Category: Insights

That evening proved to be a turning point. Having spent seven years single-handedly growing The Eventa Group to the point where it had ten employees, Mr Hill realised that if it was to expand any further, then he needed to create a proper management structure to help him to manage his employees and his business better. He immediately brought in Nick Shuff, a director and business partner, and between them they developed a management team, including a marketing manager, an HR manager and a finance director. The impact was dramatic. Turnover went from £1.7 million to £10.1 million in four years and the number of employees jumped from ten to seventy-five. “It turbo-charged growth, it was just phenomenal. All of a sudden we were one of the top 100 fastest-growing companies and I was winning entrepreneur of the year awards. “I don’t think we would have got that level of growth if I had not made those decisions then, to invest in that management team and get that level of expertise in.” It’s a challenge that many entrepreneurs will recognise. One of the biggest hurdles for owner-managers is learning how to manage, and delegate to, employees. For an entrepreneur with a clear vision of what they want to achieve, it can be particularly hard to learn how to delegate, trust and motivate workers. Cracking the issue is often the key to success. According to the latest ECI Partners survey of high-growth companies, 54 per cent of respondents said that investment in staff would be a growth driver for their business over the following year. Lara Morgan had to learn on the job about managing employees. Having started her toiletries business, Pacific Direct, on her own with nothing but a fax machine, she eventually built and managed a team of 467 employees before selling the business for £20 million in 2008. She now invests in small companies through her business, Functionality, including activbod, a skincare range, and Gate8, a luggage company. “Managing people can be emotionally stressful,” she says. “Humans are not infallible and the huge amount of mistakes they make through the poor management of people can be the breaking of any business. In my mind, the greatest and continual challenge of any growing enterprise is that of managing people.” One of the key things Ms Morgan did at Pacific Direct was to make sure that she continually engaged with and rewarded staff. She would come back from work trips with photocopied pages of business books that she had read, to share with them, and occasionally would surprise them by giving them bouquets of flowers and taping £50 notes under their chairs for them to find. She even once took the entire workforce, then 26 people, on an all-expenses paid holiday to Barbados to reward them for hitting a profit target. “I have made many mistakes along the way, but I still stick to the belief that most people want to do a good job and a great job. When people are treated with respect and given fair rules, and are included in the conversation to deliver the best service, then your chances of successful retention skyrocket. “Compared with other company growth challenges, the people piece will always be my greatest trial. Nevertheless, the reward of loyalty, laughter and work enjoyment far outweighs the turmoil.” Tony Walford, a partner at Green Square, says that managing employees in a fast-growing business is particularly tricky because of the speed at which change takes place. “When the business employs five or six people, you are one big happy family, but as it gets bigger, that’s when the problems start because somebody has to become the boss. You can’t have 50 people sitting round the table at lunch having a nice chat; you have to decide who is going to take leadership roles.” He argues that there are two key challenges to managing employees well in growth companies. First, you need to make sure that you are constantly monitoring the needs of the business. “As the business develops, everything changes — you will find the roles that need filling will change, and new roles that weren’t needed before popping up, and you suddenly find someone sitting there doing a job which they shouldn’t be doing. You need to be constantly on top of that.” Second, you need to make sure you are constantly monitoring the needs of the employees. “If you can give them career progression and training and enhancement, they are more likely to stay with you.” There has rarely been a better time to get it right, as companies face the prospect of a talent shortage for the most-skilled workers as the economy picks up. According to the same survey from ECI Partners, 82 per cent of growth businesses in Britain said that they were experiencing a skills shortage, with 13 per cent describing it as a “significant issue”. If it’s getting easier for skilled employees to move on, it makes even more sense to find ways to convince them to stay put. Six keys to success Lara Morgan’s tips for managing staff in a growing company 1 Set clear “key performance indicators” from a carefully considered role description 2 Work to understand what makes each person tick and how they like to be treated 3 Put communication at the top of your management style. Inclusiveness, limiting hierarchies, fairness, consistency of standards and treating others well all go a long way 4 Look for ways to celebrate progress and outstanding performance. Reward people with the things they want, not what you guess they would like. Do not make the mistake of taking people out for lunch to celebrate great work when they could take their partner out at your expense instead 5 As the business grows, make sure that people find new challenges and are given training and that you continually invest in your team members, including external professional supporting qualifications 6 Be firm but fair, never forceful, bad-mannered, moody or inconsistent. Management must be fair and even-handed or else managers rapidly lose the respect of those they lead

It’s this skill, or a perceived lack of it, that gets a certain kind of Mad Man all wistful for the 1960s, 70s and 80s, when beautifully-crafted messages (either on TV, in print or on billboards) ruled the roost. Everyone with an interest in marcomms looks back fondly to the days of O&M, DDB and CDP, and great campaigns for the likes of Volkswagen, Hovis, Guinness, Rolls-Royce and Heineken. Now, by fairly common consent there is a greater emphasis on delivery, meeting budgets and driving costs down, basically getting things done as quickly and cheaply as possible. The dazzling speed of technological change and disruption and the increasing realism and interconnectedness of both gaming and virtual reality, has shifted the marcomms industry’s focus onto technology and channels. This isn’t all that surprising – after all, there are almost unlimited possibilities for getting messages out there, and gaining consumers’ attention and engagement; but I wonder if the time might not be ripe for a reinvigorated focus on content. Now, content is a word that has been bandied about for some time, but not always that convincingly. Some of the bigger agencies with their quite understandable interest in data, digital and mobile media and strategic, consultative partnerships and ROI have been a bit behind the curve. Because at the end of the day, this business is all about moving people – to rage, to tears, to laughter; because the message won’t get through unless you entertain, inform, educate or benefit people. This was borne out by a law firm conference I attended the other week, in which an audience poll revealed that when asked the question ‘What’s more important? Digital advertising or content?’ over 90 per cent plumped for content. What does this mean? It means that people don’t like advertising (especially annoying banners and roll-overs that disrupt one’s web browsing), but they will watch stuff they find funny, or interesting, or useful. In fact they’re happy to do so. They want stories, not advertising. Over the past couple of years there have been some interesting stirrings, particularly in the startup sector: agencies specifically geared towards creating content have been springing up. An interesting example I came across was Kameleon, a London-based startup founded in 2008 by two guys from media giant Mindshare. The company now employs over 35 people and has done some impressive work for the likes of BA, Chivas, Sony and Volvic. Kameleon does most of the things you’d expect a full-service agency to do: strategy, creative, media, distribution and – this is crucial, because not many people are doing it that well at the moment – evaluation. Content and storytelling is at the heart of everything they do, and is usually based around online video – which is not only the fastest-growing marcomms channel, but also the most effective. And it works just as well for B2B as it does for B2C. Others, like London’s HubTV are moving from pure video production into creative and strategy, offering clients something akin to what the old full-service agencies used to offer. It’s a fascinating area, which will grow as content marketing becomes more important – and I’m sure it won’t be long before the big boys start sniffing round many of these such companies. None of this is actually new – content marketing is as old as advertising itself. As long ago as 1892, Dr August Oetker, he of baking powder fame, used to push his products by printing recipes on the back of the packaging. In 1900 French tyre firm Michelin wanted people to use cars as much as possible (so they’d sell more tyres) and developed a travel guide that offered tips, maps and articles on places to visit, eat and stay while on the journey. Given away free, it was a sensation, and remains perhaps the most effective and famous piece of content marketing ever. Nowadays big retailers like M&S, John Lewis/Waitrose, Sainsbury’s and ASOS all create customer magazines (effectively content marketing) with production values, editorial quality and readerships equal to, or greater than, traditional news-stand titles. Then there are what the Americans call ‘infomercials’ – perhaps most familiar here from the likes of QVC or those long-form demonstration/benefit films made by gadget firm JML and shown on late-night and daytime TV. But by far the fastest-growing, and most important, vehicle for content marketing is online. It started off a bit dull – white papers or e-books that you could download. But over the past decade, with ever-increasing broadband speeds and the growth of video-capable mobile devices, video has exploded. Content can be accessed any time, almost any place. Even more important, thanks to increasingly sophisticated analytics, advertisers can learn more about who’s watching their content, where, for how long, and how often. This allows the content marketing agency to improve, tweak and refine their content to make it even more effective. Although YouTube has by far the biggest each of any video channel, it’s not that great for lead generation, because YouTube’s real job is to generate ad click revenue for its owner Google. But specialist platforms like Wistia are more focused on real analytics and measuring ROI. All the great past masters of advertising – Bill Bernbach, David Ogilvy, Howard Gossage – knew that without great content, marketing could not be effective, nor (in Ogilvy’s case) did it deserve to exist. There’s an old school of thought, dating from more than half a century ago, which held that if you were going to interrupt a person’s day with advertising, you had to do it with wit and elegance or else give them something they found useful or entertaining. It’s a pity that this attitude has now largely died out, because today there is far too much advertising, and far too much of it is bad. Achieving ‘cut through’ is becoming increasingly difficult, especially as consumers and busy executives are now increasingly cynical and dismissive of marketing messages. As I alluded earlier, people don’t want to see advertising, but they will engage with good stuff. What is best about great content is that it just works. Everywhere. In PR, mobile, customer publishing, long-form advertising, DM… any discipline or channel would benefit from an injection of content-creation skill. And for forward-thinking creatives, this offers the opportunity to put their craft at the very forefront of the industry once again; there is no reason for a would-be Bernbach to feel marginalised by suits, planners and data geeks ever again. And that can only be good for the whole industry. Trawling round the net these past couple of weeks, I’ve actually been really heartened by some of the good work being done by the likes of Kameleon, Seven, Velocity, Videojug and others. What the nascent industry (there’s even a Content Marketing Association, whose website is worth a look) now has to do is to really make sure that it gets its measurement and evaluation nailed down. The case for content marketing will then become un-ignorable and the big clients and later, the big agencies, keen to get involved in the action, will come knocking. There is a good deal more I want to say on this subject so we’ll be returning to content in a fortnight or so’s time.

1. Decide what the problem is. Work out exactly why they are difficult. Is it because they take up so much of your time with endless demands? Is it because they don’t pay enough for the service you are offering them? Is it because they are rude or abusive to your staff, or continually want what you cannot provide? Once you have pinpointed the problem, the solution will become more obvious.Tony Walford, partner at Green Square business consultancy says: “Look at why they are driving you crazy. If it is because your business hasn’t delivered what you said they were going to do, then you need to address that and rectify it.”2. Listen to them. Treat any criticism as useful feedback. Unless they really are completely impossible, take note of what your difficult customers are saying. If you are fed up with customers asking for products or services that you don’t provide, ask yourself why you don’t stock them. It could be that you have missed a gap in the market. If they are asking for more than you think you have agreed to, it may be that the original contract was not sufficiently precise or well worded.3. Work out what they are really worth to your firm. This is not just about calculating how much money they spend, it is about how much of your firm’s time they take up. Then ask yourself, is the gain really worth the pain? Difficult customers can not only sap your energy as you spend all your time trying to please them and attend to their every need; they can actually do irreparable harm to your business by diverting your attention away from the good customers who might have been willing to spend a lot more money with you if only you hadn’t been so preoccupied elsewhere. 4. Bigger is not always better. And don’t spare your biggest customers either. Indeed sometimes your biggest customers can be the worst culprits, because their size and negotiating ability means they are likely to have hammered out a tough deal with tight margins in the first place, and because there can be a tendency of firms to put the needs of bigger customers before those of smaller customers who might actually be making you more money. Yes it can be hard to lose a big revenue client, particularly if your industry is ranked by revenue, but ultimately it is profits not turnover that counts. 5. Decide if you could put up with their demands if they paid you more. If the answer is yes, arrange a meeting and tell them you are sorry but you need to increase your prices in order to be able to service their needs. That way you either get them at a better margin, or they go elsewhere and the problem is solved. If the answer is still no, tell them and make it clear that your decision is final. Walford says: “Sometimes you get tricky customers and no matter what you do for them it is not good enough, or they are just nasty. You really have to sit down and say this isn’t working for us, we are working to the best of our ability but we don’t think this is a great relationship so we should call it a day.” 6. Take positive action. Don’t attempt to drive unprofitable customers away by simply ignoring them and giving them increasingly poor service. Customers talk to each other – if you give one customer the cold shoulder word will get around and your reputation will suffer and you may find yourself losing more customers than you had planned. 7. Support your staff. Often it is your employees who bear the brunt of rude or horrid customers, so make sure they know you are on their side and are prepared to stick up for them, otherwise you will end up with a seriously disaffected workforce as well. Listen to their suggestions about how best to deal with the situation and offer them the option of handing over the client to a colleague to deal with instead. Walford says: “Support your staff otherwise they will get demotivated because they are being forced to work with people they don’t want to work with. If one of your staff is being bullied by a client or being treated badly, ask them what they want to do and if you can, involve them in reaching a solution.” 8. Pass it on. If the service your customer wants is no longer the kind of service you offer, recommend them to a competitor, and tell the competitor you are doing so. Don’t send them customers from hell though, as they may one day return the favour.

So it was interesting to see the news earlier this week that Omnicom Media Group (Omnicom’s media business unit, which includes agency brands like OMD, Novus and PHD) had bought Mobile5, the UK mobile marketing agency that counts Samsung, Canon and Trinity Mirror among its clients. Now this of course doesn’t mean that the “Publicom” merger isn’t going ahead – the acquisition of companies by both entities will carry on, albeit not on a huge scale as the merger beds in. They simply cannot discuss what they are looking at until the deal is finalised. Nobody is saying how much money changed hands in this latest deal, but it must have been a tidy sum. Although less than three years old, Mobile5 already employs over 30 people in its London offices, and has a tasty client list, as we’ve already seen. Mobile5 – set up by mobile veterans Oli Roxburgh, Steve Clarke and Guy Marks, all of whom appear to be staying – will continue to be run as a separate agency within Omnicom’s OMG network, based at the latter’s London offices. Interestingly, Mobile5 will be familiar to OMG boss Colin Gottlieb and his team – the former has already worked with the latter on a number of accounts, notably PlayStation and Waitrose. So why did he buy? I think there are two reasons. The first is that there’s a mutual synergy between acquirer and acquired. Mobile5 provides services such as mobile strategy and insight, mobile experience design, mobile content creation, mobile commerce and marketing solutions. Good, funky, creatively-led stuff – the kind of start-up DNA that big networks like OMG are always seeking to inject into themselves. But what Mobile5 doesn’t do is planning or buying: this is of course something that OMG does very well. “They are doing the stuff that’s further upstream and that’s the stuff that we’d rather have on top of our existing services,” Gottlieb said in a media statement earlier this week. It looks as if Mobile5 will now provide mobile services to its new owner’s EMEA agencies network. And the second reason? That’s more strategic and tied up with a rather different deal done by Omnicom on the other side of the Atlantic. Earlier this week the network signed a year-long contract with Instagram, the Facebook-owned photo-sharing service. How much the deal was worth isn’t clear – the amount was not officially disclosed and I’ve read figures ranging from between $40m and $100m; whatever, it’s a big deal. This is the first time that Instagram, which has 150 million active users (60 per cent of them from outside the US), has signed a deal with an ad network. In fact, it’s only been taking ads since last year. Essentially, Omnicom creative and media agencies will create “ads” (possibly in the form of sponsored photos or streamed advertising) which will be delivered to Instagram users. A high level of media placement skills – not to mention sensitivity – will be needed if Instagram users (many of who have been muttering about leaving if Facebook tries to show them ads) are to be fully engaged. I have heard that Omnicom will be putting its best teams on this – so ads will be of very high quality creatively and almost “manually” placed, by tapping into the reams of data provided by Facebook. Instagram’s tentative moves into advertising have, by all accounts, been pretty successful. But they’ve all been within the US and – given almost two-thirds of Instagram users are elsewhere – to really make the deal work on behalf of clients on a global basis, Omnicom will have to use or acquire local talent. This is where a UK-based agency like Mobile5 comes in. Also, whilst Instagram is available on the desktop, it’s primarily a mobile service (which is what prompted Facebook to pay $1bn for it back in 2012). Again, for the tie-up to work properly, Omnicom will have to ensure that it has people with experience in, and understanding of, mobile as a channel and a space. And again, this is where an agency like Mobile5 excels. I can see Omnicom making similar acquisitions in other territories in the coming weeks and months as it seeks to ensure its media agencies rule the mobile space. Unless, of course, another network has other ideas…

As we’ve said before, Aegis has never been short of ambition and energy, but following its just-short-of-$5bn buyout by the Japanese giant Dentsu earlier this spring, it now has even deeper resources to fulfil those ambitions. It’s ambitious. It wants to be the world’s biggest media specialist (in the digital space especially) – to harmonise nicely with those (to expand aggressively outside its Japanese heartland) of its new owner. No less than three Aegis deals have popped onto our M&A radar over the past week or so – the purchase of Dutch social media agency Social Embassy; a buyout of Romanian agency Kinecto; and the acquisition of Belgian experiential and events specialist NewWorld. All three deals are interesting in their own individual ways and are a fascinating indicator of the mindset of Aegis post-Dentsu; and all are worth looking at in more detail. Social Embassy, based in Amsterdam, is a specialist social media agency whose focus is on community management and consulting. Established in 2008, it has built a fast-growing business, with a diverse client base including Unilever, Coca-Cola and KPN. Details of how much Aegis paid for Social Embassy have not been revealed, but I suspect what caught the acquirer’s eye was the fact that the high-flying Dutchmen have developed monitoring software to analyse the online “landscape” around a brand. The resulting “Social Media Brand Map” model classifies brands based on the share of online conversations and sentiment of posts, compared with competing brands. Based on the results of its research, Social Embassy helps clients develop social media strategies and creative concepts for content and activation, to then measure and interpret the results. The company also conducts its own Social Media Monitor research study to uncover how top 100 brands make use of it. Following the acquisition, Social Embassy will work closely with the Netherlands-based social media team of Aegis’ digital media unit, Isobar. It’s a great deal for everyone concerned: Social Embassy founder Steven Jongeneel, gets the backing to expand his unique offer into new markets (and probably gets a potentially very lucrative payday further down the line); while Social Embassy’s expertise and client base strengthens Isobar’s market position and will generate the benefits of greater scale in the Netherlands. And of course, Aegis gets some very interesting software. Unlike the Netherlands, Romania is seen as a bit of a backwater in the marketing services world. But with its membership of the EU, the former communist state is looking like an attractive prospect for ambitious pioneers – especially those with an eye on the potentially enormous Turkish market. Which is why Aegis has just bought Kinecto, part of Tempo Creative Group (a kind of Bucharest-based mini-WPP and one of the top-tier digital agencies in Romania), from its shareholders, Radu Ionescu and Dragos Grigoriu, for a total consideration of up to €5m, based on future business performance. Established in 2003 by former journalist Ionescu, (who will be staying on as managing director), Kinecto was one of the first digital agencies in Romania and grew rapidly following its 2008 acquisition, by Tempo. Kinecto had a turnover of just under €1m in 2012, up an impressive 32% on the year before. The company will be folded into Isobar and re-branded as Kinecto Isobar. Again, Aegis seems to have got itself a great deal – an experienced full service digital marketing team with connections and knowledge in the Romanian and Bulgarian markets, who can help Aegis/Isobar’s global clients expand into the region – at minimal financial risk. Finally, we return to the Benelux region, and Aegis’ acquisition of the NewWorld group, based in Mechelen (one of Belgium’s most important Dutch-speaking municipalities) and one of the leading brand activation and events specialists in the Benelux region. Headed by founder Wim Voss and working in the three Benelux countries of Belgium, the Netherlands and Luxembourg, NewWorld specialises in experiential marketing, live communication and field marketing, with some great clients – including Miele, Mazda, Lyreco, Metaxa, L’Oreal and Ralph Lauren. The business will remain NewWorld, but will become part of the psLIVE experiential network with immediate effect. Wim Voss, founder of the NewWorld group, remains as managing director of the business and will become part of the management team of Aegis Media Belgium. The acquisition (full details of which have not been revealed) is consistent with Aegis’ recent strategy of acquiring businesses which enhance the breadth of products and services within its networks – so in this case they’re buying the talent of Voss and his team, good local connections, plus an agency with skills in all the right areas: brand activation, design and development, events, logistics, digital print, creative, mobile activation and even tailor-made construction (NewWorld has its own in-house team of specialist carpenters!). None of these acquisitions have made the headlines like last week’s Yahoo! buyout of Tumblr. But this spurt of activity by Aegis should be reported – it’s important because it shows the company’s energy and ambition, and gives a clue as to its wider strategic thinking. And just as importantly, this little shopping spree sends out a clear message to competitors that Aegis is no longer “just” a collection of media agencies but a global digital and marketing services group. Sometimes the small buyouts matter as much as the big ones

They have a point – up to a point. At Green Square, we’re constantly looking at financials, drilling down and analysing, but even to M&A advisers like us – who love detail – once we have got the overview of the picture the figures provide it is hard to get really excited by the umpteenth balance sheet iteration!However, used properly, and to some of the industry’s most astute buyers – Sir Martin Sorrell for one – data is really rather sexy; something to definitely get excited about. As brands attempt to make their marketing messages more targeted, more relevant, in order to cut through the noise that fills our lives, data – or rather, the ability to interpret data and generate insights for creative and planners – becomes ever more important. Which is why we’ve seen a lot of boutique data outfits snapped up by the big boys over the past few months. This week is no different, although the acquirer is nowhere near WPP-sized. WANdisco (Wide Area Network Distributed Computing, apparently) is listed on the London Stock Exchange and has offices in both Silicon Valley and the Don Valley (i.e., Sheffield). It’s essentially a company that allows software developers to work on projects collaboratively and simultaneously, wherever they are in the world. It’s the kind of company that doesn’t look particularly exciting at first glance but which investors flock to – indeed, when WANdisco floated on the LSE six months ago, the IPO was massively oversubscribed. Although not a marketing services company in the strict sense, WANdisco and outfits like it will be very much part of the future. It obviously has ambitions, because it has just acquired a small but important US data analytics company called AltoStor. AltoStor is a pioneer in what’s called “big data” – datasets so large and so complex that standard relational databases just can’t handle them. We’re talking about tens or hundreds of terabytes (millions of gigabytes) and upward. Examples here in the UK might include bank, credit card, NHS or DVLC databases or familiar brands such as Amazon, Tesco, Facebook, eBay and British Airways – and it’s not inconceivable that FMCG giants such as Proctor & Gamble, or automotive manufacturers like Toyota and Ford, are “big data players” as well. AltoStor was a pioneer in the use of the Apache Hadoop big data platform, which is becoming a bit of an industry standard. So it’s easy to see why it was such an attractive acquisition for WANdisco, who can now offer clients some serious big data collaborative software tools. These could have far-reaching implications for the management of large CRM databases and the like, especially as brands start moving to the cloud (Amazon and Apple are two obvious examples). WANdisco said immediately after the acquisition that it hopes to have its first big data products out next year. It may be a couple of years before we start seeing the effect these tools have on digital marketing. But there will be an effect. Still with digital, it’s interesting to note that one of the fastest-growing marcomms specialisms, healthcare, has been a little slow on the digital uptake – there are relatively few digital pharma agencies in the UK. This is slightly odd because tablets and smartphones have revolutionised the working practices of physicians and pharmacists – you’re just as (if not more) likely to see a doctor clutching an iPad as a clipboard these days. So it was no surprise to see the Creston group paying a rumoured £3m for a majority 75% stake in the highly-rated digital healthcare agency DJM Digital Solutions. DJM will be incorporated into Creston’s Health division, alongside Red Door, Pan and Rock Medical Communications. The new parent has the option to buy out the remaining 25% from 2018. Creston’s “new boy” employs 26 people at its Richmond offices and specialises in fields such as iPad e-detailing (a way for pharma sales forces to interact with physicians, cut costs and get their drugs prescribed, usually through an online portal like doctors.net.uk. The great advantage with e-detailing is that it allows busy doctors to “talk” to pharma reps at a time that suits them); augmented reality; and standard website build and SEO. What’s especially interesting about this acquisition – apart from the fact that there’s one less fish in the small digi-pharma pond of course – is that there’s the opportunity to apply DJM’s specialisms – e-detailing looks very promising – to consumer and B2B marketing (Creston owns the likes of TMW, Columbus and Nelson Bostock). Imagine being able to talk to, or get info from, a virtual sales rep at your convenience and without the hassle of a hard sell – that’d be something a lot of consumers would probably be keen on – I certainly would be interested – and which might make for some very effective communications at some point in the not-too-distant future.