What was the mandate when you took over as global CEO in 2009 and how far have you succeeded?
The mandate for me when I took over as CEO of Lowe & Partners, of the network, was basically to complete its turnaround – from an agency network that had had some difficult years to an agency network that was stable, economically vibrant in terms of its revenues and costs and that had all of the structural elements that it needed to make sure that it is prime for growth in the future.
I think all agencies are a work in progress. We’re all constantly evolving and we have to, partly because of what’s going on in the economy, and partly because consumers, client needs, technology and social media and digital have evolved. So, I guess the job is never done – that’s one of the things that I think makes our industry an appealing one.
The things I can confidently report on are that the turnaround of Lowe is complete, from an organisational and economic point of view. We have a very robust agency network structure; we’re in all the places that clients really need us; we are obviously very strong in India and I’m very please with how the management team is taking things on there. We’ve done a number of acquisitions and alignments to strengthen our resources in North America, which is obviously a critical market both in terms of scale and also global capability and clients. We’ve done some other important acquisitions to bolster our position in markets such as the UK. We’ve brought in Huge as our digital partner. As a network, historically but even more pronounced today, we’re very well-placed in the emerging markets, though it’s stupid to talk about them as emerging markets; I come from Europe, which has stopped. So Asia and Latin America are the markets and Lowe is very well-placed there.
Economically, we’re very robust in terms of our cost base, revenue and reporting margins. I think we’re a healthy, competent part of the IPG portfolio.
The bits where we need to keep working harder are our product. We have some real hotspots of great work - India, Brazil, Argentina, some offices in The States, Sweden, Spain and France. But there isn’t enough of it, and not enough across clients. I’d like to see more work that is truly integrated in the context of advertising and social media. Again, I think we have some good examples of it, but I just want to see more it. I’d like to see more multinational business coming into Lowe; we are very strongly dominated by the work we do for Unilever, which is fantastic and we have an incredibly profound and important relationship with them and we do lot of good work for them in lots of important places. But like any agency service company, we need to keep our portfolio of clients growing, so I think we need to be more competitive on international pitches. Some of the things we’ve done in the UK in digital are to equip us to go after these kinds of clients. We’re seeing some successes, we pitched and won Microsoft Cloud Computing globally, which we run out of the US; HTC, the Taiwanese handset manufacturer, is a US relationship; we’re now developing in Mexico and Brazil.
The fact of the matter is the global crisis started in 2008 and it hasn’t gone away. You have to be realistic about what the market will allow you to do. You can’t run your business worrying about the financial markets – we have to be aware and cognisant of the effects they have on our clients, business and people, but we have to be a healthy agency business in our own right at the end of the day. For me, my typical rule of thumb, a good healthy agency is 70 percent local clients and 30 percent multinational clients, in terms of revenues.
Are the acquisitions boutique shops?
Actually they’re not. Our alignment in the US is with Deutsche; it’s an incredibly strong US agency brand based on the east coast in New York and the West Coast in Los Angeles. It’s kind of a smart, savvy street-wise creative shop. But it’s big. We look after clients like Microsoft, VW, Playstation, Dr Pepper, Snapple and so on. It’s a big serious legitimate business that is fully integrated.
In the UK, our acquisition was the largest UK independent with an incredibly strong record in new business and really good management. So they’re not little glittery things on the top; they’re serious mainstream businesses. My point of view is that we needed some of that heft, and stability and scale in terms of our ambitions. Importantly though, all of those agencies have a creative DNA. It’s based around their product, not their service.
Huge, as a digital example, handles something like US 13 billion of transactions for its clients, mainly in North America. It’s a serious business.
Could you tell us something about the creative council that’s reportedly going to be set up after CCO Matthew Bull’s exit?
Basically, to put a full stop to the Matthew Bull story, Matthew was the founder of Lowe Bull, our agency in South Africa, which is incredibly strong and has great creative talent. He’s worked in a network capacity for the last 5-6 years; he was in the UK, worked in an international role, then he went back to South Africa and he had for the last couple of years, taken on this role of ECD of Lowe based in New York. The truth is Matthew left South Africa to move to New York for personal reasons, and we were happy to accommodate that. He’s developing his own life now and future in America, and we wish him every success; he’s been a great partner to Lowe and vice versa. It was just a moment when we felt our ambitions weren’t the same anymore.
In the context of a role of a global ECD, I am honestly less convinced of the ability of that role to really do something for the network. The reason for that is really based on logistics. How can one person be responsible for the creative output of a network, in our case of 70-something offices, around the world? You can jump into things, typically new business or client or recruitment things, but you can’t do it as a full-scale job. I think our interests are best served by the right group of creative people; because if you’re trying to develop an agenda around the belief in what your creativity is and what it needs to, having a group of people that genuinely have a world view is potentially more powerful. Our idea was to take on the creative council (something we have anyway) and develop it with a specific, tighter brief: fewer people, the best of our best, and a meatier agenda in terms of what it does, how it evaluates our product versus our competitors for our clients, and how we go about making it better.
We thought it was very important that that group has a chair and we appointed a Colombian gentleman called José Miguel Sokoloff, and we felt that was important too. Typically networks run their axis around an American or someone from the UK. One of our strengths is being a network that’s more purely based on the emerging markets. We want those people to determine where we head to; that is all of our future. Jose Miguel is a Colombian, very highly regarded creative, chairman of a Lowe agency for 15 years. Colombia is the third biggest market in Latin America, growing like crazy. He’s respected by his peer group across the network and we just felt it was a really good place to start.
He will help my business partner Tony Wright and me to craft a compelling agenda for our creative ambitions.
We will have a key representative from India – Arun Iyer, Amer Jaleel or Balki. The council will have about 6-7 key people. Our first meeting is in the middle of November at the El Ojo Awards in Buenos Aires (kind of the Latin American version of Spikes).
What are trends in advertising in Asia that concern or excite you?
The exciting trend is that it just keeps on growing. The thing about growth (besides the economics of growth) is that it presents opportunities, dynamism, ambition and progress. In our industry, those are incredibly powerful motivating characteristics. Long may that trend continue.
I think there’s sophistication to marketing that is growing quickly here. One of the things we will talk about at Spikes is for a client called Alipay, which is a Chinese online payment system (it’s bigger than Paypal). The marketing we developed for Alipay is very interesting because when I think about how fast-paced and commercial China is, the work is a very sophisticated brand point of view.
The phenomenon that maybe a bit of a concern, is that as much as Asia keeps on growing and becoming more sophisticated in terms of the marketing, all of the uncertainty of the global economic environment, will have some sort of effect here. Whether that results in an over-reliance on the economies of India, China and Asia in general, or pressure on inflation in these markets, that uncertainty can’t be predicted. We all have to remain nimble, agile, make sure our structures are fit for purpose for what we need. We’re going to have that keep that sense of entrepreneurialism and ability to adapt as part of our capability.
A lot of people think network agencies don’t have that kind of nimbleness.
I don’t think a lot of them do. It’s one of the things that makes us competitive. We’re quite happy not being the biggest network, we don’t want to be. We’re there in the places people need us with a lot of home-grown talent that is very cued into local markets, and that gives us a lot of agility and flexibility. The marketing spiel we give is “Reach without compromise”. That’s an important capability that will be needed in Asia.
What’s your feeling about Lowe Lintas in India?
I think they will do well because they are an iconic, famous agency for their history and for their people and work. They absolutely deserve it. I’m very happy with how the team has gelled around Joseph George and I think he’s put some real vigour and structure into where we’re at. I think he’s pushing our offices outside of Mumbai harder: we’re seeing good growth in Delhi, particularly. And he has some interesting plans on how to expand our remit beyond the main cities into what you guys call the Tier-II cities, as well as our capabilities beyond advertising.
What I see in Lowe Lintas is a brilliant base camp, but I guess the part I’m more excited by is what it can evolve to.
What are areas of improvement?
I think India is still a very TV-dominated market. Social media and digital media is going to grow like crazy, so we have to make sure that’s a core part of our capability. I think while we’re strong in field (or rural) marketing as a capability with Linterland and so forth, we’re yet to turn that into a full-scale monetisable business.
How do you feel about Lowe Lintas’ digital capability currently?
To be fair, like a lot of Indian-based agencies, I think our bread and butter is advertising and predominantly TV advertising. I make no apologies about that, we’re good at it, there is lots of it, and it works for our clients. We do have all the other capabilities and what we’re seeing is that they’re developing in tandem with our clients’ requirements. To turbo charge our digital capability, acquisition is a legitimate format, organic growth and recruitment is a channel to do that, and I suspect it will be a combination of the two.
Your thoughts on the Indian market.
I think the Indian market just chugs on; it’s like a beast or a machine. What will be interesting in the Indian markets is how categories evolve – social media is the easy and obvious illustration of that, because of the smartphone uptake, café culture, burgeoning middle class, more developed cities and their population, rural migration. All of these things are going to have palpable on marketing and marketing requirements in India. Lowe Lintas is amongst a small but very privileged group of agencies who are well-placed to capture that. It’s our responsibility to make sure we have the right groups of people and capability to be able to do so.
(An edited version of this interview appeared in the print edition of Campaign India's Spikes Asia 2011 Report)