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GHD Interview

By The Drum, Administrator

March 1, 2007 | 9 min read

Sometimes you get even less straight-talking in marketing than you do in politics, especially when there\'s big business at stake.

Readers of The Drum will have been intrigued, bemused and quite possibly utterly confused by the apparent machinations that have surrounded the end of the keystone association between Leeds-based Propaganda and hair product giant ghd.

The two have been locked in a mutually productive union for the past four years, seemingly driving one another on to continued heights in their respective domains. Propaganda has rapidly emerged as one of the true agency success stories in our extra-M25 stomping ground, while ghd has gone from being a niche hair brand to a genuinely coveted \'name\', boasting sales of £82million and pre-tax profits of £15m.

It\'s been a beautiful relationship. But, as we all know, beautiful relationships don\'t always last forever. And when there are big names involved, there\'s always a salacious hunger to know what went wrong and who dumped who.

The shadowy industry speculation has so far suggested that the Propaganda team were the ones firmly in the dumping seat, resigning the account for \'unknown reasons\' and pastures new. \'Shawdowy\' in that Propaganda has been open about resigning the account, but the question mark hangs, however, over why. Waters are further muddied by the fact that Julian Kynaston, Propaganda\'s chairman, was also a member of Jamella\'s board, a position he chose to resign when his agency opted to wash its hands of the account.

Leaving aside the issue of whether an agency head can ever sit on a client\'s board without conflict, it must have caused problems when the board started questioning the strategy of Propaganda.

In a rare case of take-no-prisoners straight-talking, Martin Penny, chief executive of Jemella Group (ghd\'s parent company), is frank about why the two separated, and is keen that the mystery of exactly how much the account is worth is laid to rest. And while he\'s speaking exclusively to The Drum, Penny, who last year bought his two partners out in a £55m deal backed by LDC (a mid-market private equity house), praises Propaganda on one hand, he\'s not slow in slapping them about the chops with the other.

\"Propaganda has done a fantastic job in steering the brand to its current position over the last four years,\" he says of the end of the affair. \"However, brands move on and I think Propaganda would be the first to realise that they didn\'t have the resources or breadth of experience to follow ghd to the next level.\"

Meow. If I\'d have been having a cuppa when I heard that, my computer screen would be a new shade of Tetley\'s. What makes things more surprising - and unquestionably more complicated - is that Propaganda\'s founder Julian Kynaston shared the dual role of agency head and ghd marketing director. A fantastic gig when everything\'s a bed of roses, but surely a thorny proposition when the once blossoming relationship is starting to wilt.

\"Julian Kynaston was a tremendous inspiration to the business and helped steer and guide the brand through the potential pitfalls that could cause a fledgling business to stumble in its early attempts to gain prominence in the marketplace,\" says Penny. \"The business has, however, changed radically, even in the last 12 months, and Julian decided his true calling lay within the industry he knows best.\" You can digest that morsel as you see fit.

One of the other bugbears of the marketing press reader must surely be the opposing figures that fly around with regard to the value of client accounts in transit. They always seem to be worth £50,000 to the agency losing/resigning the business and £5m to the team picking it up.

There were similar mixed messages on the ghd front, with MMS billings suggesting that the firm\'s 2006 media spend was £2.8m, while a statement from client and new incumbent BDH\\TBWA inferred that this could be racing up to the £10m mark. A considerable hike in anyone\'s books. On this front too Penny seems keen to talk pounds and clear up the apparent confusion.

\"I notice that in your magazine you claim that ghd\'s media spend is set to rise from £3m to £10m,\" he says matter-of-factly. \"In practice, however, total media spend was closer to £6m globally in 2006 and is unlikely to rise significantly in 2007.

\"What is likely to happen, however, is that the emphasis of how ghd allocates its marketing spend is likely to change with more focus on newer communication methods, such as on-line and viral marketing, including a more news focused PR approach.\"

It\'ll be Manchester\'s BDH that will style this new approach, after impressing Penny with its ability to, in his own words, be \"brave enough to challenge some of ghd\'s preconceptions about the brand and put forward a more evolutionary solution to our needs going forward. They spent considerable time in getting under the skin of the brand and came up with some key insights, which we believe will enable us to keep our edge in the market.\"

In the domestic domain, ghd unquestionably has the edge that Penny talks about, tying up 80 per cent of the salon sales sector and 40 per cent of the overall UK market. However, it\'s in the global marketplace that the brand needs to prove it\'s a cut above the rest if it wants to move on to the aforementioned \'next level\'. Indeed, this is the reason many industry commentators thought ghd eventually plumped for TBWA - due to its established international network and the borders that will unlock for ghd.

Penny agrees with this, while denying it was the only attribute that caught ghd\'s eyes: \"Clearly having a global network is an advantage, but it wasn\'t the main reason for choosing BDH. BDH gave us confidence that their multi-disciplinary approach to presenting a marketing solution to some of our key challenges, such as cracking overseas markets, was more likely to reap dividends than a very narrow strategy of traditional ATL TV and press campaigns.\"

Which may, or may not, be a veiled criticism of some of the other approaches Penny\'s been confronted with.

He goes on to talk about the global challenges facing ghd. \"We\'re currently in 15 countries whereas L\'Oreal is in around 10 times that number. We currently have enquiries from around 70 countries, so the big challenge is to prioritise our next markets.

\"There are many factors in our favour, particularly that as a fashion brand trends are picked up globally by the increasingly inquisitive consumer community, particularly through new communication routes such as the internet. Because globally we all read the same magazines, watch the same TV and aspire to be like the same celebrities, girls in Russia, Brazil and Japan are equally likely to be excited by the ghd brand and what it can do for them as girls in our traditionally safer western markets.\"

Suggesting, perhaps, that this is how he aims to take advantage of BDH\'s fresh \"news-focused PR approach\", by releasing stories globally about those \"same celebrities\" (sure to be ghd acolytes) to girls in Russia, Brazil and Japan. Which we can assume are some of the key markets Penny has firmly in his crosshairs. Or rather his perfectly straightened, sculpted hairs.

As a parting note Penny offers more straight-talking about the imminent campaigns ghd will launch - explaining that a change of agency doesn\'t necessarily engender a complete change of tack. The brand, he says, \"must continue to evolve if it is able to stay ahead, but it is vital that it remains the aspirational brand of choice and continues to give its evangelists a reason to spread the gospel.

\"We chose religion as the underlying ethos of the brand, and this is no coincidence. Religions cannot stand still, and must shape their ideology to the needs of the current culture, or they will be overtaken or abandoned.\"

Something, you get the impression, that Penny will not accept for either himself or ghd.

The Drum approached Propaganda to put Penny\'s comments to them, but the agency decided to not get involved in a public spat with its former client. Mike Phillipson, its managing director, chose instead to issue a formal statement. \"From the perspective of our own integrity, we made the decision to resign the account in October 2006 with a formal resignation in December; any reported issue with regards to a global network never came up in any conversation before or after the decision to resign was taken,\" he said. \"Since then we have continued to work with ghd, producing great work such as the new TV campaign, and leave the business in excellent health after it exceeded all sales targets over the Christmas period. We will continue to honour our contract until we officially hand over to the new agency. Ultimately, we are very proud of the iconic brand that has been created and we wish them every success for the future. Gary Douglas, a founding partner of ghd, has also recently become a shareholder in Propaganda, and a non-executive director.\"

While the truth may never come out about why the pair split, it seems the old adage is true: Keep your friends close, but your enemies even closer.

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