What The Leith Agency gains from Newhaven deal - beer, for one thing
This week I thought it appropriate to travel north of the border (somewhere, surprisingly enough, we haven’t yet ventured), home to this esteemed publication – and Scotland’s biggest agency, Leith.
The Leith Agency's Richard Marsham
Based in Edinburgh, the Leith Agency has long been Scotland’s highest-profile marcoms shop. There has always been a thriving media and marketing scene in Scotland but, for no apparent reason, work undertaken that side of the border is often steadfastly ignored by the English media.
But Leith, with its acclaimed campaigns for the likes of Irn-Bru, Honda, Aldi, the Scottish Government, VisitScotland and Molson-Coors, has been a frequent visitor to the pages of the London-centric trade press, as well as the media pages of the nationals. Since 2005 it’s also been a major component of the consumer arm of the AIM-listed holding company Cello and it has prospered - it claims to have the largest planning and strategy department of any UK agency outside the M25.
Last week it announced that it was merging with one of Scotland’s biggest independent agencies, Newhaven Communications. The irony of this won’t be lost on observers of the Scottish scene, for Leith and Newhaven have history. Newhaven’s co-founders Ken Dixon and Jonathan Shinton were men of Leith who broke away from the mothership in 2002, taking Tennents with them and, in a further twist, another ex-Leither and Newhaven co-founder, Gareth Howells, recently rejoined his old firm as creative director.
Although Newhaven has bumped along pretty well, the recent loss of the Scottish Power account - as well as being dropped from the lucrative Scottish Government roster – meant that the agency has struggled over the past few months.
The thing about mergers and acquisitions is that they are rarely a coming-together of equals. One party is almost always the dominant one, the one that stands to benefit most. And so it appears to be here.
For Leith, this is smart business – it gives the Edinburgh agency further scale in Scotland and also allows it to compete with the big boys in London and Manchester; there are significant synergies with Newhaven, so cost savings can be made. Even better, it gets Newhaven’s client list, which still includes the iconic beer brand Tennents (Leith boss Richard Marsham told the media last week that his agency had been keen to acquire a beer account ever since it lost Molson-Coors a couple of years ago) and Historic Scotland.
In the long-term, Leith’s new, larger scale should work in its favour. Public sector and government accounts are highly sought after. But the Marketing Services Framework, the Scottish Government's new list of approved suppliers for public sector communications, has proved highly controversial (ironically, Newhaven actually went to court to challenge the framework, before abruptly dropping its action last month).
Critics say the new procurement framework criteria, such as the one for IT services, are loaded in favour of the largest companies, discriminating against Scottish independents (and the Scottish scene is dominated by indies). If the critics are right, the government procurement teams will now have fewer reasons to exclude Leith from their rosters.
For Newhaven – at least as far as its status as a standalone entity goes – the future is less bright. It has about 23 staff (who are now in consultation, so, sadly, redundancies cannot be ruled out) compared to Leith’s 75, and has far fewer clients. It will continue as a separate business initially and then it will be folded into Leith. Dixon will be leaving, while Shinton will continue in a freelance capacity.
So, while the future might be a tad uncertain for some Newhaven staffers, the future for The Leith Agency, and for Scottish advertising more generally, looks pretty bright – and there’s not just been activity in Scotland, there’s been regional activity in the South of England too.
Earlier this month, two of the South East’s bigger and more ambitious indies, integrated agencies Navigate Design of Petersfield and Basingstoke-based The Purple Agency merged (and this does seem to be a merger, of two companies roughly equal in size, although Purple possibly has the edge in terms of dominance).
Both teams are now operating from The Purple Agency's offices on Faraday Road in Basingstoke (it has a smaller office in London), and, while the Navigate team are being retained, it looks as if the brand will be subsumed into Purple.
It’s a good example of one set of skills – PR, branding and digital design – coming together with a complementary set – creative, strategy, data, analytics, healthcare and digital and mobile disciplines – to create a truly integrated offering with potentially large cost savings for both parties.
It’s also important, given the current economic situation, and the demands of domestic (as opposed to merely local) and international clients, that smaller independents join together; and this particular deal highlights the increasing importance of PR in any integrated offering.
As well as regionally-based clients such as IBM, Honeywell and Novartis (there are a number of blue-chips in Hampshire), Purple’s client base extends nationally and internationally, with studios in Berlin, Rome and Istanbul. Clients include Canon, Southampton Airport, Capita, Next, Nokia, Pfizer, Aintree Racecourse, Primark and WHSmith.
Purple also has specialist expertise in the B2B, travel, healthcare and sports sectors, recently having just been appointed as digital and social media agency for the British Paralympic Association. This gives Navigate a reach it didn’t have before, while Purple’s clients get the personal touch and PR expertise Navigate has become well-known for.
A great meeting of talents – and I am sure I’m not alone in being delighted to see ambition flourishing outside of Soho, Shoreditch, Mancester and the giant holding companies. Long may it continue…
Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector.