1576 - News Analysis

By The Drum, Administrator

September 20, 2007 | 5 min read

Agree to disagree

In terms of the Scottish marketing industry, the goings on at said agency have created shockwaves that would have registered an eight on the advertising Richter scale.

The first sign of trouble loomed in May, when the agency made several redundancies as it went through “a period of realignment”. During that “period” not even those in the board room at The Corn Exchange could have imagined the fall out that would occur.

No one has quite been able to believe that one of Scotland’s most respected and successful agencies has lost all but one of its six directors and so many long term members of staff have also walked out. Part of the reason for that mass exodus appears to have been a disagreement on the future of the agency and the way in which it was developing as a departmentally divided company.

That was certainly the indication from David Reid, the only remaining director at the company, when he announced that Jeffery was to leave.

When the news of Jeffery’s departure first broke, Reid said: “Adrian has made clear he would prefer not to work in an integrated marketing framework, such as the one here at 1576, and would rather just concentrate on creating ads.”

This comment was misinterpreted by many within the industry to mean that Jeffery was only interested in working on traditional, above-the-line advertising, which, with the launch of Mightysmall, has proven not to be the case.

That a disagreement between the board has taken place is obvious, but that the agency is still operating, and that Reid is already in the process of turning 1576’s fortunes around is surely to his credit.

In order to keep the agency continuing in the right direction, it is understood that the departed directors, Adrian Jeffery and Gary Smith have signed over their company voting rights to Reid, while also altering the shareholder’s agreement in order to allow him the opportunity to seek new investment into the agency and steer the good ship 1576 away from the rocky shore. It is believed this alteration also allows Reid to make any decision he wishes without consulting the other shareholders, as long as those decisions are for the good of the company. Smith, Jeffery and Reid are each thought to retain 30percent of the company’s shareholdings, with the rest spread across the other board members.

Insiders at the agency have revealed that the shareholders will be given monthly financial updates to find out whether the targets which will trigger a share payout are being met.

Keith Hunt, managing partner of marketing company share advisors, Results International, comments: “1576 has certainly enjoyed a good reputation in the past, largely as a thinking man's agency, with a strong planning element, but it has always struggled to seriously monetize this, probably because the Scottish market for this kind of cerebral approach is frankly not really big enough given the strong competition there. It is hard to imagine that the ‘retiring’ shareholders would have signed over their rights if they had believed there was a better way forward.”

Hunt continues: “The issue for David and the wellbeing of the business going forward must be to develop a strategy that does have a market of sufficient scale that the proposition is appealing to sufficient enough clients and future managers that its present dependence on him is substantially reduced and its obvious vulnerability largely eliminated.”

Reid is already well into his process of rebuilding and has quickly brought in figures with experience in his recent appointments, with former Faulds and TBWA senior creative Pete Bastiman joining from Family as creative director and Rob McLeod from Tsuko as head of strategy. Several new staff members have been recruited to the revolution which has created, effectively, a new agency.

Reid didn’t comment on the share holders situation, but did say: "1576 is enjoying a productive and profitable period right now. The managerial changes have been well documented, but the important thing from my point of view is that not only have we retained our existing clients, we are winning new pieces of business and looking at fresh client requirements throughout all of our Integrated disciplines. We will be issuing press releases about these wins in the fullness of time.

"As for what our previous directors and board members are up to, I cannot really comment, other than say I'm delighted that we have parted on cordial terms. I would expect each and every one of them to remain within the industry because, like me, they all have mouths to feed and mortgages to pay."

"1576 is working with Ruth Lees on a consultancy basis, and it's a measure of our harmonious working relationship and mutual respect that we are doing so."

"Kenneth Fowler, our ex head of strategy and research is now a client and I wouldn't rule out crossing paths with the others either."

"The new team at 1576 have settled in magnificently, indeed far better than I could ever have imagined. We are looking forward to continuing to come up with bold and imaginative work whilst helping our clients achieve stand out and positively affect their bottom line."


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