McCann Erickson Communications House chief execs Sue Little and Dean Lovett explain how their agencies are fending off the economic downturn
The five-year plan outlined by Little and her team at the end of 2007 appears to be falling into place.
Notable new faces are coming in to replace some of the notable old faces that have departed and a significant shuffling of desks for the 290-plus staff, which is currently ongoing, will see the agency well prepared for a series of ambitious plans.
“Without a shadow of a doubt, one of the reasons we’ve been successful is because of our integrated product offering,” says Little as she looks out onto the salubrious Bonis Hall grounds. “Whatever the challenge the client has – be it selling more product, increasing awareness of the brand or something completely different – an integrated agency can bring a channel-neutrality that may be lacking from using multiple, specialist suppliers.
“At this agency we have one bottom line, so whether we’re advising the client that they need to do advertising, PR, media, digital, sales promotion, etc, it doesn’t matter to us. It’s just about what’s right for the client.”
Little believes the agency may be the largest integrated agency in the country, with a headcount in the region of 290 – something that she believes is an advantage in the marketplace.
“I know that big isn’t always beautiful, but in terms of integration, you need to ensure you have skills in depth so I think there’s a legitimate reason for us to be large. In fact, I’d like us to grow further and become a top 10 agency. That’s part of our goal for the next five years... and why the heck not.”
McCann’s growth plans become all the more ambitious when you consider the current, and future, economic climate. But while many agencies will be concerned about the potential fall out caused by a recession, there’ll always be the few businesses that somehow benefit and Little believes with the right approach, McCann can be one of them.
“When you look back at recessions, traditionally the big have survived and the small have survived. It’s my understanding that it’s the ones in the middle that have had issues. If you’re a very good niche player, you’re going to survive and if you’re a big player you’re probably going to survive – although you need to make sure you deliver what your clients need you to deliver and that you’re smart in how you manage your operation.
“But, whether you’re a small, large or even medium sized agency, in addition to having a clear plan, it’s important to be entrepreneurial. At some point in a recession, every consumer will have a moment when they think ‘I don’t care, I’m going to buy that expensive bar of chocolate or what-have-you’, because there’s a reaction that just says ‘to hell with it, I’m fed up of scrimping and saving’. One of the things we need to do on the communications side is know how to capitalise on the upsides of recession. You’ve got to be opportunistic and you’ve got to be able to duck and dive a little bit.”
Little has been ducking and diving at McCann’s for 23 years. She joined the business to handle media for a number of dealer clients, including Peugeot – still a client of the agency to this day – and was a driving force in the launch of Universal McCann. However, after “sticking her head out of the media box” one too many times, she was moved into management and worked her way up to the chief executive role when her predecessor, Brian Child, retired.
“Brian had, and in fact still has, a passion for this place and having been here for 23 years, I also have that passion. When I drive here in a morning, I just think how lucky I am to work here – even more so on a summer’s day.”
Sadly, it’s not sunny today. But Little is still beaming from those impressive international business wins with IGH and Hoover.
“The growth of our international business has been very important for the agency,” she says. “A lot of clients are saying ‘yes, my UK business is important, but I also want to grow internationally’ and I don’t think there are too many operations like us and [McCann] Central that can accommodate those international aspects.
“But, make no mistake, while things are going well, everybody here is working harder than ever to make that happen. That’s vital as you just don’t know what’s around the corner. You look at Northern Rock and you look at Bradford & Bingley and they were healthy, solid businesses and all of a sudden that has changed, so it’s difficult to tell.”
As the long-term incumbent on the Britannia Building Society account, McCann is no stranger to the financial services sector. However, Little won’t be drawn on whether the lender is in for a rough ride.
“It’s an interesting time for all financial services organisations at this moment in time, because it really is all change. In most financial companies, a year has a particular shape to it and when that shape changes and you don’t know what the new shape is going to be, it’s very difficult to manage. What tends to happen is most companies will step back a little bit and see how it develops. It’s tough for the organisations and it’s tough for agencies.
“Allegedly, the first budgets that are cut in a recession are marketing. Therefore clients are looking for smarter ways of approaching challenges, so one of the things I think we’re going to see is even more growth in the digital arena.”
A number of agencies are currently debating the merits of losing the traditional agency model in favour of a more digitally-focused operation – including TBWA in London, which has just seen its CD Steve Henry depart over this very issue. For McCann, Little believes the change is inevitable and has earmarked major growth for its digital offering over the coming years.
“I think we’ve got some great digital agencies in Manchester and we’re investing to make sure we also have a great digital offering, but one that is part of a great integrated offering. At the moment, digital accounts for about 18 percent of the business, but in the next five years, we’ve potentially got it going up to 50 percent. That could be, in some instances, substitution, while in others it could be genuine growth.”
The investment to make that happen has already started. In June, the agency launched Digi Lab, a division of the online team, which will enable clients to test and evaluate new and emerging digital marketing techniques as well as helping them to understand how consumers interact with digital technologies and web sites.
Then, just this week, came the announcement that McCann-i has appointed Gavin Forth and Kevin McKay to its team. Forth, the former head of entertainment for Orange UK, will become digital development director at the agency, while McKay has taken up the digital technical director role after leaving his head of digital position at CheethamBell JWT. Both represent major scoops and Little says the agency now has its “digital dream team”.
The agency may look and feel differently to other agencies in the McCann empire, but Little believes this is important when part of a network.
“I think we’re seen as a beacon for integration. When we were bought into the McCann empire, we were different from the traditional agencies within the group and as a result we’ve developed in a slightly different way. It’s quite nice in an organisation when you’re seen as a bit different and that’s the case here. When the companies in a network are different, that’s how you learn and develop best practices – something McCann Erickson is all about.”
Dean Lovett, ceo
McCann Erickson Communications House (Central)
Dean Lovett is not your typical adman. Those are his words, not ours. While other budding agency types were busying away at college or university, the current McCann Erickson Central chief exec was earning his crust as a salesman – most notably in the car trade – and living life to the fullest.
When eventually tempted to the advertising industry, his first stint was short-lived. After a spell with advertising agency Cogent Elliott in the media planning and buying department, he left for a similar role at Harrison Cowley. However, another section of the media and marketing industry had caught his eye.
“Radio was really taking off and there were a fair few stations setting up at the end of the 70s and early 80s,” he says. “It was an exciting sector too – kind of like how digital is today – and I wanted to be a part of it. So, I joined Mercia Sound just before it
launched on air.
“I spent five absolutely fantastic years there. It was a bit like WKRP in Cincinnati; it was mad. But, I guess you have to grow up some time and I left to join Beacon Radio, which, as it turned out, wasn’t for me.”
It was the fact that Lovett didn’t enjoy his time at Beacon that prompted what he says was “perhaps the daftest decision” of his life – he started an advertising agency.
From humble beginnings, in the back room of a Coventry car dealership, which became the agency’s first client, Campaign Concepts grew to become a 150-strong team over the next ten years and handled a number of major automotive accounts.
“We’d gone through the early 90s recession without too much trouble, but then we had a bit of bad luck with a significant client leaving us with a bad debt. So, in 1997, I moved the agency across to McCanns. I joined as operations director leading the automotive business, but was later moved to the Knowle office to head up a new division called Consumer Retail.”
The division became the agency’s largest and Lovett’s reputation for growing businesses, through unrelenting new business success, made him a natural choice for first the managing director post and later the CEO role. Nowadays, his passion for growth and business development is just as fierce and he admits this has helped the McCann Central’s recent success.
“I have a weekly sales meeting with my [business development] team of six, and we work it more than anybody. Everybody says they’re interested in new business... but not in the same way we are. We’re talking to 5,000 people on a regular basis and we make over 1,000 calls every month. We do 25 face-to-face meetings every month, too. These are unheard of numbers by agency standards. Whereas other agencies are likely to meet a prospect once or twice a month, we do more because we know it’s the volume that makes the difference.”
In the last two years, the agency has jumped from 190 staff to 284, which Lovett says has even surprised the McCann Group.
“In 2008, we’ll have grown 33 percent on 2007. Realistically, the McCann Group are expecting growth figures of between five and 10 percent year-on-year. Last year we did 22 percent and this year it’s 33 percent, so even McCann can’t believe how it’s going. They’ve even started asking us to do talks on how we approach new business and how we are developing these new opportunities.
“Our board directors here are now expecting us to put them in front of 20-plus new prospects every month. If we don’t, then they’re telling me that they’re not seeing the opportunities. So we’ve created this monster and we’re trying to feed it all the time.”
Recently the Monster was well-fed by the agency’s biggest ever account win – MFI. The home interest brand moved its full account, including media, into McCann in May, prompting an extension to be built at the agency’s Solihull base.
“The clients we’ve won over the last two or three years have created a halo effect, which has started to attract much bigger clients. What happens is that you win one significant client and others start to take notice. In fact, we’ve been approached by a very significant advertiser in the regions and I know that it’s come off the back of MFI.”
The growth hasn’t been confined to Birmingham, however. The firm’s Bristol office - which became part of the McCann Central operation five years ago - is also enjoying significant success.
“Bristol has enjoyed very similar growth to here over the last four or five years,” explains Lovett. “It’s a microcosm of the Birmingham offer and is a bit of a hub and spoke, in the sense that a lot of the investment is here and we share some staff, such as administration. But, it’s a Communications House, like us it’s got similar divisions down there, PR, advertising, brand response, B2B, online, and direct.
“Fraser Bradshaw, who’s managing director of the Bristol team, runs a very strong operation and it’s probably five times the size it was four years ago. When we took it over there was 26 people there and I had to immediately get rid of 13. Now there are over 40 and we’re moving to new, modern premises. The whole business has changed. They share a very similar philosophy to here, which is why I like to talk about McCann Erickson Central.”
Lovett believes that in the last five years the Central operation has enjoyed the most significant growth of any agency outside of London. He acknowledges that smaller businesses may have grown “faster”, but believes McCann’s size makes the achievements all the more important.
“The reason I say ‘most significant’ is that in the last two years, we’ve grown 60 percent. But two years ago, we were already a massive agency. We were an agency that people were saying ‘fuck me, they’re winning everything’, so for us to grow 60 percent on that is absolutely brilliant. The reality is, next year it could be 80 percent more than 2006’s figures. I’m not seeing it stopping.”
However, while Lovett’s business development strategy is gung-ho, he admits one of the biggest draws to clients has to be the McCann brand.
“The beauty of a business like McCann Erickson is that it isn’t a case of being trendy and in fashion one minute and then out of fashion the next. A business like this just continues to grow. You’ve only got to look at [McCann] Manchester, which has always been a big agency, as a marker for that.”
In addition to MFI, recent seven-figure wins have included Whitbread, Hardys and, announced this week, Altro Flooring.
“People want an international agency with the pragmatism of an agency in the regions, so they’re getting the best of both worlds here.
“The worst criticism we could ever get would be ‘I expected better from McCann Erickson’. I’d hate a client to ever say it and that’s what drives you to make sure you get it right.”
Only time will tell whether the agency’s hot streak can continue during the tougher economic climate that’s on the horizon, but Lovett believes he has a solution.
“Don’t watch the news, you won’t want to come into work. Yes, it is going to be tight; Yes, there will be a recession of sorts. But none of us really know how deep it’s going to be or how it will impact on clients reducing budgets. There are clients spending money in some sectors and the trick is to find them. To do that you need a strong new business team. We already have a strong pipeline of leads,” he says, quickly removing said list from the wall behind him.
“I feel we’re better placed than most for what’s going to happen next year, but it doesn’t make me any less worried about it. I have been through a recession before and the only way to get through it is to keep driving new business. Otherwise, if you do see a downturn on business, you have to cut your cloth accordingly. You have to react immediately.”
So how does Lovett believe the agency is viewed within the McCann network?
“I think we’re seen as a very professional, well-managed and trustworthy business with an unusual new business track record, which they just don’t understand.
“To have got the MFI account, we had to get that supported by New York and all of the European management and that wouldn’t have happened if they didn’t have absolute trust and believe in this agency.”