New Attitude
Kevin Roberts, chief executive of the Saatchi & Saatchi Worldwide advertising agency, goes by the nickname “Rambo.” When running a New Zealand brewing company in 1994, he had a lion devour a case of rival Foster’s beer before a roomful of stunned stock analysts.
Roberts, 47, hasn’t pulled any stunts during his four months at Saatchi, an agency recovering from financial turmoil and management upheaval. Stay tuned.
“Kevin is not your run-of-the-mill executive,” said Warren Doak, an analyst with Merrill Lynch in New Zealand. “He’s an extremely flamboyant fellow.”
Jovial and plain-spoken, Roberts has outlined a simple yet challenging strategy for Saatchi. Rather than chase after myriad accounts, he hopes to coax more business from Saatchi’s most important clients, Procter & Gamble and Toyota, global companies with huge appetites for advertising that are continually pushing into new markets.
“You can spend all your time . . . to get new business, or you can get more business from your existing clients,” said Roberts, outlining a strategy that some analysts have greeted with skepticism.
At the same time, Roberts intends to shape Saatchi into a diversified communications company, with stronger presences in public relations, direct mail and online communications. In a symbolic move, he sent a memo from a hotel room in Los Angeles on Sunday announcing that Saatchi would no longer use the word “advertising” in its name. He was visiting Saatchi’s office here.
“We are in the ideas business, not the advertising business, and that is a huge shift,” said Roberts, articulating a growing mantra within the industry. “We plan to get into every single business where we can add value with imagination and ideas.”
Eventually 60% of Saatchi’s revenue will come from advertising, he said, compared with 90% today.
Saatchi is at a crossroads. Later this month, shareholders of Saatchi’s parent company, London-based Cordiant, will vote to divide Cordiant into two groups around its largest agencies--Saatchi & Saatchi and Bates Worldwide, both based in New York.
The “de-merger,” as it is being called, ends a period of turmoil that resulted from the huge debt the holding company took on during an acquisition spree in the 1980s. Amid financial troubles in 1995, the agency’s enigmatic founders, brothers Maurice and Charles Saatchi, bolted to form a rival agency, luring away the coveted British Airways account and leaving their former agency reeling.
Concerns about the future of Saatchi & Saatchi during that period scared off potential clients.
“We used to go into pitches with a slide that said, ‘Yes, we are the financially troubled Saatchi & Saatchi,’ just to get it out of the way,” said Joe Cronin, head of Saatchi & Saatchi Pacific in Torrance, which creates advertising for Toyota in the United States.
Cronin said Saatchi decided not to pitch Bank of America, a sought-after account, after the bank said it couldn’t do business with an agency in such financial disarray.
“The situation really hurt us,” Cronin said.
Analysts said Saatchi & Saatchi is financially stable now, and Roberts said the agency is recovering. It recently won the $100-million Delta Air Lines account and is one of three finalists in a pitch for the accounting firm KPMG Peat Marwick.
“I doubt an accounting firm would be considering us if our troubles were not behind us,” said Roberts.
The selection of Roberts, a non-advertising executive, to run Saatchi raised eyebrows at first. But there was precedent within parent Cordiant for such a choice.
Cordiant Chief Executive Robert Seelert, Roberts’ boss, spent much of his career at General Foods. And Roberts points out that he was a client of Saatchi during his seven years at the New Zealand brewing concern, Lion Nathan.
“He understands our culture better than our own people do,” said Ed Wax, the former chief executive of Saatchi & Saatchi Advertising who wooed Roberts to be his successor. “He pushes for breakthrough advertising, and he has a client’s perspective.”
Roberts has had a varied career, holding management posts at PepsiCo and Procter & Gamble, in addition to Lion Nathan. During his stint with P&G;, he was responsible for Tide, Pampers and Crest in Africa and the Middle East. At PepsiCo, he ran the company’s Canadian unit, once firing shots into a Coke machine during a black-tie event to rally the troops. During his tenure in Canada, Pepsi edged out Coca-Cola.
Analysts give Roberts’ tenure at Lion Nathan mixed reviews. Under his guidance, the beer company acquired breweries in Australia that produced half that nation’s beer. It also entered a bottling deal with PepsiCo.
According to analysts, Lion Nathan had trouble managing its Australian breweries. Its share of the Australian beer business sank to less than 42% from 50% in two years. Meanwhile, the Pepsi bottling venture piled up losses.
Analysts said Roberts, distracted by the challenges of digesting the new breweries, was caught off guard by Foster’s Brewing Group. Foster’s slashed prices and brought out light beer to seize Australian sales from Lion Nathan. A few weeks after Roberts’ resignation last November, Lion Nathan reported a 21% drop in profit.
“Instead of being proactive, they found themselves reacting,” said analyst Doak.
At Saatchi, Roberts said he is making headway. Saatchi has recently snatched new business from Toyota, winning accounts in Argentina and Brazil--two new markets for the Japanese auto maker. But some analysts are skeptical.
“Doing more business with these accounts would be a huge plus,” said Alan Gottesman, an industry consultant at West End Communications in New York. “Why is all of this going to happen when it hasn’t happened before?”
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King of the Hill
Here are the 10 largest U.S. advertising agencies, ranked by 1996 gross income. Bates Worldwide, which is spinning off from Cordiant along with Saatchi & Saatchi, ranked 15th, with gross income of $149.3 million.
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Agency Headquarters 1996 U.S. Gross Income 1. Leo Burnett Chicago $393.7 million 2. J. Walter Thompson New York $375.2 million 3. Grey Advertising New York $353.2 million 4. McCann-Erickson New York $329.6 million 5. Foote, Cone & Belding Chicago $299.9 million 6. BBDO New York $289.3 million 7. Saatchi & Saatchi New York $274.1 million 8. DDB Needham New York $271.9 million 9. Young & Rubicam New York $241.9 million 10. Ogilvy & Mather New York $233.3 million
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Source: Advertising Age magazine
