Global Agency of the Year 2002: Saatchi & Saatchi – Old Dogs, New Tricks

When Kevin Roberts joined troubled Saatchi & Saatchi Worldwide as CEO more than five years ago, he was greeted by serious problems on two flagship brands of the agency’s oldest client, Procter & Gamble. Before he had time to save Ivory soap, it had moved to Grey. The outlook for Tide detergent, and for the agency itself, for that matter, wasn’t much better. Roberts, a former P&G executive himself, was warned by top brass that the packaged-goods giant was about to pare down its agency roster and that Saatchi would be the first to go.

So Saatchi’s 20 percent jump in billings last year, including significant assignments added from bedrock clients P&G and General Mills, was more than an enviable new-business performance in an appalling industry environment. It was a validation of Roberts’ revival efforts, which have focused on growing business from existing clients. The response from those marketers is nothing less than a remarkable vote of confidence in Roberts and his team. Not only has Saatchi restored Tide’s fortunes in the marketplace, it has added other global assignments for P&G’s biggest sellers. After picking up Crest and Pampers last year, Saatchi now handles seven of P&G’s top 10 global brands—more than any other agency network.

“2002 was just the maintenance of the strategy of the past five years,” Roberts says. “In 1997, when I joined after the [Saatchi] brothers’ exit, one of the things we believed was our future was inextricably linked with our clients, like Procter & Gamble, Toyota and General Mills. We didn’t see a lot of purpose in chasing accounts in review which change hands every two to three years and don’t make money. We knew our future lay in doing great work for our existing clients, not in ambulance chasing.”

More than $500 million of Saatchi’s $1.3 billion in new billings last year came at the expense of D’Arcy Masius Benton & Bowles, which is being dissolved. While Paris-based holding company Publicis Groupe is the parent of both shops, the shift of major P&G and General Mills business from D’Arcy to Saatchi was no sure thing. It occurred only after a carefully orchestrated behind-the-scenes process managed by Saatchi that started 10 months before the public announcements of the pending account shifts came in the fourth quarter.

Saatchi’s worldwide billings rose from $6.6 billion to $7.9 billion in 2002. (Those billings include business at company entities not branded with the Saatchi moniker.) While it’s hard to estimate revenue growth since much of the new billings—particularly the P&G and General Mills business—have yet to be realized, worldwide revenue is expected to be approximately 3 percent over 2001’s total of $628 million. The revenue gain in the New York office is estimated to be some 40 percent. The biggest wins last year were the global accounts for P&G Oral Care ($200 million) and Pampers ($80 million), and $225 million in General Mills assignments, including Pillsbury brands Green Giant, Old El Paso and Progresso around the world.

Even as that success reaffirmed Saatchi’s packaged-goods credentials, the agency, led by its London office, jumped to the top of the world’s advertising awards league. Saatchi had been known for plodding if competent work. That changed in 2001, when the agency tied with DDB for top honors at the International Advertising Festival in Cannes. Then, in 2002, Adweek’s Global Agency of the Year reigned supreme, winning the most Lions by a wide margin. Saatchi London won 12, including Agency of the Year and the press and poster Grand Prix.

When Roberts took over the top job at Saatchi, he set a goal for the agency to rank among the top three winners at Cannes every year. “While the rest of the industry was caught up in the scramble for marketing services and the dot-com era, we were investing in creative talent,” he explains. “We dropped the word ‘advertising’ from our name; we wanted to be the hottest idea shop.”

Leading that charge is worldwide creative director Bob Ish er wood. Roberts and Isherwood have a long history together from when Rob erts was on the client side and Isherwood was at other agencies. In conversation, Roberts repeatedly refers to Isherwood as his “partner.” Isherwood describes himself as quiet, in contrast to Rob erts, who once savaged a Coke machine when he was CEO of Pepsi-Cola Canada. Nonetheless, Isherwood says their close working relationship—in New York the two sit in glass offices separated by a glass conference room—is the model for similar pairings of Saatchi executives around the world.

“We’re very much chalk and cheese. But we can be on opposite sides of the planet and respond identically to a problem because we share the same vision,” says Isherwood. “You don’t get really great creative work if the CEO doesn’t buy into it. It’s a method of working together rather than just being lucky.”

Isherwood changed the way Saatchi copywriters and art directors work, not a small accomplishment at an agency once known for bowing to creative stars who spurned packaged-goods clients. “We motivate people to do the best possible work on our most valued clients, and we reward them accordingly,” Isherwood explains. “Secondly, we believe in putting our best people where it matters most. Several years ago we had a Singapore creative director who made Saatchi & Saatchi a global [award-winning] agency out of Sing apore. So we moved him to London.”

That individual, David Droga, became executive creative director in the U.K. three years ago and is one of the hottest creative directors in the world. He was the driving force behind Saatchi’s ascension to the top of the industry’s creative ranks, so it’s no small loss that he has just left the agency to become worldwide creative director at sister network Publicis. But Isherwood and Roberts insist his exit does not bother them. “This was my idea,” says Roberts. “I told [Publicis CEO] Maurice [Lévy] to hire Dave.”

Roberts says Droga’s departure won’t hijack Saatchi’s creative resurgence in London. A replacement for Droga has been identified, but Roberts wouldn’t name names.

Further boosting Saatchi’s creative reputation has been the addition of two other well-regarded creative directors. In 2000, Saatchi brought in Steve Rabosky from TBWA\Chiat\Day to lead the charge on the Toyota account in Los Angeles. (Last year, Saatchi’s Toyota work won more awards at Cannes in the highly competitive automotive category than any other car advertising.) Two years earlier, Saatchi recruited Tod Seisser, an alumnus of J. Walter Thompson and the former Ammirati Puris Lintas, to become chief creative officer in New York. While that office didn’t bring home any awards from Cannes in 2002, Seisser’s work has breathed new life into brands including P&G’s Old Spice. Previously a men’s product line pitched to a mature market, Old Spice is now the No. 1 deodorant brand among teens 12-17, says Cincinnati-based P&G.

“I asked Tod to take three years to create the best advertising in the [packaged-goods] category, and he’s done that,” says Roberts.

Saatchi’s reversal of fortune—underscored by last year’s performance—is even more striking when viewed against the plummeting fate of one-time corporate sibling Cordiant Communications Group, which is plagued by large debt and ongoing client defections. When the two companies demerged in late 1997, they each traded in London at £1.10 a share. In 2000, Saatchi was sold to Publicis for £5 a share, while CCG is currently trading at 32 pence. To be fair, Saatchi was blessed with bigger global clients such as P&G and Toyota, but CCG also created problems by overpaying for marketing-services acquisitions like Lighthouse, bought in 2000 for $421 million.

“Maybe we were lucky that we didn’t have the money to expand and make mistakes. We zigged while everyone else zagged,” admits Roberts. “We thought if we quietly did very good creative consistently it would pay off, and last year we saw evidence of that.”

Says Lévy, CEO of Publicis Groupe: “Kevin Roberts has done a remarkable job of keeping what was good at Saatchi & Saatchi and staying true to its roots. In turning around a very troubled situation, that was probably the most challenging aspect he faced.”

Restoring Charlotte Street’s edgy reputation is a potent reminder of those roots, and other network initiatives also evoke the mystique Saatchi once had in the go-go world of U.K. agencies in the ’80s. Saatchi & Saatchi’s New Directors’ Showcase, produced by canvassing the network’s 138 offices in 82 countries for the best reels of local directors, has become the second-best-attended event at Cannes, after the awards gala itself. Saatchi’s Innovation in Communication Awards have attracted judges such as NASA astronauts Story Musgrave and Buzz Aldrin; Edward de Bono, who created the concepts and tools of lateral thinking; musical artists Laurie Anderson and David Byrne; and Julie Taymor, director of theatrical productions such as The Lion King and films including Titus and Frida.

Saatchi’s true origins—once eclipsed by the facade of the brothers’ hot London creative boutique—are in the world of the big-brand marketers who had long been associated with Saatchi’s predecessor agencies, Dancer Fitzgerald Sample and Compton Advertising. Saatchi’s oldest clients, P&G and General Mills, have been on board for more than 80 years. P&G’s Ivory brand was assigned to Compton, for instance, in 1921.

“Ironically, our two oldest clients are our two fastest-growing clients,” says Mike Burns, Saatchi vice chairman and a New York managing partner. “The 4A’s say the average client/agency business relationship lasts less than four years. We’ve had P&G and General Mills for more than 80 years; we’ve had Toyota and Johnson & Johnson for more than 25 years. Every day for us is a new business pitch where we compete with ourselves and others for additional assignments. It was a deliberate decision to get out of the beauty-contest business and grow with our best clients—the most rewarding new business is when you grow those relationships.”

About 40 percent of Saatchi’s revenue now comes from P&G and Toyota—about equal in size now as the company’s largest accounts—and General Mills. When Roberts arrived, the agency derived about 33 percent of revenue from those three marketers.

Winning business from existing clients is less expensive and has the benefit of deepening relationships—no small benefit in the current industry environment. For Saatchi, it’s also been a boon in perception as well.

“The best indication of an agency’s health and its most efficient way to grow is through new assignments from existing clients,” says Tim Love, another New York managing partner and worldwide account director. “Sometimes a company has to go through rough times to focus and refocus on what’s important. Kevin [Roberts] came in and shifted our strategic focus.”

That shift fit perfectly with parent Publicis’ broader corporate goals, a significant factor for Saatchi, which in its former incarnation as a midsized independent faced limited long-term opportunities in an industry dominated by the resources of holding companies.

“I think this way of working is very important,” says Lévy. “Obviously the fact that Saatchi & Saatchi is delivering a high standard of work for P&G helped make for a smooth transition from D’Arcy.”

Ultimately, those time-honored standards have paved the way for Saatchi’s own transition into Publicis’ expanding empire. “When I joined [Saatchi] in 1997, one of the decisons we made was we didn’t want to be part of the big three conglomerates, because there was no place for us there,” says Roberts. “We want to be an old-fashioned ad agency that produces award-winning work.”

Statistics

Worldwide Billings: Up 20 percent to $7.9 billion (est.)

Worldwide Revenue: Up 3 percent to $647 million (est.)

Win/Loss Pitch Ratio: 6 out of 10

Accounts Won/Media Budget*
General Mills-Pillsbury, U.S./$225 million
Procter & Gamble, global/$305 million
Sicilian tourism, Italy/$12 million
Chantelle Lingerie, France/$10 million
Kitchen-Aid, U.S./$30 million
T-Mobile, global/$10 million
General Mills-Cereal Partners Worldwide, U.S./$8 million

Accounts Lost/Media Budget*
Sony Electronics, European/$80 million
DuPont Agricultural, U.S./ $7 million
Becks Beer, U.S./$7 million
DuPont Teflon, U.S./$4 million
Highlights: Won $600 million in new billings from global clients P&G and General Mills; worldwide CEO Kevin Roberts assumes new role of P&G brand navigator for all of the client’s brands in the Publicis Groupe; ranked No. 1 network at Cannes.