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Creative Agencies Abroad: The foreign office

By The Drum, Administrator

July 31, 2008 | 17 min read

Most agency bosses have, at some point, considered opening an office abroad to bolster their bottom lines (and their tans, of course). But how easy is it to set up shop in a foreign land? We ask five agencies that have made the move to offer some worldly

Why Dubai and Houston?

Having looked at the way the energy industry was developing we concluded, at a minimum, we would have to be located in Texas, the Middle East as well as UKCS. Initially we gravitated to Houston as we already had good knowledge of the area and an excellent network. However it soon became evident to us that the centre of real growth would be the Middle East. Houston becomes fully operational this coming month.

How much research did it take. And how quickly did you make the move?

After an initial fact-finding trip and subsequent appointment of a local manager, Fifth Ring Dubai became operational. In the following three months it became evident that to capitalise on the opportunities we would need to commit a significant injection of Fifth Ring DNA. I became resident in Dubai less than six months after our initial visit.

Do you need to have a client worthwhile opening for? Or will opening speculatively

pay dividends?

We had existing business in the area but the decision to open was based on the merits of the market and the criticality of being located there to deliver against our business plan. It would always be good to have some business to get the cash flow going, but locating in any remote location based on one piece of business is not in itself a sound strategy.

What incentives were you offered to open?

There are incentives and assistance through the likes of SDI but we did not avail ourselves of them mainly due to the speed of incorporation in Dubai. We have however had input from them in setting up in Houston.

And what red tape did you encounter?

Specific challenges in Dubai are, as a company, over-draft facilities are not possible so cash flow is of prime importance, and company credit cards aren’t issued against a corporate bank account. Individuals must take these out in their own name and re-charge. Sharia law also forbids people to gain or receive interest and the bank shouldn’t charge interest on accounts, instead they charge fee. As Dubai is such a melting pot of cultures and nationalities, getting great staff is difficult.

The laws are different to the UK. In adverts you can specify male or female, age preference, nationality and choice of languages and what the native language must be. If however, for example, you advertise for a PR manager, western educated fluent in English and Arabic you can get 300+ CVs from accountants, promotional staff, with less than 5 percent vaguely within your criteria.

How does business etiquette /culture change from that of the UK?

The biggest and most important cultural difference between the Dubai and the UK is vision. Through strong world-class leadership, Dubai and the UAE as a whole have set the benchmarks in many areas for the rest of the world to aspire to. In simple terms, they say what they are going to do and do it. Obvious differences in Dubai would be that in the Middle East the working week is Sunday to Thursday, and we are four hours ahead of GMT. By the time our Aberdeen office opens on Monday, we have done 1.5 days work, and two days work by the time Houston comes online so inter-office conference calls can sometimes be challenging. Time keeping in the Middle East varies greatly – very rarely do meetings begin on time, and it is considered the norm for participants to take telephone calls throughout the meeting.

What surprises are in store for anyone hoping to do the same?

If you thought you worked hard before then there’s a real surprise in store. We are officially operational six full days a week and the working day spans 18 hours of the 24. In terms of pitfalls rather than surprises, if you are not truly in a position to replicate and control your operations from arms length, life will be very difficult. We have developed Fifth Ring on the principle of franchise ability, so we have detailed processes for everything and systems that are seamlessly accessible everywhere.

Has the investment been worth it so far?

Four years ago we had the vision and made the commitment to change our paradigm from a lifestyle to a legacy business. At that point we had a team of 20 and a turnover of about £2m. Today that team is almost 100, made up of 14 nationalities, working across three continents and this year turnover will be in excess of £8m.

Debbie Longbottom,

financial director, Elmwood

(Leeds, Edinburgh, London, Melbourne)

Why (and when) did you decide to make the move to Melbourne?

Elmwood began working in Melbourne during summer 2004 initially with our team based within the client’s office for approx six months.

We had been initially asked to create the Housebrand strategy for Coles Myer, a leading Australian retailer. This took approx five months to complete. Once finalized, the strategy then needed to be rolled out into store within a short period of time and our role was to advise and guide our client through this process.

How much research did it take. And how quickly did you make the move?

The project was won in June 2004 and we had a team in place in July 2004. During the initial stages we were focused on delivering the project for the client with a seconded Elmwood UK team. However after a short period we began exploring the long term opportunity which meant thinking about space, local employment, our own infrastructures etc. We opened our own studio with local resources in Melbourne during June 2005.

Do you need to have a client worthwhile opening for? Or will opening speculatively pay dividends?

It is the only reason. Remember when you are opening up in someone else’s back yard you are taking on new competition. They aren’t going to roll over and let you steal their dinner. And opening an office costs lots of money (legal fees, agents fees, recruitment fees, travel and IT set up costs etc etc). So if you have no revenue lined up then you’d better have very deep pockets.

And what red tape did you encounter?

Local tax laws meant setting up a separate company with separate guarantees and funding. In Australia you have to have certain levels of solvency to trade.

And how are the current trends in your specific sector different?

There are differences in the two markets not least because of the economic differences. The Australian market is experiencing growth in the service industries whereby in the UK we have seen a downturn. Australia has a land mass larger than the whole of Europe with a population the size of the north of England, which means an agency has to be able to deliver boutique work with boutique budgets. The Aussie dollar is half the price of the pound, so making money is an art form too!

What surprises are in store for anyone hoping to do the same?

Be well planned but be flexible. Be ready for the telephone calls very late into the night if you are opening somewhere that has a big time difference to the UK. If you thought you worked long days think again when there is an 11 hour time difference and you have to answer the same questions about capacity, late payment or sort out a new credentials presentation in the middle of the night!

Has the investment been worth it so far?

Absolutely, not just in terms of the financial return on investment but the growth and development opportunities for our people. Elmwood has become a truly international business with a global perspective and that helps set us apart from other competitors who lack the same on the ground insights into the global world our clients now play in.

Martin Beard, Managing Director,

The Native Agency

(Edinburgh, poland, New York, Dubai)

Why (and when) did you decide to make the moves?

Over two years ago, Native’s chief executive Iain Stirling took part in a Scottish Development Tayside visit to Dubai to assess the opportunity in the UAE market. I was already in the market as a client marketing director, and had identified a gap for a quality supplier of marketing services, particularly for SMEs and new entrants due to the phenomenal growth in the region. A few months later, after some discussion between Iain and I, the Dubai office was set up.

One of the foundations of the Native story is our network of contacts and clients, and many are interested in international expansion. Following some discussions we also decided to formalise an office in New York to capitalise on our extensive network of contacts there.

We believed that we could create a real synergy in creating a “triangle” connecting our clients and contacts in Scotland, New York and Dubai, and so we began looking at establishing this in 2007.

Most recently we opened our office in Wroclaw, Poland to address the incredible growth being seen in the market there. Poland and Scotland have a long standing history, and Native has staff from the lower Silesia region, so it was a logical fit for us, particularly as clients such as Tesco Poland were keen to work with us.

How much research did it take. And how quickly did you make the moves?

We reviewed a lot of market information and took soundings from clients and contacts. The speed was relative to the market, Dubai took some time, New York was initially very quick, although the formal part is still ongoing.

Do you need to have a client worthwhile opening for? Or will opening speculatively

pay dividends?

I don’t think it is crucial to have a launch client, but it helps! Our three international openings are long term investments for Native.

What incentives were you offered to open?

In Dubai we are operating in one of the “freezones” which offer a range of benefits including no restrictions on ownership.

And what red tape did you encounter?

Opening a business in the UAE is not easy, and it does take at least three months and significant funds to set up. In Poland, it has taken a number of visits to finalise all the paperwork.

How does business etiquette /culture change from that of the UK?

The Middle Eastern business culture is similar to the Far East in some ways; you need to get to know potential clients before they work with you. New York is fast paced, as you would expect. In Poland we are building our profile and there is an element of educating the market as to what marketing can offer their business.

What surprises are in store for anyone hoping to do the same?

Don’t go in with a short term approach – the market will recognise it. Anyone looking to start up in the Middle East should be prepared for it to take longer and to cost more, but once it is up and running, the problem could well be finding enough good quality teams!

Mark Noe, managing director,

Marque (Glasgow, London, New York)

Why (and when) did you decide to make the move?

I decided to make the move in February 2005. By March 2006 the studio was up and running. It was always my ambition to open up an overseas studio. In terms of optimism, excitement and opportunity – I believe there is no where else in the world like New York.

How much research did it take. And how quickly did you make the move?

The research stage was seven months of desk-based research and actually spending considerable time in the city. Four months of the seven we had a full time member of staff in the city creating introductions, networking and socialising as much as possible. I spent around 14 weeks in total in New York prior to opening. So within 12 months of the idea, the office was opened.

Do you need to have a client worthwhile opening for? Or will opening speculatively

pay dividends?

No, not necessarily. We opened speculatively, but did get several clients to commit to us from day one, through the business development we did throughout our research process. We went out with the belief we would get work once we opened. But until you are actually physically in the place – particularly with demanding clients, which many New Yorkers are – you can sense that many clients will not take you seriously.

What incentives were you offered to open?

New York actually has lots of incentive options in terms of rent restricted geographical areas to encourage businesses to locate to upcoming areas. We wanted to be in the heart of things so it was not relevant to us.

And what red tape did you encounter?

Obtaining the right type of visas, particularly for staff relocating from the UK can be very difficult, time consuming and expensive. You are encouraged to hire locally as much as possible which we try to do. The design talent in Europe way exceeds the US, so this can often be hard. Also without credit records in the US, you cannot borrow, secure accommodation or rental on offices. Therefore the initial outlays, until you build up your credit record, can be significant. Banking in the US is also archaic compared to the UK.

How does business etiquette /culture change from that of the UK?

Clients understand the value of what we do more and treat you as a consultant. In the same way as they will trust their lawyer or doctor. And pay the relevant fees. They also steer away from creative pitching. The biggest difference is the amount of referral business in that clients love to celebrate working with their agency and will go out of their way to pass on “their agency” to friends or colleagues. Clients are your best sales agents for sure. In the same way, one bad job will destroy your reputation.

And how are the current trends in your specific sector different?

In terms of aesthetic, there is certainly an American style that still exists. As an agency with its roots firmly in European design principles, and who do not fall into this category, an understanding of certain nuances and expectations is very important – to educate clients to a new way of visual thinking. With many more US brands particularly in fashion being attuned and aspiring to Britishness and a European aesthetic, it is slightly easier to sell these principles than perhaps it was before.

What surprises are in store for anyone hoping to do the same?

Take your set up budget and multiply it by two. Like building a house, it always cost more than you expect. You must also understand your own positioning fully.

Has the investment been worth it so far?

From a financial perspective we broke even in the first year and will be profitable this year. It has helped us refine our position, been a catalyst for our name change and as an international agency, exposed us to an amazing array of culture and influences and has opened us up to an audience that we never though possible before.

Bernie Shaw-Binns and Ron Cregan

Navyblue

(Edinburgh, London, Budapest )

Why (and when) did you decide to make the move?

Firstly a realisation that our offer was attractive and required to foreign markets.

A reaction and a business strategy to address a congested UK market environment, and an insight that UK branding is seen as the world leader.

The opportunity to communicate a clear company positioning without any legacy issues, that is a new and receptive audience rather than a traditional view of the agency based on its roots in design rather than strategic brand consultancy.

An ambition and ego to build on what we have achieved and make it bigger – build our success and reputation abroad and take it back into the UK market as something for UK business to look at us again in a new light.

Why Budapest?

We had an existing network from working with clients based in Budapest, and we were familiar with the culture and people and had developed the confidence that we could run an effective business outside our comfort zone. The location is an international hub, which connects easily to a much larger emerging marketplace.

Hungary was also the most progressive former Soviet country we experienced.

Our new partner Robbie Braun was also a leading and respected figure within the business and branding community.

How much research did it take. And how quickly did you make the move?

12 months from the first idea, tested by working on a live project in the region, gaining deeper understanding of legal’s, payment, invoicing, travel and managing the overhead!

Do you need to have a client worthwhile opening for? Or will opening speculatively

pay dividends?

You need the client first, the friend second and confidence third, in that order. Otherwise anything else is all high risk against investment.

What incentives were you offered to open??

None, apart from the encouragement of our peers.

And what red tape did you encounter?

Corporate and company structure and legislation, trading agreements, MOU’s, the usual start up issues but in a different language!

How does business etiquette /culture change from that of the UK?

Depends on the country, it’s unique to each market. We work in 15 countries at any one time. Each country has a different culture, etiquette and nuance. However one real difference is each business tends to have one leader, with little marketing team support or experience. That’s very different to working with structured marketing teams and processes. Decision making and timings are erratic so be prepared for that, don’t get frustrated!

And how are the current trends in your specific sector different?

The UK is very brand developed and the challenges are about massaging developed positionings and propositions, whereas in emerging markets it is starting at ground zero.

What surprises are in store for anyone hoping to do the same?

Lack of sleep due to early flights, not taking emails read on Blackberry literally, everything gets lost in translation. The food is exciting, the welcomes are warm, and the rewards are very unexpected.

Has the investment been worth it so far?

Still waiting for the Villa! However we know it’s for the long term, this is not a Gold Rush!

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