Sorrell warns Lévy against buying Chinese agency Oriental & Rende

February 28, 2012

In an extraordinary new twist to the Oriental & Rende story I posted the other day, WPP chief executive Sir Martin Sorrell has written to his counterpart at Publicis Groupe, Maurice Lévy, warning him of the dangers of acquiring the Chinese specialist car agency.

Last year, I’m told, WPP subsidiary Ogilvy broke off acquisition talks with O&R after it emerged that the agency – whose main client is VW, Mercedes and Hyundai joint-venture partner FAW – was operating both outside Chinese law and accepted ethical practices. The problem seems to involve under-the-table payments, totalling several million dollars a year, which are being paid to the client management in order to retain business.

It is believed that, in his letter, Sorrell appealed to Lévy’s sense of fair play and emphasised the need for a corruption-free level-playing field in the international advertising business.

Corruption, knowingly or unknowingly, committed in foreign markets is now a major corporate headache. Under section 7 of the UK Bribery Act 2010, it is an offence for commercial organisations registered in the UK, or carrying out business there, to fail to prevent bribery taking place. The burden of proof is on the indicted company to demonstrate that it had adequate anti-corruption controls in place at the time of the offence’s commission. Punishment on conviction ranges up to a 10-year prison sentence and unlimited fines. France has similarly tough anti-corruption legislation governing overseas subsidiaries, involving heavy fines and potential imprisonment.

Whether Sorrell’s letter – to which Lévy is believed to have replied – will have any impact on PG’s decision to buy O&R remains to be seen.


Publicis Groupe moots deal with Chinese auto specialist agency Oriental & Rende

February 25, 2012

You’ve got to admire the mettle of the man. Publicis Groupe chief executive Maurice Lévy may have his hands full with a corruption scandal at Betterway, one of PG’s principal Chinese subsidiaries, but his appetite for acquisitions in that part of the world is undiminished.

It has come to my attention that PG is close to striking a deal with a Beijing agency called Oriental & Rende. Never heard of it? I’m not altogether surprised. It’s a smallish specialised agency with revenue estimated at $10m in 2011. But don’t underestimate its strategic significance. This is a way into the booming “Made in China” car business. O&R does what used to be called through-the-line work (advertising, PR, events etc) for many of the Chinese automobile joint-venture companies. Its biggest client by far is FAW, which is allied to VW, Mercedes and Hyundai.

It is believed that WPP earlier showed interest in acquiring O&R but, for reasons which are not yet apparent, decided to pull out of discussions.

Newsweek’s Tina Brown flags Mad Men revival with retro ads fest

January 13, 2012

Creatives, sharpen your pencils. Tina Brown, editor of Newsweek and The Daily Beast, has a new challenge for you.

Well, not “new” perhaps; more “retro”. It’s a once-in-a-lifetime opportunity to hone those copy skills which you might, if you were extremely lucky, have learned at the knee of David Abbott or, very distantly indeed, Bill Bernbach (ob.1982).

The brief? To turn a whole edition of Newsweek into a celebration of Mad Men’s fifth season premiere, on March 25th, with 60’s-themed ads.

It’s difficult to know who’s been commercially cuter here, with this “life imitating art” fest: Brown, who needs to boost flagging Newsweek ad revenue; or Matthew Weiner, creator and executive producer of the critically acclaimed but hardly money-spinning Lionsgate TV series, who needs to give the long-delayed fifth series the best uplift possible.

It’s nearly a year and a half now since Don Draper and his chums last graced our screens, mainly thanks to a protracted dispute between Weiner and Mad Men’s TV sponsor, AMC Network. Last March, Weiner eventually emerged with a new $30m contract which, reportedly, will guarantee us another 3 series.

For Brown, the hope is that the March 19th Mad Men edition will provide the crowning glory to a low-profile turnaround for Newsweek. Ad pages dropped 17% in 2011, but the magazine has experienced a steady quarterly recovery since her well-received redesign, launched on March 14th last year.

Of course, that’s not what she’s saying in public:

Newsweek was very much on the cultural forefront at the time of the show. It covered the events that are so much of the background for the show’s drama — the burgeoning civil rights movement, the women’s rights movement, the Vietnam War. That was Newsweek’s cutting-edge beat and its flourishing journalistic subject. So it seemed like a wonderful marriage in a sense to take that and apply it to the magazine, to make the magazine an homage to the period.

As opposed to today when the magazine does… what exactly? Maybe it’s not such a smart idea to remind people of its past glories after all.

No matter. Here’s a great opportunity to dust down those copywriting skills. And this, by way of inspiration, is what you’ll be up against. A bit of Bernbach’s immortal VW Beetle advertising. And, from the same agency DDB, the scarcely less famous “We try harder” for Avis. No tobacco advertising, though. Historical authenticity doesn’t stretch to allowing parodies of a Lucky Strike campaign.

Alas, most of us in Blighty are going to have to bide our time with Mad Men Mark V. The BBC has lost the screening rights to: – subscriber-only Sky Atlantic. Roll on the series DVD, retailed by Amazon.

Iris retrenches in China – already

January 10, 2011

Word has reached me that Iris, the ever-expansive integrated marketing services micro-network, is closing its Beijing office.

That might (to mix my sub-continents) sound like a small earthquake in Chile. Until you realise that the agency group only opened in Beijing about 18 months ago. Isn’t the Chinese economy still going gangbusters? And did Iris chief executive and founder Ian Millner not say, only a year ago: “Our intent is to become the leading integrated marketing agency worldwide and we see China as a key market for our growth and development.”?

Suspicions about the company’s health might be further confirmed by exploring some of its recent history. Iris has been struggling, no doubt about it. In the summer, it closed down its German office, put its Spanish office on notice and was then forced to make a number of redundancies back at London HQ. Later, last November, UK chief executive Steve Bell was moved sideways to joint ceo, and agency chairman Drew Thomson stepped down. European chief executive Paul Bainsfair, meanwhile, was handed a more “client-focused” role and – proof of the urgency of matters – Millner and fellow-founder Stewart Shanley were called back from the China and US stations respectively to take the troubled ship’s helm.

So, just what is going on in China? I caught up with Millner who, for a man recently under some strain, seems chipper and friendly enough. Technically, it would appear the Beijing office will retain a ghostly presence as a client services office, but to all intents and purposes Iris’s China operations will now be regrouped in Shanghai – which Millner set up as an office only a year ago. Apparently, most international clients find it easier to operate out of Shanghai than Beijing. Be that as it may, one particularly large client – Sony Ericsson, with Iris since it set up in 1999 and still accounting for about 20% of revenue – obviously thought differently. Reading between the lines, it was Sony Ericsson, long the backbone of Iris international expansion plans, which drove the network to China in general and Beijing in particular. But ambitions to crack the smartphone market there (it is the fourth-largest player) do not seem to have gone entirely to plan.

Millner admits that China has been a steep learning curve (expensive as well, I imagine). “We need to be more focused and less expansionist. It’s now about making the network work and being profitable on a global scale,” he tells me. Luckily for him, his is still a privately-owned company, so we’re never likely to learn just how much this experiment has cost him and his fellow directors.

Note: Iris has grown like Topsy. It has offices in London, Manchester, Paris, Amsterdam, Singapore, Sydney, Melbourne, New York, Miami, Portland, Atlanta and Delhi. It also had plans to open up in Russia, Indonesia, Vietnam, Cambodia, Laos and Sweden. At one point, it employed 750 people worldwide, over half of them in the UK. What began as a sales promotion and direct marketing outfit has now branched out into experiential, digital, PR, sponsorship and even management consultancy. Its biggest clients after Sony Ericsson are Orange, VW and Barclaycard, none of which account for more than 10% of revenue. Its second biggest client was COI (know what I mean?). Total revenue is £48m, according to Millner – up from about £27m 3 years ago. But pre-tax profit is reported to be about £2m, according to a well-placed source; and debt is a sizeable £10m.

Iris has a well-deserved reputation for creativity and was recently voted one of the UK’s top creative agencies in a YouGov survey commissioned by Pitch.

UPDATE 3/3/11: No wonder there was a spring in Millner’s step. What he knew, but I didn’t when I talked to him back in January, was that Iris was about to land an enormous US account. No less, in fact, than all of Reckitt Benckiser’s North American digital business, formerly handled by Euro RSCG, and worth about $20m (it already handles digital in Europe). It also explains a mysterious ad appearing on LinkedIn, trawling for two senior suits. That should help to tidy up the bottom line a bit. My thanks to Angie Dean for bringing the win to my attention.

PS. Whatever is going on at Euro RSCG, which seems to have received the celebrated three phone calls recently?

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