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Neogama loses Bradesco, Omo to Interpublic – and 40% of its revenue

January 30, 2013

alexandre-gamaNot all fairy tales have a happy ending. One such is the marriage of convenience between Brazilian hotshop Neogama, its micro-network affiliate BBH and Publicis Groupe. Readers of this blog will recall that, a little over six months ago, Publicis chief Maurice Lévy bought out the 51% of BBH PG did not already own. A useful by-product of the deal was that he acquired not only BBH’s 34% stake in one of Brazil’s hottest agency properties, but the majority shareholding of its founder and creative supremo, Alexandre Gama, at the same time. Neatly, Lévy solved the creative succession crisis at BBH with the same stroke of his pen – by appointing Gama as BBH’s global creative chief, replacing Sir John Hegarty.

Alas, the deal has worked out somewhat better for Gama than for Lévy and Publicis. Gama managed to bank his cheque, but Neogama has just lost about 40% of its revenue, and two of its principal clients. Or so I hear.

It is common knowledge that one of the reasons Gama was hawking his majority stake in the first place was that he feared his agency was too reliant upon a single account, that of Brazilian bank Bradesco. Indeed, rumours soon began to surface that the bank was about to review. Well, now it has: and placed the account with McCann.

For Interpublic, McCann’s parent, Neogama’s plight is, however, a double joy. Another major – this time multinational – client has also fallen into its lap. I mean Omo (“Dirt is Good”), which has moved to Lowe.

In retrospect, we can see this was an accident waiting to happen. As is well known, PG is a Procter & Gamble agency group, and Omo is owned by Unilever. Under the status quo ante, Neogama had an element of protection from client conflict, in that BBH – itself a major Unilever network – was still majority-owned by its founding partners (i.e., Nigel Bogle and Hegarty). All that ring-fencing was swept away by the Lévy deal.

8027388763_a9feed3b19_zIt will interesting to see who gets the blame for this cock-up. My money is on Jean-Yves Naouri, the once but not future king of Publicis.

One thing you can be sure of: it won’t be the Silver Fox himself, who now seems comfortably ensconced in a permanent chairman role, despite recent protestations that he was – at 70 – on the point of retiring.

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Last top 10 Brazilian indie Neogama sells out to Publicis Groupe, not BBH

July 4, 2012

It seems that months-long negotiations over who will own the controlling stake in fashionable Brazilian agency Neogama BBH (see my earlier post here) are now completed. So says the Brazilian trade press.

And the answer, shortly to be announced on the French Bourse, is: Publicis Groupe. Not BBH.

Do such technicalities matter, given that all these agencies are part of the same, happy, family? Well, yes they do. There’s more for micro-network BBH in this award-winning agency than a 35% stake.

Neogama’s biggest single client is burgeoning Brazilian bank Bradesco, but the agency also plays an important role in servicing BBH global clients such as Unilever and Diageo.

As is well known, Publicis Groupe is essentially Procter & Gamble-aligned. The only reason BBH, and therefore Neogama BBH, is permitted to handle Unilever business is a ring-fencing 51% stake in BBH held by its senior staff, chiefly group chairman Nigel Bogle.

If Publicis Groupe has directly bought out Neogama BBH, which it appears to have done, what will happen to that sizeable chunk of Unilever business? That is the question – as posed by rival Unilever agencies WPP, Interpublic and Omnicom.

Neogama’s principal shareholder is its flamboyant founder, Alexandre Gama. His is the only top-ten agency Brazilian agency that, up to now, has managed to remain independent. His motives for selling out? He has been running his agency a long time – over 12 years. Bradesco is overweight as the main client. And money, yes money. Gama’s services are highly in demand, and he knows it. He has been hawking his stake about for some time – in the not unreasonable expectation that he will get a bigger wedge from PG if he does so.

Ideally, BBH should have been the one to buy him out. But it doesn’t have the money. So Publicis Groupe, which probably had first refusal anyway, stepped in and snapped up the agency. Gama will now have to report directly to PG group chief executive Maurice Lévy, which he will not enjoy very much. By all accounts, the two men loathe each other.

Even when the Neogama acquisition is completed, WPP – owner of Y&R, JWT and Ogilvy – will continue to be the biggest biller in Brazil.

Neogama’s $667m turnover in 2011 was up 5% on the previous year, according to Inter-Media Project. Its revenue was $53m. It has 270 staff, according to Publicis Groupe.

UPDATE 9/7/12: Some further facts and figures about Neogama’s performance have come my way. Almost certainly included in the deal were two Neogama subsidiaries, Triacom – a promotion company – and MIM – a digital specialist. BBH’s precise share in Neogama was 34.4%. It had no share in Triacom or MIM. The latest financial performance figures were:

Gross revenue, for Neogama, Triacom and MIM respectively:  $66.7m, $8.7m and $1.1m. Net revenue: $57.3m, $7.9m and $0.9m. Operating profit: $28.4m, $1.5m and $0.4m. Operating profit after tax: $18.1m, $06m  and $0.3m.

A rumour has surfaced that Neogama’s biggest client, Bradesco, is reviewing.


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