M&C Saatchi outpaces bigger holding company rivals with diversified model

M&C Saatchi, the quoted agency that now has a network of over 20 outposts worldwide, outshone its bigger holding company rivals by reporting revenue up seven per cent to £241m in 2017 and top line profits of £27.7m. M&C is forecasting a further seven per cent revenue increase in 2018.

CEO David Kershaw (below) hailed the results as evidence that running an agency could still be “a wonderful business.”

M&C’s network is based on shareholdings shared between M&C and local entrepreneurs. Its flagship London agency has suffered in recent times but now seems to be back on track under former Leo Burnett executives CEO Giles Hedger and CCO Justin Tindall. The international network is run by Moray MacLennan.

UK revenues were up six per cent with operating profit up 46 per cent before restructuring costs (likely to have been substantial). New business wins included, Costa Coffee (Lida, global), Dreams (M&C Saatchi UK), and Aston Martin (Lida, US). Lida is M&C’s CRM agency. Asia and Australia was up 23 per cent while the nascent US operation fell three per cent. The US is a notoriously difficult market for UK agencies to crack and is in the midst of an ad slowdown.

M&C has had its ups and downs since Charles and Maurice Saatchi, Jeremy Sinclair, Bill Muirhead, Kershaw and MacLennan (the ‘hombres’) split or were fired from the original Saatchi & Saatchi empire, now owned by Publicis Groupe.

At one time it looked as though M&C would challenge the biggest UK agencies when it handled the likes of British Airways (then a huge advertiser) and, briefly, Sainsbury’s. That never quite happened but the agency’s revised model appears to have proved solid. The whole company is now valued at £336m.

M&C is good at making money, unlike the original Saatchi in its latter years which came unstuck in the US, and called the market right on media agencies when it sold about three quarters of Walker Media to Publicis for £35m back in 2013.

Kershaw says this has allowed it to evade the downturn in media agency fortunes in the wake of the US ANA report. He also says his network is not dependent on big multinational advertisers like Procter & Gamble and Unilever, busy slashing agency expenditure, leading to a double whammy for some bigger holding companies.

Not that either would be shown the door if they knocked on M&C HQ in London’s Golden Square. M&C, like its famous parent, which was once the biggest in the world, is nothing if not opportunistic.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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