functions: to make sure the agency has the right perspective to enable it to grow, and bring an in-depth knowledge of clients.

"If you really want to make a difference to a client's business you have to understand how it operates inside out," he says. "And a non-executive director can hopefully bring that."

Finally, at The Ingram Partnership, Ingram has harnessed the expertise of a board with an wide breadth of aptitude. In fact, this week he is adding two more members: Dr John Browne, a strategic consultant and former director of strategy and marketing at the Prudential, and Fabiola Arredondo, the owner of FRA Holdings, a private investment company based in Madrid, will complete the line-up.

The board, which will meet once a month, is designed to strengthen the credibility and reputation of his new strategic consultancy, he explains.

Already in place are the former chief executive of ITV, Richard Eyre, Terry Neill, the ex-chairman of the worldwide board of Accenture, and Andrew Seth, previously the chairman of Lever Brothers.

"The board brings wisdom and a huge amount of experience and know-how in regions where we are determined to develop quickly," Ingram says.

"We are looking for client and professional services experience, not the the heavy sell. All we want to do is to meet senior people in companies that are open minded."

If Grey's board leans towards the academic, CHI's is composed of hands-on, experienced business men. The Ingram Partnership, meanwhile, appears to combine both worlds.

As trading conditions for agencies have become tougher, the establishment of an agency board is a new way to open dialogue with potential clients as well as impress existing senior ones.

But how much time do any of these "advisers" have to really get to grips with agency troubles? And, in reality, what can a brain researcher contribute towards solving everyday issues faced by an advertising agency?

It may be too soon to tell what effect Lace's or Ingram's more recently installed teams will have. They are learning as they go and the jury is still out.

But for the younger, smaller CHI, its more conventional and perhaps more relevant advisory board appears to have already proved its worth.

GREY

Advisory board

Baroness Susan Greenfield - professor of pharmacology at Lincoln

College, Oxford, author

Joe Yasin - Oxford scientist

Dr Theodore Zeldin - member of Demos, author

Professor Richard Scase - business strategist, author

CLEMMOW HORNBY INGE

Advisory board

Peter Mandelson - government advisor

Ellis Watson - general manager, Mirror Group Newspapers

Charles Dunstone - founder, Carphone Warehouse

Mark Wood - chief executive, Prudential

Rowan Gormley - founder, Virgin Wines

THE INGRAM PARTNERSHIP

Advisory board

Richard Eyre - former chief executive, ITV

Terry Neill - former chairman of the board, Accenture

Andrew Seth - former chairman, Lever Brothers

Dr John Browne - strategic consultant

Fabiola Arredondo - owner, FRA Holdings

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