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Top Centaur executives Wilmot and Potter fall on their swords

May 15, 2013

Geoff WilmotIt’s a dry, spare document. But beneath the dense, printed undergrowth of Centaur Media plc’s Interim Management Statement 7464E – out on City desks first thing this morning – lies a rich speculative mulch.

Take this, for example:

Geoff Wilmot is stepping down as CEO but has agreed to remain with the business until the end of the financial year in order to implement a smooth handover to Mark Kerswell, who is now interim CEO.

Tim Potter, MD of the Business Publishing division has decided to leave Centaur. The process to appoint his successor has commenced.

Wilmot (above) has been the CEO since 2006, a relic from a bygone era called Print. Kerswell is the group finance director, imported relatively recently from rival publishing house Informa. And Potter? He’s been at Centaur almost as long as I was – which means forever. Or to be more precise, over 25 years.

The clue to the Centaur story is in the departure dates and the word “interim”. This is no carefully planned succession strategy, but a hastily cobbled boardroom putsch designed to appease the moneymen’s ire once they discover (as they now have) that all the high falutin’ promises of earnings growth predicated on Centaur’s transformational but risky £50m acquisition of Econsultancy last summer will not come to pass. Not, at any rate, in the near future.

Here’s another understated gem from the selfsame IMS:

May and June represent two of Centaur’s most important trading months, typically generating in the region of 45% of full year EBITDA.  Visibility of advertising revenues for this period still remains limited and delivery of corporate training revenues is also volatile.

Or put another way, an earnings disaster is on the way. No wonder Centaur’s share price troughed from about 47p to just over 31p this morning on receipt of the news. At all events, we doubt the dip was because share-traders were in deepest mourning for the two departing executives.

What’s gone wrong? Well, undoubtedly Econsultancy, the paid-for content acquisition, has failed to delight. Investors were promised digital steroids. What they’ve got instead is brewer’s droop: some mealy-mouthed excuse about losses in overseas operations.

Tim PotterMore seriously, disappointment over Econsultancy has formed a deadly cocktail with calamity in the print division, which is Mr Potter’s (left) peculiar fiefdom. The wheels have been coming off this vehicle for some time. No amount of penny-pinching and management delayering has been able to disguise a simple truth: the emperor has no clothes, or for that matter, coherent strategy. The promised uptick in print advertising, particularly cycle-sensitive recruitment advertising, is stubbornly refusing to come through. Scarcely surprising, really, given that the economy is dancing around the abyss of a triple-dip. But that’s no consolation for Messrs Wilmot and Potter, who must now play the role of official scapegoats.

Wilmot will be allowed to retire gracefully, through the front door, around the end of June. Potter, however, has been forced to scuttle with immediate dispatch through the dark hole of the tradesman’s entrance, clutching his P45 and the no-doubt-handsome rewards of failure. Such is corporate life.

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Why Aberdeen Asset Management wants to be the Intel of financial services

May 7, 2013

Piers Currie - Aberdeen Asset ManagementWhat’s the biggest, most successful, company you’ve never heard of? Impossible to say, of course. But a good candidate would be Aberdeen Asset Management.

It’s in the FTSE-100; it’s genuinely global. And it’s very profitable indeed, judging from its latest interim figures. Just to make the point: profit before tax increased 37% to £223m; earnings were up 43%, while the dividend increased 36%. And it manages financial assets of £212bn.

Yes Siree, the people at the top of this company are heading for deferred bonus payments that will make Sir Martin Sorrell’s look like a storm in a teacup. And, do you know what? There won’t be a squeak of dissent from shareholders.

Anonymity – outside the global capital markets – has served Aberdeen well these past 30 years. It has had little need to trumpet its wares through the megaphone of mass-media publicity, since what it does – trade in equities, fixed income instruments, properties and multi-asset portfolios – is mainly aimed at the wholesale financial market (other people sell the product on), and has little resonance with the punter on the street – unless that punter happens to be reasonably wealthy in the first place. True, Aberdeen has spent some trifling amount on a corporate ID (it looks a bit like a mountainous ‘A’) and does dispose of a £20m annual global marketing budget (peanuts for any equivalently-ranged consumer products company). But most of that money goes on getting a word in the right, expert, ear – via the rapier of PR and that trusty old ambush-marketing technique, the roadshow, rather than the blunderbuss of advertising.

Not any longer, however. This week Aberdeen is launching a global corporate branding campaign – its first since 1983. “Simply asset management”, the strap line, may not sound like rocket-science but, in fact, it is shrewdly timed. And for that, presumably, we must thank Aberdeen’s long-serving head of marketing (now group head of brand), Piers Currie (pictured above).

At a time when interest rates on deposit accounts are near zero (after inflation is factored in, you effectively pay the bank, not the other way round), investors are finding it increasingly difficult to gain a reasonably safe return on their financial investment. They must therefore turn to more risky asset classes – fixed income instruments and, more fashionably, shares. Who to trust in this treacherous financial world, however? Certainly not the universal banks – discredited bancassurance conglomerates that were yesteryear’s financial toast – who have comprehensively fleeced us of our savings, through rank incompetence, downright fraud or a combination of both.

Aberdeen’s modest proposition is that it is a narrow specialist; but within a field where it has gained great expertise and evidence-based returns. Stuff that isn’t going to be lost in the miasma of a bank’s balance sheet, and is there for all to see – should you wish to. There’s been an element of luck here, but also a good deal of judgement. When chief executive Martin Gilbert set up Aberdeen (it was a management buyout from an investment trust, which owed its name to its physical location in Aberdeen), he deliberately targeted emerging markets, and in particular the Far East, as the company’s area of fund management expertise. At the time, ’emerging markets’ were the financial equivalent of  the Wild West. Today, they’re mainstream. Anyone without a decent chunk of his or her portfolio in China, Brazil, India, Hong Kong or Singapore is probably suffering from asset imbalance.

Aberdeen’s sweet-spot won’t, of course, last forever. But while it does, it has – on the evidence so far – a reasonable claim to being regarded as the Intel of financial services.

Which is what this corporate makeover seems to be about.


It’s the Age of Google and Sorrell has no time – or money – for Twitter

April 29, 2013

Martin SorrellThe most interesting thing about WPP Group’s first quarter financial results were not the numbers, but its chief executive’s obiter dicta.

The numbers themselves were a curate’s egg. They beat the revenue forecast, bizarrely enough they delighted in Britain, but they disappointed in the United States. Which is just about the only part of the world economy currently showing signs of dynamism.

The obiter dicta, on the other hand, were curiously memorable. WPP CEO Sir Martin Sorrell used the occasion (well, near enough: he was actually speaking at the FT Digital Media Conference the previous day) to highlight a singular phenomenon. So far as his company is concerned (and it  is, after all, the number one spender of advertising money in the world), Google will soon become a bigger destination for his clients’ money than the biggest traditional media owner in his stable, News Corporation. Google is currently in receipt of $2bn of WPP’s quarterly spend; while NewsCorp gets about $2.5bn. But, given the Google figure represents a 25% increase year on year, it can only be a short time – Sorrell assures us – before the search giant moves into pole position.

I say “search giant”, but that of course is history. Sorrell’s underlying point is that Google – after some initial fumbling – has made the transition from a techie company, peopled by nerds, into a multi-media corporation with global reach. He calls it  “a five-legged stool”: there’s search (of course); display advertising; social media (google+); mobile (via Android and AdMob); and video through YouTube.

Note well where Sorrell places his chips, however. From an advertising point of view, the Age of Google (as he calls it) is primarily defined by video. YouTube has made big inroads into what traditionally would have been television viewing. He’s bullish about mobile, too: Android is now the most popular smartphone platform and in some developing markets, like China, it accounts for two-thirds of all mobile sales.

But social media: Oh dear, what an advertiser’s no-no! Yahoo, though generally lacklustre these days, garners about $400m of WPP spend. Facebook, infinitely more successful with its audience figures, receives only $270m. And Twitter a lot, lot less. What’s the logic? Well, Yahoo “gets” the commercial need for a five-legged strategy (indeed, TechCrunch speculates it is about to buy Dailymotion, a smaller competitor to YouTube). Whereas Facebook and Twitter do not. Facebook, Sorrell reckons, is important for brands – but in a negative sense – absence of criticism, which has little to do with any advertising content. Twitter, on the other hand, is simply a PR medium with almost no value to advertisers.

“It’s very effective word of mouth,” Sorrell told Harvard Business Review last month. “We did analyses of the Twitter feeds every day, and it’s very, very potent…I think because it’s limited in terms of number of characters, it reduces communication to superficialities and lacks depth.”

Maurice Levy, CEO of Publicis, speaks during the Reuters Global Media Summit in ParisThat last may sound a little harsh. And is certainly not a universally accepted view among admen. Significantly, it is not shared by Sorrell’s deadliest rival, Maurice Lévy – chief executive of Publicis Groupe. Lévy has just announced a four-year pact with Twitter which will involve PG’s media planning and buying arm Starcom MediaVest Group committing up to $600m of client money to monetizing Twitter’s audience. Details, at this point, are sketchy.  It is clear, however, we are not just talking “pop-ups” here. Lévy makes specific reference to video links and “new formats” yet to be developed. He admits to there being “some risk” involved in the project, though whether this relates to his own reputation, clients’ money or both is not apparent.


Can Chris MacDonald hack it at McCann New York?

April 26, 2013

Chris MacdonaldHaving, a while back, complimented Chris Macdonald on the improved quality of his tailoring, it would be churlish not to congratulate London’s sharpest suit on landing the hot seat at McCann New York, where he will soon become president.

Macdonald, who combines the position of McCann London group chairman with agency chief executive, is one of several senior executives to be reshuffled in the first significant management changes to be made by Harris Diamond, Nick Brien’s replacement as Worldgroup chief executive. In effect, Macdonald is to take up a position that has been – inexplicably in a creative agency –  left vacant for over a year. His predecessor, Thom Gruhler, quit for Microsoft after – like many around him – coming to blows with Brien over his shoot-from-the-hip management style. The seat had in the interim been kept warm by Hank Summy – a Brien hiring with no traditional agency experience – who has now been elegantly side-shifted to the bafflingly esoteric role of president, commerce at Worldgroup’s digital and direct arm, MRM.

Diamond is evidently throwing away the fairy-cycle stabiliser wheels and proving his own man earlier than expected (or perhaps, more accurately, than I had expected).  When he was picked as McCann Worldgroup CEO last November, McCann’s parent Interpublic hit upon the curious expedient of appointing two “handlers” – hemispheric presidents, Luca Lindner and Gustavo Martinez – to babysit the new boy while he learned the ropes. That was wholly understandable, given that Diamond was a former PR man with no experience of creative advertising. But might have sent out the wrong signal to clients: does McCann trust this man to do the job properly, or not?

In the event, the gamble involved in appointing him – he is well-regarded for his EQ – appears to be paying off. Six months into Diamond’s tenure, McCann has seen off Goodby Silverstein, recaptured the front-end of the General Motors pantomime pony; and won US domestic business as well. Quite a reversal of the negative business spiral that had dogged his predecessor’s two-and-a half-year reign.

It’s easy to see why Diamond might have called upon the services of Macdonald. Where his predecessor loved technical complexity, Diamond is all for human simplicity. “This is a straightforward business,” he told AdWeek recently. “If you can come up with great ideas and make an impact on your clients’ business you do well.”

The great idea, so far as Macdonald is concerned, is threefold. First, his London group role since 2008 has given him invaluable experience of breaking down silo walls and making the various parts of the marketing services machine interoperable. Second, Macdonald is very good with big clients, who these past few years have been feeling a bit bruised and under-loved. Third, London has had a good new business record under his stewardship, in contrast to certain other parts of the McCann empire.

But will the Macdonald pixie dust be enough to salvage McCann’s battered global reputation? That is the question observers are asking. Twenty-five years ago, or so, it was relatively easy for a smooth-talking, self-possessed Brit to make it “Over There” after making it over here. Britain’s reputation for advertising creativity and big brand marketing was second to none in the world. And, if that were not recommendation enough, we could also play the consumer and strategic planning card.

That was then. Now, our effortless superiority in those disciplines should not be taken for granted. And besides, the world has moved on in other ways. It’s a grimmer, greyer place. Post-crash, clients are challenged and risk-averse. As one source of mine puts it: “The need to meet quarterly numbers is more important than waving a magic wand of creativity. This is a low- to no-growth environment.” Add to that the complications of procurement, the massive disruption of traditional channels caused by social media, and the fiendish complexity of planning and measuring campaigns these days, and it becomes triply more difficult for any individual, however talented, to achieve cut-through.

McCann has many weaknesses as a creative agency brand, but one of its great strengths over the years has been its knowledge-in-depth of client businesses. That reputation took a knock under Brien. We have yet to find out whether Macdonald is the man to restore it.


Age cannot wither them, nor shareholders vote them off the holding company board

April 16, 2013

David-Jones---Havas-007Whoever said advertising was a young person’s business? The conventional wisdom is that at 40, most ad executives would be advised to investigate a second career. And at 50, they’ll be positively clapped out and  have “post-economic” freedom foisted upon them whether they like it or not.

Superficially, membership statistics for the Institute of Practitioners of Advertisers (IPA – the UK adman’s trade body) bear this theory out. When I last looked (which was admittedly a while ago, but I doubt the demographic profile has improved), the number of members surviving their 50th birthday was a vanishingly small 6%.

But these are just the worker bees. Look at the nerve centre of the hive – the main board of the world’s leading advertising holding companies – and you’ll find that gerontocracy has never had it so good.

I was forcibly reminded of this the other day by Marketing Services Financial Intelligence editor Bob Willott.

Willott has done a demographic survey of the Omnicom main board and found the average age to be an astonishing 70. In his own words:

The oldest of the 13 board members is the chairman and former chief executive officer Bruce Crawford.  He is 84 and has been a director for 24 years. His successor as CEO John Wren is a sprightly 60 and has served on the board for 20 years.

I have yet to do the arithmetic upon the board composition of other global holding companies, but the most superficial of surveys suggests a similar age-profile, if their chief executives are anything to go by. At WPP Group, there is an evergreen Sir Martin Sorrell – still incontrovertibly ruling the roost at 68; and likely to do so for a good while yet unless shareholders go nuclear over his annual pay review. Interpublic Group chairman and CEO Michael Roth sails imperturbably on at 67, despite repeated attempts by the media to unseat him or sell his company to a rival. And at Publicis Groupe we have the grand-daddy of them all Maurice Lévy – 71 – with no successor in sight, despite repeated attempts to pretend he has found one.

All this looks terribly good for that comparative whipper-snapper, David Jones (pictured above). At only 46, the global CEO of Havas can anticipate at least another 25 years at the helm.


Chris Wood helps to launch top-end male fashion brand Dom Reilly

March 28, 2013

Dom ReillyFor years, you’ve run your own brand consultancy. After successfully selling it, you step into the limelight as chairman of the Central Office of Information, only to find that mad axeman and part-time cabinet minister Francis Maude is cutting off at the knees the very organisation you’ve just been invited to head. What next?

I caught up with Chris Wood recently and found out. It transpires he is helping to give lift-off to a new top-end fashion brand called Dom Reilly. Never heard of it? Well, unlike Chris Wood, you’ve probably had nothing to do with Formula One. Wood, in his spare time, is an unreconstructed petrol head; and Dominic Reilly (pictured) – the eponymous brand name –  is the former head of marketing at Williams F1 Team.

Reilly’s company, where Wood is a non-executive director and adviser, is ambitiously pitching itself at the very top of a very discriminating market – with a price-tag to match. The initial range, admittedly exquisitely hand-crafted, starts at £95 for a tooled leather phone case and escalates to an eye-watering £1,400 for a weekender bag (roughly the price of a Manolo Blahnik handbag or a Jimmy Choo tote).  This new brand has no intention of being a Mulberrry also-ran, no siree.

So why is Reilly so confident about his ambitious positioning? The answer lies not so much in the quality of the goods – that’s a given when competing with the likes of Louis Vuitton, Armani and Alfred Dunhill – but in a judicious soupçon of Formula One. A soupçon, because too much of it will asphyxiate the brand with the rank odour of “petrol-head” and “anorak” – in short, death by downmarket male. While there’s no escaping Dom Reilly’s essentially masculine appeal, the idea is to imbue the brand with FI’s sophisticated reputation for engineering excellence and technological innovation. One of the accessories, for instance, is a beautifully finished crash helmet case; and some of the collection features a special high-density foam used in F1 cockpits that absorbs almost all shock on impact.

Reilly, given his 6 years as head of marketing at Williams, has second-to-none access to one of the world’s most sophisticated R&D departments. But he has to be careful how he plays the Williams card. Few team brands, with the exception of Ferrari, have much charisma off-track. And in any case, Williams has not performed well of late (one, but only one, good reason, why the Williams name is not directly associated with the brand). Instead, an aura of cutting-edge R&D is being subtly diffused through the person of Patrick Head, co-founder of Williams F1 and its fabled chief of design – who just happens to be a founder shareholder in Dom Reilly.

Dom Reilly EnglandIn truth, the attractions of launching an haute gamme fashion brand are there for all to see: salivating margins and high resilience to recession. Equally, so is the demerit: everyone’s at it. The sector has become crowded with participants touting increasingly obscure and recondite “provenance”: the 17th century Huguenot diaspora, the Empress Josephine’s personal dressmaker etc (I made those up, but you know what I mean). So attaching your brand to future-directed technology with wide aspirational appeal is certainly a point of difference.

But that’s not to say fashion and high-octane auto culture are natural bedfellows, as the history of the Ferrari brand all too clearly illustrates. “It’s interesting,” says Wood, “That in the last Top Gear programme I watched, they were extolling the virtues (and innocence) of Pagani (750bhp hypercars, costing three times as much as a Lamborghini and correspondingly rare), while referring to the Maranello mob (i.e. Ferrari) as ‘purveyors of key rings and baseball caps’. And about Lamborghini as a contrivance of Audi. Out of the mouths of children, and even Clarkson, can come a certain wisdom.”

Indeed.


Richard Pinder launches global network with Maserati as a client

March 26, 2013

Richard PinderAfter years of being a jet-setting senior suit in someone else’s service, Richard Pinder has decided to go global on his own account with the ambitious launch of international network The House Worldwide.

Pinder, it will be recalled, was head of Publicis Worldwide for five years until group succession politics (the imposition of Jean-Yves Naouri as executive chairman) made further tenure of his position unrealistic.

That was two years ago. Since then, Pinder has been pondering how to cash in on his experience with global clients (he’s worked for over 25 years in Asia, Europe and the USA; for Leo Burnett, Ogilvy & Mather and Grey, as well as Publicis) by building a new-model worldwide agency network.

No mean cliché, the cynic will object. We’ve heard the rhetoric before. What’s the reality?

It’s true that the agency world has long been struggling with a “post-analogue” structural solution to the increasingly financially unviable traditional creative agency network, with its army of regional bureaucracies. Some have proffered a solution in the form of the fleeter-footed international micro-network (step forward BBH, Wieden & Kennedy and – in its heyday – StrawberryFrog.

Pinder, however, has gone a step further in presenting a top-down managerial solution – or perhaps that should be management consultancy solution – in place of the piecemeal creative one. His starting point is that the traditional global advertising business – unlike professional counterparts such as lawyers and accountants – loses most of its senior talent to the management of regional geographic fiefdoms, which are there primarily because of historical legacy. What this talent should be doing is servicing the client’s agenda rather than their own corporate one. The exception, where the client really can insist on top-level personal service, is a vanishingly small number of mega-clients, such as Ford and Procter & Gamble, which have specially structured teams to pander to their requirements.

Pinder’s idea is to provide this level of service for global, or at least international, clients further down the budgetary league table. Each client should be serviced by no less than three senior people at any one time. To do this, he has joined forces with a core team of like-minded senior executives: initially, Peter Rawlings, former chief operating officer DDB Asia, Chris Chard, former chief strategy officer of Lowe Worldwide in New York and Ben Stobart, former senior vice-president (chief suit) of Burnett Chicago. These will deal directly with top clients on a day-to-day basis; the specialist skills base, on the other hand, is to be provided by a network of over a dozen associated network companies, of which the best known is Naked Communications (see AdWeek for a full list).

Note the absence of an overall chief creative officer. This is deliberate: Pinder does not believe a single individual can adequately address the creative needs of all client types.

Why is Pinder convinced this model can operate from a single fixed geographical location (well, actually two in THW’s case – London and Singapore)?  Because of consolidation on the brand management side. More and more marketing power is being concentrated into the hands of Chief marketing officers and indeed chief executives; less and less being delegated to regional and country power bases.

But, the acid test is: has Pinder got any clients? Yes he has. He has been collaborating with two over the past year in honing the organisational structure of THW, during what he calls “beta mode” (how digitally au courant).

And they are? Maserati and an upmarket specialist haircare brand, GHD (stands for “Good Hair Day”). Both, he tells me, are poised at an interesting fulcrum of development, from the brand and new product point of view.

Maserati, an ultra luxury sports car marque lodged in the Chrysler/Fiat stable, has been given a €1.6bn injection to broaden its model range and take on Porsche.

GHD – which produces premium-priced hair stylers – is also cash-rich after being bought for £300m by Lion Capital. Lion is investing in npd, with a view to bringing GHD out of the salon and onto the international stage. Inevitably, that is going to involve careful brand positioning as GHD moves into a broader market segment.

However, Pinder is coy on the subject of who, apart from Maserati and GHD, is bankrolling all of this. It seems likely that both principal founders (Pinder and Rawlings) have skin in the game. But a project of this scope is financially beyond most individual investors, even if they are relatively wealthy admen. Private equity seems to the answer. Among the list of network associates is, rather intriguingly, a UK-based hedge fund called Toscafund, whose chairman is former RBS bigwig Sir George Mathewson. Pinder claims Toscafund is very handy on the “analytics” side. No doubt. But my guess is it’s providing a lot more resource than that.


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