New Saatchi for Old
Benady, Alex, Marketing
It's three weeks since Maurice's break with Saatchis. But its clients have been virtually forgotten in the tumult. How much confidence do they really have in the agency and The New Saatchi Agency?
If, as marketing theory predicts, a high profile attracts triallists, there should certainly be no shortage of prospective clients beating a path to the as-yet-unmarked door of The New Saatchi Agency hoping to share in the Saatchi magic.
Relieved of the usual difficulty of gaining a profile and winning business, the new agency faces three different problems. Ironically, the first is Maurice Saatchi himself. The second is the legal blitz about to hit Maurice and his seven Saatchi & Saatchi defectors. And the third is the nature and structure of the new agency.
When Saatchi left last December, it was to the rapturous applause of those who valued "creativity" above accountancy - despite the fact that he was always the money man and has never written an ad in his life.
"He has skillfully cast himself as a much put-upon hero, a charismatic beacon keeping alive the flame of creativity in advertising," observed one top-ten agency chief.
He also positioned himself as the clients' champion - certainly Forrest Mars and Lord King regarded him so. And if his behaviour was a little vindictive at times, well, he was being treated badly. "He was in a fight. It is hardly surprising things got nasty," said a senior industry figure.
Others object to the damaging way that Muirhead, Kershaw and Sinclair may set up in competition, despite clauses in their contracts preventing it. "Why do you suppose they were paid such astronomical salaries in the first place if not to ensure compliance with contracts," reasoned a highly-placed executive in a Saatchi & Saatchi operating company?
Their loss certainly inspired a flurry of writs from their former employer, which is trying to keep the seven defectors to their contracts. The plc says it may even try to prevent Maurice from using the name Saatchi in his new agency.
However legal experts believe the company could be facing an uphill struggle to hold "the three amigos" to their contracts. "The courts are reluctant to enforce these kind of restrictions on individuals. They may stop people working in some cases, but the maximum is likely to be for between three and six months," says Mike Burd who heads the employment section of solicitors Lewis Silkin.
Assuming that NSA can ride out the coming legal battles, the agency still faces considerable problems. For starters it has the task of supporting an overhead in the form of seven directors whose combined remuneration at Saatchi & Saatchi would have been around [pounds]2m a year. "They would need about [pounds]70m in billings just to support them," said a top five agency chief.
Insiders say that men of the calibre of Kershaw and Muirhead would only resign "on the promise of something definite". That promise has been widely assumed to be all or part of the [pounds]85m British Airways account. In fact a Saatchi & Saatchi source said the defectors were so confident that they have already promised jobs to the 40 people working on the business.
Even so, to service such an account - and to be in keeping with Maurice's ambitions to be a global player, NSA would need a fully-fledged international network. "Constructing their own would take years," points out Winston Fletcher, chairman of DFSD Bozell. Some predict that in the short run they are most likely to use another agency network as a distribution system. McCann-Erickson, Lintas, Y&R, and TBWA are all possible contenders.
This, however, would still mean that NSA would be limited to running big strategic campaigns from London. "Tactical support for local operations and running multi-brand, multinational accounts would be beyond them," predicts Fletcher.
The most likely scenario in the longer term is that Maurice will try to buy into an international network. Ayer is tipped as the most likely candidate at the moment, but it may yet be Saatchi & Saatchi.
If Maurice emerges without his reputation too sullied and if NSA can see off the law suits, then it has every chance of becoming a significant UK agency quite quickly.
The prospects for the agency Saatchi left behind are less rosy. "The clients most likely to sign up with NSA are those who have already bought into Saatchi values," says Fletcher. At the time of writing, Mars, BA, Dixons, Mirror Group and Burger King were reviewing accounts worth over [pounds]150m a year, nearly half the agency's billing. The prestigious Tory Party account, Gallaher and Toyota have also been mentioned as considering reviews.
Old Saatchi revitalised
Sensibly, the new managing directors Adam Crozier and Tamara Ingram are preaching the gospel of "business as usual" and say they are looking for a new chairman to lend the agency gravitas "as quickly as possible". "The New Saatchi Agency is just another competitor," says Ingrain. "The 'nothing is impossible' culture is so deeply instilled in even junior staff here that we will weather the storm," she adds.
She argues that, ironically, the defections will liberate the agency. "Saatchi & Saatchi is now a younger, more modern outfit better suited to operating in the 90s than The New Saatchi Agency," she says.
"Optimism aside, the real key to the agency's survival is Procter & Gamble," predicts our top five agency chief. "They are very conservative and slow to move. As long as they stay there will be a nucleus of business to regroup around." If, however, P&G decides it has had enough, the outlook is bleak. In theory at least the whole network could unravel.
As it is, Saatchi & Saatchi has been wounded, badly but not mortally. It will probably lose a substantial amount of business in the coming months. "It takes years for an agency to die," says an industry figure. "If it is going to happen, it won't happen overnight".
There is, however, one player who has not yet put his cards on the table and whose hand will decide the outcome of the game: Charles Saatchi. Officially he is still president of Saatchi & Saatchi plc though he hasn't been back to his Charlotte Street office this year.
If he stays, it would be a mighty blow to his brother's new venture and a life-saver to the agency. If, as expected, he joins NSA, it will become an even more formidable force, and who knows the limits of its ambition?
RELATED ARTICLE: WHAT THE CLIENTS SAY
MIRROR GROUP "Mirror Group has notified Saatchi & Saatchi that it is withdrawing its business across all titles. The board of Saatchi & Saatchi ignored the Mirror Group's concerns after the departure of Maurice Saatchi and now the talent that looks after its newspaper account is deserting the agency. Mirror Group intends to take whatever action is necessary to ensure the smooth and continued execution of all its marketing initiatives." A spokesman. ([pounds]10m).
reviewing the situation
DIXONS "We have taken the view that we will be reviewing the account. We have not put a time frame on that but that is what we will be doing as we are concerned about the senior management changes at the agency." A spokesman. ([pounds]40m).
BA "We have a lot of experience and knowledge in-house and we are bringing together a resume of the top agencies. The review will be completed within the 16-week period [when the Saatchis contract runs out]. Saatchis will be invited to try and retain the business. The pitch could include The New Saatchi Agency." Mike Batt, marketing director. ([pounds]85m).
BURGER KING "Our on-going review continues unchanged. Saatchis, SP Lintas and DMB&B pitched in December and we will be making an announcement at the end of January." A spokesman. ([pounds]8m (UK)).
GALLAHER TOBACCO (UK) (Silk Cut) "All we are saying at the moment is that we have no comment to make on whether we are reviewing our account with Saatchi & Saatchi or not. The situation is so fluid that we don't want to say anything at present. You can read into that what you like." A spokesman. ([pounds]12.5m).
MARS "The changes are not really relevant to us. We began a review of all our creative agencies just before Christmas, so the new developments do not make any real difference." John Murray, staff officer on franchises. ([pounds]260m).
TOYOTA "It is quite sensitive poised at the moment. We are monitoring the situation very closely but we are committed to the agency and the account team which has produced some sterling work for us." A spokesman. ([pounds]22.5m).
CARLSBERG-TETLEY "At the moment we have no plans to change our arrangements as the account staff who deal with us remain unchanged. But we will keep the situation under review." A spokesman. ([pounds]7.5m).
PROCTER & GAMBLE "We have no plans to remove any P&G business out of Saatchis because of this controversy. We're confident that Saatchi can handle our business and do not think it is appropriate to get involved in the agency's internal matters." Dick Johnson, marketing services director. ([pounds]300m).
CAMELOT "We are not reviewing our business. The management group and creative teams who worked with us through the bid process and who deliver the advertising, which is contributing to the success of the National Lottery, reside at 80 Charlotte Street. As far as we are concerned it is business as usual." Jon Kinsey, marketing director. ([pounds]60m).…
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Publication information: Article title: New Saatchi for Old. Contributors: Benady, Alex - Author. Magazine title: Marketing. Publication date: January 19, 1995. Page number: 14+. © 2003 Haymarket Business Publications Ltd. COPYRIGHT 1995 Gale Group.
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