Saturday March 5, 2011
By M. HAFIDZ MAHPAR hafidz@thestar.com.my
SINCE Chris Jaques became M&C Saatchi International chief executive officer (Asia) three years ago, the regional focus of growth for this marketing communications group has been on Malaysia, Japan, China and India.
“We try to build our strength in those countries by building our business in the right areas,” he tells StarBizWeek during the latest visit to the KL office.
The strategic focus is on high margin and high growth areas.
Datin Sharifah Menyalara Hussein and Chris Jaques with a horse statue in the KL agency’s reception area.
“In high margin, you look at things like brand consulting, business consulting, and corportate identity. In high growth, obviously you look at digital and shopper marketing,” he elaborates.
In brand consulting, M&C Saatchi launched consultancy Clear's regional hub in Hong Kong which is now working with big clients like Unilever and Pfizer. The second Clear regional office in Asia was just launched this year.
In digital, it launched M&C Saatchi-i in China and India, and just launched it in Malaysia.
“So that has been our focus so far and we're building up from there,” he says.
The strategy seems to have worked. M&C Saatchi Asia is one of the fastest growing if not the fastest growing agency networks in the region financially.
The company, which has nine offices in Asia (all in the four countries mentioned) and two offices each in Australia and New Zealand, saw its profit in the region grew by a thumping 215% last year. This was on the back of some 40% growth in revenue.
The Malaysian office is in fact the M&C Saatchi network's third most profitable office worldwide, after Britain and Australia.
M&C Saatchi Malaysia managing director Datin Sharifah Menyalara Hussein says the KL office, which started operations in 2003, had its best year in 2010.
It managed to retain all key clients - including Celcom, Axiata, Alliance Bank, Sepang International Circuit, Boh Tea, Nike, Tourism Malaysia (Oceania and events) and Petronas Chemicals and clinch some new businesses, including from Volkswagen, Malaysia Airports and Bursa Malaysia.
“We had fantastic growth from Celcom because of the World Cup. We had good growth from Axiata as well,” says Sharifah Menyalara, who is known in the industry as Lara.
Jaques says that M&C Saatchi Malaysia's high profit ranking in the network is unique. “You'd find that in no other advertising network in the world where that's the case. In most networks, Malaysia would be between 10th and 20th.”
Despite M&C Saatchi Malaysia being already highly profitable, it still managed to grow by over 20% in profit and revenue last year. The agency won the Celcom below-the-line business in October, allowing it to start a design subsidiary called Design Factory with a solid foundation client.
Lara says she wants to make Design Factory, which currently has a staff of 10, into a specialist company that does very good quality design work. Design Factory covers a whole spectrum of design, from the top end (corporate identity, packaging design, etc) to the mass volume work such as display materials.
M&C Saatchi Malaysia, which has a staff of 65 people, also has a joint-venture partner a third-party studio with about 20 people called Designation.
Jaques is unable to disclose the London-listed M&C Saatchi's global financial performance last year because the results had not been announced to the exchange yet. But he says that the network was back into growth last year, with revenue up significantly.
Asked on his outlook for M&C Saatchi Asia this year, Jaques says it is budgeting for revenue growth of between 20% and 25% and profit growth of 40%. “Bottom line is, it's going to be a strong year,” he says.
“China is going to continue to grow as the government continues to stimulate the consumer economy. India is going to continue to grow dramatically. The consumer market in Japan is actually pretty good right now; it's showing signs of life. Here (in Malaysia) things are going brilliantly well. And last year we won 150-160 new clients in the region, and their businesses are all kicking in for 2011. All in all, we're all very optimistic.”
He cautions that the biggest danger everywhere remains inflation. “But in the markets that matter, that will be controlled. If you look at the markets which influence Asia, the US is looking like it's going to be okay. I think Western Europe will be a problem. Generally, the Asian economy will be fine.”
Jaques says that increasingly the marketing communications industry is becoming less and less about communication, and more and more about business solution.
“And we have a very clear message about M&C Saatchi: M&C Saatchi means business. All we care about is how we generate business results or overcome business problems. We don't build anything so that we can win creative awards or get famous. All we focus on is to get our clients achieve their business objectives. As a result of that, we're the fastest-growing agency network in Asia (in profit),” he says.
Asked how the network in Asia did in creative award wins in the last one year, he says: “I don't care. As far as I know, I think we didn't enter anything in international award shows because I'm not interested. If you look at the award winners in Malaysia, how many of the winning campaigns have you actually seen before you saw it at the show? It's a lie show, not an award show. Do the clients care? No. Does the business care? No.”
He continues: “The problem with Malaysian advertising is, everyone thinks that doing a bunch of scams is the passport to career success and dramatic increases in personal wealth; it's got nothing to do with business. Singapore and Malaysia are two of the worst shocking juvenile approach to what should really be a serious industry. The whole industry has to grow up. We're either a serious business or a kindergarten; and some of the time, I think, people would prefer to work in a kindergarten.”
He says that the Cannes Lions award winners from Western markets and Japan are real campaigns which ran for big clients.
“People have seen them for six months before they ever see them at an award show. Imagine that happening in Malaysia. But because we find it very hard to get great work through the system in Asia, people have just decided to go around the system and they produce their best work for things that don't matter. It serves our industry badly.
“We're a serious industry; at our best, we can make a dramatic difference to the business performance of big companies. That's what we exist to do. If you look at the work we did on Celcom, it doesn't win many awards, but it gets good results. That's what we exist for creative ideas to transform the business around.”
While Jaques doesn't care about creative awards, he does like the Effies, which gives awards based on marketing effectiveness.
For Lara, the biggest frustration is looking for good people and people who have stamina to withstand challenges in advertising.
She suggests introducing a staff poaching fee in the industry, whereby Agency A would have to pay a fee if it hires an employee from Agency B who has been with the latter for, say, less than a year.
Jaques chips in: “There's tonnes of it. If someone starts a job and they're not particularly happy, they'd just move. It doesn't build anyone's career. The staff of the industry has got to grow up and view their careers in the same way as people in other serious industries view their careers. You have to put in the hard work even if you don't like it for a year. Now people would leave after just weeks in a job. What sort of a workforce are you building when you're allowing and encouraging that to happen?”