Emirates global account quandary as Strawberry Frog splits with Amsterdam

July 11, 2013

emirates46_460If what I hear is correct, Scott Goodson, chairman of micro-network Strawberry Frog, hasn’t been kissing enough princes lately.

The mercurial Goodson – famous for saying his agency wasn’t up for sale, while putting the finishing touches to a deal with PR group APCO – has had a bust-up with his Amsterdam agency, Media Catalyst. That’s Amsterdam agency number two. He also managed to alienate Amsterdam agency number one, headed by SF co-founder Brian Elliott, which now trades as Amsterdam Worldwide. And then he fell out with his Brazilian partner, Alexandre Peralta, of Peralta Sao Paulo – an agency that has gone on to rather greater achievement without him. So, there’s a bit of history to this kind of thing.

But I digress a little. The latest split is unusually serious, because SF Amsterdam/Media Catalyst is the lead agency for SF’s backbone client, Dubai-based Emirates Airline – one of the world’s largest. The Frogs won the account against considerable competition from the likes of BBDO and Grey, back in 2010. And what an account to win: lead agency for a global rebranding campaign worth (according to AdAge at any rate) $300m. This wasn’t just a feather in the cap, but full plumage for a small digitally-inspired creative boutique making its way in the world. Timely sticking plaster as well, given the above-mentioned ructions going on elsewhere in the organisation.

It’s important to point out that most of the credit for winning – and retaining – this account seems to have been down to Amsterdam CEO Hans Howarth, the majority shareholder in Media Catalyst. Goodson, with his habitual talent for self-publicity, owned about 30% of the agency from which he has now been ejected, but somehow managed to maximise most of the plaudits.

The Emirates brief was to turn the airline into an aspirant, lifestyle brand (isn’t one enough in the world?) and SF duly delivered with “Hello Tomorrow”, announced with great pizzazz last April by Sir Maurice Flanagan, executive vice chairman of Emirates Airline : “Our new corporate image and global marketing campaign both underline the confidence we have in our existing products and services, and the vision we have for the future growth of the airline. Emirates is not just offering a way to connect people from point A to point B but is the catalyst to connect people’s hopes, dreams and aspirations.” What this boils down to is getting a younger “audience” hooked on the brand by dextrous use of social media.

Only last month, Omnicom – in the guise of BBDO New York and Atmosphere Proximity – won Emirates North American business, against competition from WPP’s Grey and JWT. At the time, we were assured that the pitch would not in any way affect Strawberry Frog’s tenure of the global branding account. But that was before news of the split with Amsterdam broke. It would be surprising if some of these agencies’ biggest guns are not, at this very moment, on a Boeing 777 heading for Dubai airport. An Emirates one, naturally.

Where all this leaves SF – apart from picking up the pieces – is anyone’s guess.

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“Not for sale” StrawberryFrog sold – to PR agency APCO

February 16, 2012

StrawberryFrog – the maverick advertising micro network – up for sale? Come again?

When, late last year, I had the temerity to claim that was indeed the case, SF founder, chairman, chief executive and great panjandrum Scott Goodson took venomous issue with my impudent suggestion.

Yet, less than 3 months later he has done just that – sold out. More specifically, APCO, a PR agency specialising in crisis management, has acquired a controlling interest in the financially troubled New York agency. (It is not yet clear how the sale will affect SFNY’s freewheeling Amsterdam counterpart.) The sale comes hot on the heels of news that Goodson has also parted company with the only profitable part of his organisation, StrawberryFrogPeralta, in which he held a 30% stake.

The spin on the APCO deal is that it is an inevitable sign of the times. As digital becomes the key communications channel between marketers and consumers, the traditional lines between PR and advertising are being extinguished. If anything, PR is culturally more sensitive to the “conversational” requirements of social media than advertising, but often lacks the technical expertise to be found in advertising agencies. Consequently, many PR firms have taken to hiring Madison Avenue creative executives over the past few years.

StrawberryFrog is indeed an accomplished expert in digital creativity. Goodson and his co-founder and fellow Canadian Brian Elliott (once best friends, who set up the company on Valentine’s Day, 1999, but later spectacularly fell out) early realised that strong creative ideas combined with digital know-how was a winning way of undercutting the big agencies, tied as they were to the bureaucratic “account team” legacy of traditional advertising.

And for a time, they were spectacularly successful. Even today, nearly 4 years after Elliott broke away, StrawberryFrog can boast a client list that includes Procter & Gamble (Pampers), Emirate Airlines and bourbon-maker Beam Inc.

But it is also a troubled agency, headed on a downward financial spiral and suffering from an unenviable reputation as a place to work (not least because of Goodson’s mercurial temperament).

Last year, I reported that agency staff had been cut from 76 to 40 in New York, while revenues had plummeted from $17m in 2010 to an estimated $12m in 2011. In the event, that last figure has proved a bit conservative – The Wall Street Journal cites $10m revenue. So, while Goodson may be quite right in asserting that the APCO deal will “give us the ability to work with clients in more markets around the world” (APCO has about 30 offices), it’s also true to say Goodson had to sell – or else suffer financial disaster.

APCO will be wise to treat its new acquisition with kid gloves. As one source familiar with StrawberryFrog put it to me: “Placing a value on this agency will not have been easy. What’s the IP value? How are they going to deal with the reputation issue? And has outstanding litigation with former staff been settled prior to the deal being signed?”

One thing APCO won’t have to worry about in the short-term, however, is dealing with StrawberryFrog’s prickly CEO. I understand he’s rather busy at the moment promoting his first book: “Uprising: How to build a brand and change the world by sparking cultural movements”. Perhaps some unintended irony in that title, the way things have turned out.


StrawberryFrog is up for sale, but will anyone want to buy it?

November 3, 2011

Word reaches me that StrawberryFrog, the maverick international advertising network, has hoisted a discreet “For Sale” sign. Whether it will succeed in its objective is open to doubt, as will be seen below.

First a little background. StrawberryFrog – curiously named after a colourful, nippy and spectacularly poisonous Latin American amphibian – was founded in 1999 by Canadian entrepreneur Scott Goodson as an agile alternative to the big, cumbersome, advertising holding companies. Goodson, who remains to this day head honcho, likes to see himself, and his company, as an avatar of what is called Movement Marketing, a concept first dreamt up by sociologist Neil Smelser. Stripped of jargon, this means “avantgarde” or “revolutionary”. In practice, Goodson was one of the first to spot that small, manoeuverable agencies with strong creative ideas that travelled well could use digital leverage to undercut the legacy giants – with their expensive but increasingly quaint bureaucratic structures wedded to traditional advertising.

For a time things went extraordinarily well. With only 2 offices, one in Amsterdam and one in New York – which deployed a staff of no more than 70 “Frogs” (but rather a lot of freelancers) – Goodson and his co-founder in Amsterdam, Brian Elliott, pulled in some extraordinary global business. We’re talking Sony Ericsson (when that was still a name to conjure with), Mitsubishi Motors Europe, Pfizer, RIM’s Blackberry, Ikea, Heineken, Morgan Stanley, PepsiCo, Emirates – to name but a few.

In 2009, the agency reached its apogee when – against all odds –  it seized the prized global digital account of Procter & Gamble’s biggest brand, Pampers, from under the nose of Publicis Groupe’s Digitas and WPP’s Bridge Worldwide. It was not even a P&G roster agency. Pampers remains StrawberryFrog’s most prestigious account.

But that was then. From thereon in, it seems to have been downhill.

Already, the cracks had begun showing when in 2008 Elliott broke away, rechristening the StrawberryFrog Amsterdam business Amsterdam World.

True, Goodson (left) patched up the network. He set up a new Amsterdam office, and had already opened a successful Brazilian boutique in Sao Paolo, a shop in Mumbai and disclosed his intention to set up an office in London (project later aborted). But he signally failed to control his New York hub, which has gone into freefall.

Not a week seems to go by these days without news of redundancies, stories emerging of Goodson’s increasingly tyrannical behaviour and acrimonious exits by senior staff. Two of his former top team are, I’m told, suing. One, ex-chief strategy officer Ilana Bryant, wants $2m for alleged breach of contract (I should add in fairness that StrawberryFrog is counter-suing her for $50,000).

All of which, as can be imagined, does little to impress clients, who have become still more alarmed by rumours that StrawberryFrog’s NY office is increasingly reluctant to pay its suppliers’ bills.

By way of illumination, some interesting “numbers” recently came into my hands – from what appears to be an unimpeachable source. They are as follows:

NY office: Dire. Revenue has declined from $17m (2010) to  about $12m (2011). A loss of $600,000 is expected this year. NY has about 40 employees, down from 76 a year ago.

Amsterdam and Brazil have different ownership structures to New York: Amsterdam is smaller by revenues, and expected to generate a $200-300,000 loss this year; Brazil has about 80 employees with $8-9m revenue – it is profitable.

Back in 2007, StrawberryFrog came quite close to sealing a deal with Publicis Groupe (it failed at the due diligence stage). This time a sale is more urgent. But I wonder whether Goodson will be able to find a buyer.


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