Kiwi diamonds add lustre to Saatchi's crown

By Dita De Boni

Saatchi & Saatchi plc chairman Bob Seelert thinks year-end results to be released in March will prove conclusively that the agency is the "hottest ideas shop on the planet."

But, to paraphrase one of the company's more notable campaigns, he would say that, wouldn't he?

Mr Seelert is in New Zealand for Saatchi's board meeting, the first to be held outside London or New York and a recognition of this country's status as a "shining creative beacon in our worldwide constellation."

He denies the venue is an attempt at damage control after last year's Tourism Board debacle, which saw the company lose the $30 million contract to Wellington rivals M&C Saatchi.

"We came here for all positive, look-forward types of reasons."

New Zealand holds a special place in the Saatchi galaxy, with worldwide chief executive Kevin Roberts and senior management figures Peter Cullinane, Geoff Vuleta and John McCabe adding to what Mr Seelert calls the "disproportionately" high Kiwi contribution to Saatchi's ideas bank.

He stresses that Mr Cullinane's move from his "dream job" in New York to responsibility for Australasian operations - widely seen as an attempt to safeguard a low profile for Mr Roberts in this part of the world - was a step up the company's hierarchy.

Is he being primed for leadership? Mr Seelert smiles: "He's a guy the company is investing in."

Part of the Cullinane brief incorporates parts of Asia, an area where Saatchi invested "several million pounds" in 1998 and one which is only just recovering from the Asia crisis.

At Saatchi's half year, the loss for the Asia-Pacific offices was reduced by sterling 1 million from last year's sterling 2.8 million, and growth in China, where the company has 400 staff spread over three cities, stood at 9.9 per cent compared with overall regional growth of 3.6 per cent.

Saatchi has also expanded in India and entered into a joint venture with relatively small Japanese agency Yomiko to fulfil nine Procter & Gamble assignments in the area.

Asia Pacific contributes 13 per cent of the company's worldwide revenues. Eighty-five per cent of that comes from New Zealand, Australia, Singapore, Japan and China.

"Our outlook is that growth in Asia Pacific ... is going to outstrip worldwide growth," says Mr Seelert. "We're big believers in China, and our belief is that China is going to inexorably grow in terms of a worldwide market."

So big, in fact, that Mr Roberts now enthuses about plans to "brand" China in the same way New Zealand has been marketed in the Saatchi world.

The idea follows New Zealand's own branding "blackout," described by Mr Roberts on his personal website as "... uncompromising, timeless, hip. 747s look great in it."

Mr Seelert is positively effusive about Saatchi's overall growth, which showed a slight drop in the UK in the six months to June 1999, but picked up in the US over the past year.

The rise was due in part to new billings of around $US1 billion, including $US340 million in worldwide billings from top client Procter & Gamble.

Operating revenue for the six months to June was sterling 191.6 million, compared with last year's sterling 171.6 million, and profit rose 17.4 per cent to sterling 16.2 million.

Mr Seelert says the profits will be sustained in the full-year results and beyond.

Mr Seelert concedes that the company is operating in an improved economy and positive media environment. Worldwide media spending has increased between 4 and 6 per cent for the past three years,and is again moving up from the 4.9 per cent of 1999.

"But the reality is [Saatchi] has been growing at double that rate, and we've fundamentally been doing it by recording the best new business performance the network has ever had."

He attributes much of the success to the "inspired leadership" of Mr Roberts, whose hiring he describes as also "inspired."

Coming in after founders Maurice and Charles Saatchi quit in 1995, Mr Seelert says he "stabilised the company, refinanced it, and was the driving force behind demerging the company [from Cordiant]. But probably the greatest thing I ever did was make the decision to hire Kevin - [who has some of] the most dynamic leadership skills of anyone I know."

"We have a whirlwind at the top of our company. I sometimes say, 'Is it a bird? Is it a plane? No, it's Kevin Roberts!'"

The "one team, one dream" Saatchi mantra has emerged as a result of two reconfigurations in the mid-90s; first, the Saatchi brothers' ousting, and secondly, the split from Cordiant plc in 1997.

When the Saatchi brothers went "over the road" to set up M&C Saatchi, Mr Seelert says he could see the two companies were "totally different animals."

"M&C Saatchi is a UK-based agency that happened to have a few outposts [internationally] based on the historical accident of British Airways who, having gone with them, required offices in other parts of the world."

Even though M&C Saatchi's Wellington "outpost" won the Tourism Board contract from politically embroiled Saatchi last year, Mr Seelert refuses to be drawn on any other comparisons between the two companies.

"It's a foggy memory. Absolutely has nothing to do with what we are all about today."

The Saatchi shareholder structure has also evolved, from a 62 per cent shareholding by institutions to a more diversified holding, including the 30 per cent of employees that have bought shares - now worth sterling 3.95 - at a 15 per cent discount.

As with most other agencies, the advent of web ad-marketing has been seen as a potentially lucrative challenge for Saatchi. The company attributes 2.5 per cent of worldwide revenue to "online" work like web consulting, banner ads and site design, and a further 5 per cent is the new business from "e-commerce and dot.com companies who need to know how you make consumers aware, how you drive them to the site."

But in essence, says Mr Seelert, ideas are the currency, and whether those ideas are transmitted in print, online "or in sky-writing, they are bigger than any ad."

"Creative ideas is the truth why companies turn to Saatchi, and we have positioned ourselves as an ideas company that transforms the brands, businesses and reputations of our clients."