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Saturday November 17, 2012

M&C Saatchi bucks the trend

MacLennan: ‘We’re relatively strong in
Europe.’ MacLennan: ‘We’re relatively strong in Europe.’

UK-BASED multinational advertising group M&C Saatchi had its first biannual worldwide meeting in Malaysia last week, a fitting honour for the Kuala Lumpur office which has been one of the stars in the network.

M&C Saatchi (M) Sdn Bhd has had another great year despite the total industry experiencing slow advertising expenditure growth of 3% in the first nine months of 2012.

Managing director Datin Lara Hussein downplays her role in the office's achievements.

“I hate to say it but a lot of it was luck; we just managed to do the right thing at the right time,” she tells StarBizWeek.

“We retained a lot of our key anchor clients such as Celcom, Axiata, Tourism Malaysia, Volkswagen, Boh Tea and Petronas Lubricants.”

In terms of new business momentum, Lara says the agency suddenly became busy in the middle of the year. “We won Sime Darby Property, Hello Cambodia (part of Axiata group), Pemandu, 1Malaysia.com.my, 1Malaysia branding (for clinics, etc) and SOTA (online travel business platform),” she notes.

This year she expects a 10% revenue growth, compared with 15% last year, but its profit is better this year. “Our profit this year is the best we've ever done,” she says.

Lara hopes the momentum will continue next year, when the agency celebrates its 10th anniversary.

As for the whole network's financial performance, Moray MacLennan, M&C Saatchi worldwide CEO, would not speculate as it is public listed, but he says the market will remain tough on margin.

“However, there is no reason why we can't have steady progress in our advertising network. I would see a steady progress in the advertising network,” he says.

Lara Hussein: ‘We managed to do the right thing at the right time.’ Lara Hussein: ‘We managed to do the right thing at the right time.’

Last month WPP chief Sir Martin Sorrell was reported as saying global business sentiment had worsened with clients becoming cautious. UK-based WPP, one of the world's biggest advertising groups, has cut its revenue and profit forecast for this year.

Asked to comment on this, MacLennan says: “There are dark clouds for some but not for everyone. I don't think there's a blanket worldwide storm.

“We're relatively strong in Europe. Next year the region will have slow growth but will be broadly fine unless there is a default in the eurozone from either Greece or Spain. I think there is enough dynamism in our business through new technology and new capabilities to keep things vibrant.”

He says that it is easier, in some ways, for a network of M&C Saatchi's size with only 26 offices worldwide than for WPP, whose performance reflects the global economy. “It is easy for us to capitalise on trends like mobile by moving quickly,” says MacLennan.

M&C Saatchi Kuala Lumpur has built a strong digital team with 15 people and it is also doing a lot of mobile content applications.

“We have a joint partnership with Celcom where we can produce content and have a revenue-sharing agreement with them,” Lara says, adding that the partnership began in the middle of this year.

While M&C Saatchi Kuala Lumpur has had a good year financially, she says “it wasn't our creative year, and we'll have to try harder next year.”

The agency only managed to gain merit awards at the recent Kancil Awards, which honoured the country's best advertising work in terms of creativity. Last year it was ranked fourth, with four silver and two bronze awards.

“Maybe the types of work that we submitted were not liked by the judges, and secondly, we were too busy and didn't submit that many entries. We need to be more focused in terms of improving our creative product,” she says .

Both Lara and MacLennan cite attracting talent as a challenge for the agency and the network, respectively.

“The biggest gripe I have is the shortage of talent. We're not (prominently) featured as an industry to join among students,” Lara says.

To address the problem, M&C Saatchi KL is having a joint sponsorship programme with 95% The Advertising Academy, which offers training on advertising and branding.

“We'll recruit young graduates from universities. I want to attract talent with professional degrees like law, economics and engineering, not necessarily mass communication students. Maybe we'll train them and invite them to intern with us,” she says.

M&C Saatchi London holds an annual contest every year whereby the best graduates in the UK are awarded an internship in London and KL.

“Two University of Durham graduates have come here for internship,” says Lara, adding that the local programme with 95% The Advertising Academy will be similar to the one in Britain.

MacLennan, who mentions retention and attraction of talent as a main challenge, says there has been some talent moving out of the industry to technology companies because the latter are seen as more dynamic and the industry of the future.

“That's something the advertising industry needs to look at. That's a real medium-term challenge,” he says..

The other challenge to the industry, he continues, is to develop a positive relationship with consumers.

“The opportunity now in the new era is for advertising that people welcome rather than something that gets in the way. In today's world, we have to find more inventive ways to reach people but to do so in a genuinely engaging and useful way,” he says.

“The challenge is also to broaden our skills base; we'll have to become more like creative business solvers rather than just makers of advertising campaigns. We're going to have to be content providers.”

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