Agency Profiles : Saatchi Saatchi

Saatchi & Saatchi is a global advertising agency. It was listed on the London Stock Exchange and was once a constituent of the FTSE 100 Index but in 2000 it was acquired by Publicis which is headquartered in Paris.

The Company was founded by brothers Maurice (now Lord Saatchi) and art collector Charles in 1970. The Saatchi brothers were born into a Jewish family in Baghdad, Iraq (the name “Saatchi” means “Watchmaker” in Turkish). Saatchi brothers were noted for their campaign “Labour isn’t working” on behalf of the Conservative Party before the 1979 UK general election and for the advertisements for British Airways, Silk Cut and other state-owned interests privatised by the Conservatives in the 1980s.

In their early days the agency was known as one of the more creative in London and employed people who went on to be stars of their industry including Tim Bell and Martin Sorrell. Their early growth was also helped by a policy of settling the invoices from small suppliers as late as possible, while promptly paying large, high-profile companies.

With the support of American investors, Saatchi & Saatchi pursued a policy of buying out competing firms with lucrative established contracts. One of the companies they bought out was DFS. In 1995, a boardroom coup saw the brothers leave the company and set up a new firm M&C Saatchi.

In 1987 Paul Arden was appointed executive creative director. He has spent 14 years with the agency, handling accounts of British Airways, Anchor Butter, Toyota, Ryvita, Nivea, Trust House Forte, Alexon Group and Fuji among others. His British Airways campaigns continue to be remembered as one of the greatest advertising campaigns of all time, changing the fortunes of the airline.

“Arden was the ringmaster behind the whole creative circus that saw British Airways become “The World’s Favourite Airline”, The Independent become the new intelligentsia’s favourite newspaper, Margaret Thatcher the nation’s favourite leader and Silk Cut their favourite fag.”

Arden chose to leave Saatchi & Satchi in 1992 but remained a key consultant for the agency until 1995.

The ousting of the Saatchi brothers in 1995, and the subsequent formation of M&C Saatchi saw a period of turmoil for the agency, as key figureheads from the London office joined the defection to the new entity. At this point, nearly £40 million of revenue was taken from the agency, with a further £11 million spent on severance payments and litigation against the staff members who left.

In 1995, Saatchi & Saatchi became part of the Cordiant Communications Group, a new grouping that was split into two main functions: research and advertising, with Saatchi & Saatchi forming the keystone of the latter. The acquisition frenzy that characterised the agency throughout the 1980s was taken to task under the new management system. This led to a number of agency assets being sold, including the Fitch design company (which is now part of the WPP group), management consultants The Hay Group and a number of the 383 offices around the world that had been opened during the late 1980’s.

After the 1995 shakeout, the key imperative for the new owners of the agency was to manage the relationships with Saatchi & Saatchi’s blue-chip client base, which at this point included decades-old partnerships with The Campbell Soup Company, Hewlett-Packard, Johnson & Johnson, Procter & Gamble, DuPont, Phillip Morris and General Mills. These clients were strategically acquired when the Saatchi brothers had bought out a stable of established advertising agencies throughout the 1970s and 1980s, including the London-based Compton Advertising and the New York agencies Dancer Fitzgerald-Sample (which had been an agency of record for Procter & Gamble since the 1920s) and Bates Worldwide. While the British Airways and Mars defections in 1995 destabilised the agency’s reputation in London, it seemed not to affect operations in its biggest market, the United States. The growth of its new healthcare arm in New York City and increased spending from its West Coast auto clients Toyota and Lexus, marked a period of steady growth for its American operations.

Saatchi & Saatchi entered a new phase in 1997 when it officially dropped “advertising” from the name. This was part of a new imperative installed by Kevin Roberts, a beverage marketing veteran who had been brought in to revive the agency’s fortunes. One of Roberts’ most important decisions was to move the global headquarters of the agency from its Charlotte Street, London address to its Hudson St, New York City office. Newly dubbed an ‘ideas agency’ by Roberts, the agency quickly sought to usher its resources towards the Internet, which was still very much in its infancy in the mid-1990s.

In 2000, after speculation that it would be acquired by WPP or Omnicom, Saatchi & Saatchi joined the Publicis Groupe, a global marketing concern based in Paris, France. Publicis kept Roberts as CEO, content with his vision for an ‘ideas agency’. Saatchi & Saatchi still underwent some turmoil throughout this time, as the dot-com bubble saw the closure of its San Francisco office, which effectively ended its 15-year relationship with the Hewlett-Packard company. The account was subsequently split between a Publicis agency and creative agency Goodby, Silverstein and Partners. Johnson & Johnson also decided to review its relationship, withdrawing its $US100m Tylenol account from the New York office. A few months later, InBev announced that it’s Beck’s Beer account would shift to Leo Burnett after only a year at the agency. As a result, Roberts committed to building revenue through its existing clients, which led to additional assignments, with Saatchi Los Angeles securing new accounts such as Pur Filtered Water and Millstone Gourmet Coffee. Efforts were also made to shore up the Los Angeles office after it missed a $US40m brief for Toyota’s Scion, a new sub-brand targeted at youth, which was given to San Francisco-based Attik, a hybrid creative agency.

Despite these losses, this strategy gave rise to the Lovemarks philosophy — a theory espoused in a book by the same name released by Roberts. While this met with scepticism in the advertising world, Roberts was vindicated in 2006 when he secured nearly $US700m worth of billings from two clients, Wendy’s and department store JC Penney. Subsequent additions to the New York office, such as the New York Tourism Board and Cold Stone Creamery have been described by both client and agency as ‘being due to a strong belief in the Lovemarks’ philosophy. Despite this, after only a year with the agency, Wendy’s decided to pull the majority of its business into another roster agency, Kirshenbaum Bond & Partners, after complaints from Wendy Thomas (the namesake of the restaurant) who did not take kindly to her likeness being used in the advertising.

In 2005, critics complained that in creating a £20 million campaign for a new Brazilian spirit the agency spray-painted graffiti images on walls and buildings in the East End of London.

Dr Martens CEO David Suddens decided to fire Saatchi and Saatchi as their advertiser on 24 May 2007. This was because of a one-time advertisement that used a picture of 1990’s music icon Kurt Cobain without the permission of Courtney Love, Cobain’s widow. In its defense, Saatchi released a statement indicating their regret of Dr Marten’s decision to terminate their services with them but emphasizing that they believed that the advertisement was deliberately edgy but not offensive.

It was reported in late 2006 that Saatchi and Saatchi were working with the Israeli government free of charge to improve the image of Israel.

Although the agency had gained early fame for its “Labour isn’t working” advertising for the Conservative Party in 1979, in 2007 it was appointed the advertising agency for the Labour Party.

While the addition of Wendy’s and JC Penney to the American client roster reaffirmed Roberts’ belief in the ‘ideas agency’ model, the London office continued its slide as it plummeted out of the UK Top 10 list of agencies (a list, compiled by industry magazine Campaign UK, based on reported client billings). In early 2007, the London office saw the bulk of its work for Toyota UK and Europe leave to upstart agency CHI & Partners, just months after it had lost the entire Lexus business to the same agency. Late 2006 saw the return of some Toyota business, including the £60m pan-European launch of the Auris, Toyota’s Corolla successor.

In July 2007, it was announced by Publicis chief Maurice Levy that Saatchi & Saatchi would form a new business alliance with sister agency Fallon. Fallon, part-owned by Publicis, has enjoyed similar mixed success with its network of offices. While its London office, with a client list that includes Sony, Orange and Asda, has been consistently lauded for its new business and creative success, its Minneapolis headquarters, where namesake founder Pat Fallon remains a presence, has been tarnished by a number of client losses, including Citigroup, BMW, Sony, Dyson and Starbucks.

The new alliance, known as Saatchi & Saatchi-Fallon (SSF Group), will operate under the supervision of Kevin Roberts, who was named as CEO of the new entity. Reporting to him is Robert Senior, one of the original partners of Fallon London, who will preside over the Europe & UK operations of the alliance, including both Saatchi and Fallon offices in London. In early 2008, Chris Foster, a Saatchi veteran of nearly a decade, was appointed to become the new CEO of Fallon’s Minneapolis office, fuelling speculation that Fallon will become a new Proctor & Gamble or General Mills roster agency.

After a year of operations, it was announced in October 2008 that the SSF Group had been contracted by chocolate giant Cadbury to handle its Dairy Milk and related brands across several markets (including the UK, Europe, Russia, Canada and the United States), with a reported total of $US200m in billings. Whilst Fallon London would lead creative efforts across Europe, Saatchi’s New York office was handed the brief to handle the business in the United States, where Cadbury remains a relative unknown compared to its main competitor, Hershey.

Saatchi & Saatchi has offices in over 80 countries around the world. Its worldwide headquarters are in New York City. Its other main office, in the United States, is located in Torrance, California. In the US, Saatchi’s largest clients are Toyota, Procter & Gamble and General Mills.

The London office, the home of the original agency, is on Charlotte Street and has its own pub, named “The Pregnant Man” after the firm’s first famous ad. London is often the base for many of Saatchi’s pan-European accounts, which include Toshiba, Sony Ericsson, and VISA. The company’s motto Nothing is Impossible is famously engraved into the steps of the Charlotte Street office. Saatchi’s worldwide CEO is Kevin Roberts.

2006 saw a renewed focus from the agency upon its digital credentials. As marketers noted the migration of consumers to other types of media, such as mobile phones and broadband Internet services, Saatchi has responded with a number of initiatives, such as its global joint venture with New Zealand-based Hyperfactory, a leading global mobile marketing agency. Saatchi also refocused its efforts on its digital arm and celebrated with wins in 2006 from PricewaterhouseCoopers and Procter & Gamble.

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