Letter From Italy: The Son Also Rises

From his desk, marco testa can gaze at a black-and-white portrait of himself as a little boy, sitting on his famous father's knee. "You know, it's very difficult to inherit an advertising agency; it doesn't happen," says the president and CEO of the renowned Armando Testa agency. "It's hard for clients to believe in someone simply because you're the son of the father." Testa admits that winning the respect of his father's clients and agency colleagues wasn't always a concern. He committed to the agency, founded 51 years ago by Armando Testa and his wife, Lidia de Barberis, after giving up a career as a journalist. The fourth estate's loss was advertising's gain. Under his 12-year stewardship, the agency has done well, becoming Italy's largest in 1989. With an estimated $48 million in revenue in '96, it is the No. 1 Italian agency in gross income, nearly one-third larger than its closest competitor, McCann-Erickson. Testa has also won an impressive share of Lions at Cannes. Not bad for a family-owned shop, especially since the other top 25 agencies in Italy are multinationals. "You have to love this business," Testa says. "I live my life for advertising." His passion is about to be tested. Testa is preparing for the unprecedented task of creating an Italian-owned, world-class European network. The seed of this idea was first planted in 1985, when Testa International (TI) was created. "We have to become international," Testa says softly, "Otherwise, we cannot survive. If you look at the market here, we have no possibilities. Even if we are very big in Italy, we are still small in terms of total size." In fact, Testa International is something of a misnomer. Through a series of partnerships--including minority stakes of up to 40 percent in agencies in Spain, Germany and France--TI has a presence in 12 European countries. It services some clients, such as Fiat Lancia automobiles, across the network, while Lavazza coffee and Benckiser detergent are shared in various markets, including France and Germany. At present, TI is pitching Amaretto Di Saronno, a liqueur brand already handled by Testa in Italy. Though TI is affiliated with a Euro-network that claims more than 650 staffers and total European billings that surpass $745 million, these figures must be seen in context. "The percentage of TI billings outside Italy is about 10 percent," Testa explains. "This needs to be improved. This is the moment to do it." Why now? He says many multinational advertisers are unhappy with the mediocrity seen in a large percentage of pan-European campaigns. Testa points to his company's creative reputation and says it represents the linchpin on which his network will ultimately live or die. If TI flourishs, it will be thanks to the solid foundation of its home offices in Turin, Milan and Rome. Armando Testa S.p.A. has developed some of the country's most memorable, honored ad campaigns, including work for Lavazza, Barilla Mulino Bianco bakery products, Telecom Italia and Martini & Rossi. Many are award-winners. Other blue-chip agency clients, many foreign-based multinationals, include Sergio Tacchini, Nestlƒ, Quaker Beverages and Heinz. Some of these relationships date back 11 years; in the case of Lavazza, nearly four decades. Testa adds that 31 of his clients in Italy are market leaders. To capitalize on agency strengths, Testa's global strategy is to create a network that is more than a confederation of largely independent agencies, an oft-tried European scenario that has failed to produce a viable international network. To accomplish his goal, Testa says he must either take majority positions in agencies (if current partner agencies don't want to give up control) or open wholly-owned TI offices in the four key European countries outside Italy: France, Spain, Germany and later, the U.K. Testa predicts this strategic maneuver will be completed by early 1998. But can he finance such an ambitious enterprise? Testa is reluctant to discuss specifics but claims, "We have as much money as needed." The harder task, he says, will be getting a network with highly diverse cultures to function as one. Consider: Agencies such as 154 Testa in Paris and Brussels or HLPB in Amsterdam derive much, if not most, of their billings from local clients won outside the TI structure. "Our international clients represent between 30 percent and 40 percent of our gross revenue," confirms Frantz Roesch, managing director of 154 Testa. "We must develop the same spirit of Testa International in every country," Testa says. "We're working on this. We're looking to hire international types in many markets, especially in Great Britain, Spain and France. "When multinationals can decide, they often come to us," Testa adds. "If they don't come, it's usually because they are not allowed to. If you are a multinational, you probably have an obligation to choose a certain agency from some network." Of course, not every overseas project Testa has undertaken has succeeded. The agency made an ill-fated attempt to open an office in New York in the mid-'80s, banking on the strength of its Gallo ENJ brandy account. By 1989, the effort was abandoned and the office closed. "For us, it was too far," Testa says, noting there are no plans to return to the U.S. A second disappointment occurred at home: The agency was embroiled in a corruption scandal dating back to 1993. The group's media subsidiary, Media Italia, along with the Italian offices of Y&R and Publicis, was charged with paying bribes to government officials in exchange for pro bono advertising assignments. Testa explains that two people from the agency did confess, though they maintained they had been pressured by the officials to make the payments. To settle the case, the agency paid fines of several hundred million lira, and the two agency employees spent a night or two in jail. A trial could still be held, but Testa insists his agency's role in the affair is finished. Moreover, despite the scandal, independent observers say the agency's image escaped unscathed. "It didn't hurt their reputation because the agency is so strong," says a Milan-based analyst. The agency's brush with failure, as well as the corruption charges, left its mark on Testa. He appreciates the obstacles he'll confront in his efforts to construct a more formidable international presence. At the same time, he appears confident he can build on his father's legacy. "Advertising was invented by the Americans, who know how to sell ice to Eskimos. Here, there is no ad culture. You don't speak about Italian advertising. "But internationally, there is a special market for very creative agencies. During the last one or two years, I think we have become one of them," he notes with pride. "When a European client asks for a creative agency, they look around the Continent and invite a BBH or Casadevall or Wieden & Kennedy to pitch. More and more, we are finding ourselves in competition against agencies such as these." Daniel Tilles can be reached at 100442.1706 compuserve.com

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Letter From Italy: The Son Also Rises

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