Johnny Hornby: our 'new model agency' is paying off but we need 'new model behaviours' too

Johnny Hornby's The & Partnership has just posted record revenues and profits and he expects double-digit growth again this year but the gregarious ad man is not in party mood.

Johnny Hornby: our 'new model agency' is paying off but we need 'new model behaviours' too

His "new model agency" is paying off after he decided, in a prescient move in 2013, to bring creative, media, content, public relations and data under one umbrella company with one P&L.

The & Partnership’s global billings almost doubled to £450m last year, gross profit rose 48% to £74.6m and earnings before exceptional items (Ebitda) climbed 73% to £11.8m – in a year when many of the big agency holding groups saw little or no growth.

The EMEA region outside the UK was the big growth engine, going from zero to £150m in billings after The & Partnership won Toyota’s creative and media from Publicis Groupe.

A growing number of brands, including Canadian telco Telus, News Corporation, RBS and Toyota, have bought into Hornby’s agile approach, which involves putting his staff "on-site" in the client’s offices to provide a suite of services – usually sitting alongside the marketing team. 

The idea of our agencies plying either our employees or indeed our clients with a large amount of drink over a sustained amount of time is only asking for the kind of trouble

"I’ve been pushing this ‘& model’ a good bit longer than Arthur [Sadoun]," he says, referring to the boss of Publicis Groupe, who has recently adopted his own joined-up strategy, "The Power of One".

Hornby may be able to claim first-mover advantage when it comes to building a "new model agency" to cope with the changing needs of clients but he knows that is not enough.

'New model behaviours'

The ad industry is entering a more sober, restrained period that requires what he calls "new model behaviours" in the workplace.

He speaks from first-hand experience after The & Partnership was rocked by a sexism row last month when a departing male employee in the London creative agency sent a "Top Five" email that ranked female staff on their looks.

The fact that this kind of email had become common practice at The & Partnership and several other agencies prompted an outcry. 

"The way The & Partnership has evolved into this much more modern marketing services business is a testament to that continued hunger."

The immediate furore has died down but Hornby says it was "a wake-up call" and promises change.

"New model behaviours are going to involve my agency, at least, looking at this from a completely new lens," he says, explaining how he plans to commit a proportion of profits to diversity and unconscious bias training and to set targets for staff.

He has also decided that he won’t host his annual yacht party, a fixture at Cannes Lions, in June because it would be "inappropriate".

"The idea of our agencies plying either our employees or indeed our clients with a large amount of drink over a sustained amount of time is only asking for the kind of trouble that we had a couple of weeks ago," he says.

"Having invested 20 years of my time building this business, it’s too precious to allow a stupid alcohol-influenced tweet or email to affect that again."

Hornby is also looking at whether The & Partnership should continue to operate the eight bars that are located in its various offices around the world and is turning to the most senior women in The & Partnership to formulate a plan.

"Rather than me decide this, I’ve asked Sarah Golding in London, Jessica Burley in M/SIX, Jenny Halpern for Halpern and Victoria Davies in New York to get a group together and make a recommendation for what ‘new model behaviour’ should look like," Hornby says.

While he acknowledges that much of the criticism surrounding the "Top Five" email was valid, he feels The & Partnership’s record of supporting women has been overlooked.

He is "proud" of the fact that his senior management team is 46% female and there is only a 0.8% gender pay gap between men and women at this level.

‘Staying power’ and still ‘hungry’

Hornby himself has a reputation as a Mad Man, combining entrepreneurial drive with top-drawer social contacts such as Sir Charles Dunstone, Rebekah Brooks and Lord Mandelson.

James Murphy, the group chief executive of Adam & Eve/DDB, who has known Hornby since they were both trainees at Ogilvy & Mather, says: "Johnny is one of the characters with stature in the industry that gives it its buzz and creative glamour.

"The industry used to have quite a few like him and now he’s one of the only ones, if not the only one."

Another chief executive says: "He is the closest the British ad industry has got to a Don Draper. He could sell snow to Eskimos."

Hornby, who is 51, first rose to prominence at TBWA when he worked for New Labour on the 2001 general election campaign, before co-founding creative agency CHI & Partners.

He sold a 49.9% stake to WPP in 2007 and went on to launch sister media agency, M/SIX, in 2008 and later bought a 50% stake in Halpern PR in 2013 as well as launching other ventures in content and data.

"Johnny has been a leading figure in the industry for so long and he’s got staying power and yet he continues to innovate," Murphy says.

"The way The & Partnership has evolved into this much more modern marketing services business is a testament to that continued hunger."

An agile structure

Hornby identifies several reasons why The & Partnership is doing well compared to big agency holding companies: chiefly its ability to work in an agile way inside a client’s office and its integration of creative, media and data.

"The way we’re structured today puts us in a really strong position to attract clients which in a way maybe seven or eight years ago what would have been a disadvantage is now an advantage," he says.

Wind the clock back a few years and "if I didn’t have a big office building for every discipline in every European city, I couldn’t win a big piece of pan-European business".

Now clients don’t want "a separate bottom line for each discipline, each with a separate big building in every European or global capital", he says. "It is both a cost and a structure that clients don’t want to wear."

"They don’t want to wear the cost of a separate bottom line for each discipline and they don’t want to wear the whole thing being off-site."

That is why The & Partnership is putting "60% to 70% of every team that we build for a client in their building or adjacent to their building and we’re doing it with a single bottom line", according to Hornby.

By contrast, the holding companies are "trying to prop up multiple bottom-line organisations that effectively compete and they don’t want to put lots of people on-site because they own lots of buildings in every capital around the world" and need to fill them to pay the rent, he says.

"We won’t have competing bottom lines, which I think is a huge thing for clients."

Divorcing creativity from media and data is bad

Hornby says having creative sit together with media and data is vital, which is part of the reason why he was happy to drop CHI as a brand in January and rename the UK creative shop The & Partnership London.

"If I was a holding company, I’d put my agencies together," he says.

"For any agency, for any creative entity, to be divorced from either the deployment of the creative or the data is a very bad place to be and I think will just increasingly be marginalized.

"The way of the world will get more and more real-time where messaging will be deployed to distinct groups, that will be picked from a data source, and then that creative will be adapted and grown or turned up if it’s working well, turned down if it’s not working well, turned off it’s not working at all – almost like a kind of marketing newsroom type of environment. 

As a founder of my business, I wouldn’t take kindly to anyone else hypothesising about how they’d run my company, so I wouldn’t hypothesise about how I’d run his
Johnny Hornby

"So you’re going need to have the people who are deploying the creative, next to the people who are putting it into market, very closely aligned to the people that are seeing what effect it’s having.

"The single-discipline creative agency not allied to media and data is already fast declining and will rapidly decline further."

Critics say Hornby risks marginalising creativity but he insists that the "magic" remains vital, particularly as the big management consultants are challenging agencies.

Clients want help with transforming and digitising their business, not just their marketing.

"The danger for the ad business is if the consultants buy enough good agencies then they might bundle marketing services as part of that – I think that’s a credible danger for us," Hornby warns.

"My biggest worry is ‘can we keep the creative and brand strategy and magic dust at the top and keep Deloitte and so on at bay?’"

WPP and Sorrell

Hornby first agreed to talk to Campaign more than a month ago – before the "Top Five" email controversy exploded and WPP launched its investigation into the personal conduct of Sir Martin Sorrell.

Hornby, who is close to Sorrell, won’t comment on the investigation and plays down speculation that he might be a contender to be WPP’s chief executive.

"As a founder of my business, I wouldn’t take kindly to anyone else hypothesising about how they’d run my company, so I wouldn’t hypothesise about how I’d run his," Hornby says.

WPP’s minority stake in The & Partnership has worked well for Hornby, giving him access to Group M’s buying scale but ensuring he retains a degree of independence.

"It’s very unlikely to change in the near future simply because we are currently riding a wave we are very much enjoying," Hornby says.

"The new model is the right one. People like being in businesses that are successful and growing and they have exciting, new colleagues, disciplines that, opportunity to work in new countries."

What’s more, "all the partners in the agency share in the profits" which "come from one single P&L", he says.

He expects to see fee income and profit growth of "20% to 30%" in 2018 as the agency gets the full benefit of wins including Astra Zeneca and Sapporo in North America, Toyota and Bridgestone in Europe and Google and Procter & Gamble in the UK.

The market is changing. "Where there are big pitches, we’re starting to see them being not single discipline, or the possibility of them not being single discipline, and people thinking maybe we need to not just change agency but maybe we need to change the model," he says.

"New model behaviours" will also mean change. As Hornby points out: "Back in the day you might choose to work for an Ogilvy & Mather or Bartle Bogle Hegarty over a Goldman Sachs or a Deloitte because your perception was that it would be a much more creative, entertaining vibrant environment with a lot more freedom to be yourself. The advertising industry has built a lot of its foundations on that."

Whether something will be lost in this new era, he doesn’t say, although he jokes that perhaps he should "leave a bottle of sparkling water on the pier in Cannes where the party would have been".

If Johnny Hornby has decided the party’s over, at least for now, then things are definitely changing in advertising.