Faulds goes to London
Welcome to the Faulds: (l-r) creative partners Tony Malcolm and Guy Moore, managing partner Graham Deakin and plannig partner Anna Hutson.The responsibilities of a managing director are many and varied, that goes without saying, but obviously one major responsibility, perhaps the biggest, is identifying realistic opportunities to expand the business.
That said, if Dennis Chester, managing director of Faulds, has had time to do anything other than examine opportunities for expansion in the last six months then it would come as some surprise. Since taking over the agency in December 2001, Chester says that he has been approached by up to 50 different marketing services agencies, all eager for him to add them to his growing Faulds Empire.
However, last Thursday Chester and his management team at Faulds finally showed their hand by announcing the acquisition of London ad agency Malcolm Moore Deakin Hutson. With the deal signed, the Malcolm Moore Deakin Hutson name was replaced with Faulds and the agency founded in an Edinburgh pub by Jim Faulds some 17 years ago had finally arrived in the Big Smoke.
Unlike The Leith Agency, which opted to open up a new agency in London from scratch around two years ago, Chester and company opted to acquire an already established agency. Why?
“We did look at starting a new agency in London,” says Chester. “In January we were looking at bringing teams of people together to start afresh, but putting people together in that manner is a bit like a blind date. You never know if they are going to get on and be able to work together in the long term.
“The core team at Malcolm Moore Deakin Hutson have been together for the best part of 15 years, so there were obviously no chemistry problems. The only chemistry to work out was the chemistry between them and us.”
However, it now appears that as Chester was looking at such possibilities in January a willing suitor was already preparing to make himself known.
“In January the stories broke about the MBO and that we were looking to expand our business,” says Chester. “Graham Deakin phoned me around the end of January and said that they liked what Faulds was doing and could we get together for a chat. We didn’t actually meet up until March, but we all got on straight away.”
The all too obvious challenge that can stand in the way when such an acquisition takes place is grafting two agency cultures together to form one cohesive unit. However, Chester believes that this will not prove problematic.
He says: “The guys at Malcolm Moore Deakin Hutson are not that different to us. They think like us and they act like us. They are not prima donnas and they are very down to earth. They don’t talk in ad-speak. Also they are wedded to the planning and creativity ethos that we have, so the way that they work is almost identical to us.”
Graham Deakin, a founding partner of Malcolm Moore Deakin Hutson and now managing partner at Faulds in London, also felt that the synergies between the two agencies indicated that a fruitful marriage could be made, but he was also keen to maintain the spirit of MMDH. He says: “We had been approached by several people in the last two years who wanted to buy us, but we had always said no. It was mainly London-based agencies that wanted a bit of additional income and some talented people as well. I always felt like we were being used a bit.
“From the off with Faulds it was always an equitable thing. We were not going to lose our identity and our premises by being swallowed up into the offices of some big London agency. Dennis wanted to crack London and had seen people put together dream teams in the past that had faced problems. This was another way to achieve it and it had obvious advantages for us both. People in London know Faulds for things like the Scottish Tourist Board stuff they did and for being a professional outfit, but they needed to be a British outfit.
The move south also comes at a time when Chester himself has some deep-rooted concerns for the advertising business community in Scotland as consolidation and centralisation continue to eat into the number of marketing departments in Scotland.
Chester says: “Scotland has had a tough year, but much of the Scottish cut-backs have been tactical and also strategic. Corporate Scotland has shrunk and is shrinking. There are fewer big marketing departments up here and they are getting fewer and fewer every year. If we continue to market ourselves solely to a Scottish client base there will be a problem. If you are going to grow your agency then you cannot hope to do it in Scotland any more and that has to be understood by people up here.”
But, as Scottish agencies feel the pinch of the downturn, and with the recent closure of Yellow M and McCann’s in Scotland, and with job cuts at most agencies, is now a really good time for such an ambitious expansion?
Christine Tulloch, marketing director at Faulds, says: “The downturn started last year and there is obviously a lot of caution up here. There is a lot of negativity across the industry at the moment, so we felt that it would be a good time to go. It is really about being confident in what you have to offer clients and I think that they will respond to that confidence. It is a brave thing to do, expand when everybody else is shrinking, but it will give us an advantage when things get back on track.”
Chester agrees: “Faulds was often criticised for being a business and not a creative advertising agency, but we have got a strong balance sheet at the moment and we are not actually taking too many risks by making this move now. There are no banks involved. Although we are being brave, we are not taking silly risks.
“Because we are secure we can take advantage of this deflated market at the moment so when the downturn does end we will be in good shape and in a strong position to take advantage of that.”
But what of the future for Faulds in Scotland? Is there a danger that the agency could become focused so much on winning business in the south that the Scottish end suffers?
“It is very important to us that we are not seen to be abandoning Scotland by this move,” says Chester. “Nothing could be further from the truth. We are going to do some restructuring in Edinburgh now and will continue to do the offices in Edinburgh up. We are totally committed to being successful in Scotland and it is up to the management team here to demonstrate that to the staff in all our actions.”
And how have the staff at the respective agencies reacted to the acquisition?
“We have had some meetings with our staff and they are all pretty gung ho for it,” Chester says. “It doesn’t take much to explain the state of the marketplace, so this deal says to the staff that Faulds is going places. It is interesting for them as our intention is to move into other areas. Their staff are coming up on 9 August and we are all looking forward to getting to know each other better. There is a real buzz about the place. There is no resentment at any level at MMDH. We are now playing on a bigger playing field and we are getting access to a different client base. The guys at MMDH are also getting access to a different client base.”
Deakin concurs that his staff are more than up for the marriage: “I suppose it is the honeymoon period at the moment, but everyone here is being really positive and as helpful as they can when we have guys from Edinburgh down here. There are logistics to be done to make sure that we get the best out of the deal, but we are sure there’ll be no turf wars or fiefdoms developing.”
So, it’s a win-win situation for Chester, Deakin and the two agencies, but is that the case for clients?
Deakin and Chester believe so.
Deakin says: “Well, my creative department has gone from being six people to being around 20 people. That can only help our clients get the very best.”
Chester agrees and says that the agencies’ combined lists of clients are perhaps the biggest winners out of the deal.
“We are now able to offer clients a bigger pool of talent to work with and staff are going to work across both offices. If you look, we now have two planning directors, three creative directors and three client services directors. I suppose we are top-heavy in terms of talented people, but it ensures that clients should be meeting and working with board directors. There will be no competitiveness across the offices.
“Clients will be able to choose where their account is managed from and where their account team is based. By the end of the year we may have more than two offices anyway. It may be Manchester, then again it may not.”
So, why was the move to London not made five years ago when the advertising pickings were somewhat rosier? Chester says: “We perhaps should have made the move about five or six years ago, but our first priority was to expand in Scotland with companies such as Navigator, Redpath and The Glasgow Agency. Three or four years ago we said that the next thing to do was go to London.
“But Jim was not up for it and always wanted to concentrate on things in Scotland. Post-MBO we had a re-think and decided the time was right now.”
According to Deakin and Chester, briefs are already being handled across both offices, with staff going to London and vice versa.
But, ultimately, will the marriage be one made in heaven or hell? Will the honeymoon period end in divorce or a contented couple carrying each other over the metaphoric threshold?
As always, Chester remains firmly bolted to Mother Earth, simply saying, “I hope so.”