2011 a good year for Draftfcb despite loss of SC Johnson: Laurence Boschetto

“Six years ago, the SC Johnson account represented 15 per cent of our overall organisation. Since then we have grown enough that when we parted company, the loss hit us on a global basis of 3 per cent. So while we have had to reduce head count globally by that percentage, we manage to handle it by using the open positions we had to reshuffle talented individuals,” said Boschetto.

The loss in SCJ’s billings will also not impact the agency’s bottom line directly in 2011 and he hopes that by the time it does, financial growth coupled with the win of the global Beiersdorf (Nivea) account in 2010 would have offset the loss. “In 2012 we will be integrating most of the disciplines under Beiersdorf and other clients, and hopefully by the year’s end it will be a net wash.”
 
“Every relationship has a beginning, middle and end; and ours after 50 years had run its course. I’m very proud of the relationship we had with them and I think we’ve left them in a stronger position — better company, we’ve helped grow them. And they in turn have made us a better agency. For my sensibility, the only upset we had was that we had to say goodbye to 3 per cent of our employee base,” commented Boschetto.

The agency’s resiliency to the loss is proof positive that its nine key market strategy and its focus on integration has paid off, said Boschetto referring to the agency’s strategy on focusing its resources on building nine key markets - Brazil, China, India, Chicago, New York, South Africa, Middle East, Germany and UK into major hubs. “We are present in over 90 countries globally, but not all offices are equal in terms of growth, potential, population and impact.”

Launched in 2009, the strategy, said Boschetto is “right on track”. “Two years ago, we were number 13 in AdAge’s global rankings, now we’re number eight, making us the only agency to have made significant improvements on a global basis during this time.”

Moving forward, the agency intends to focus on businesses within the nine key markets, like China, that currently lack robustness and scale. “We are dominant players North America and India, but China is a little bit behind the ball for us,” he admitted. “There, we will be focusing on talent, retention and growth of clients as well as mergers and acquisitions.”

Currently Draftfcb is in negotiations to acquire two new digital outfits in Greater China and if successful may operate these acquisitions under a dual name for a period of time to address the perception that Draft lacks digital expertise. “They will be fully integrated components of Draft but this will aid awareness of our full capabilities,” said Boschetto.

With no plans to launch a regional office, Draftfcb intends to build its Shanghai office into a regional hub. Currently, Asia-Pacific’s regional manager Mark Paccini lives in Chicago but is frequently in Shanghai, said Boschetto.

The network also has no plans to open its own office in Singapore and is content to work in partnership with sister IPG agencies there. “For us, it’s important to be where our clients do business. Chasing a footprint is not really what we do. We prefer to concentrate on markets we do operate in and make sure we’re in the top five players there,” he said. In Southeast Asia, Draftfcb is performing well in Thailand and Malaysia, he added.

Overall, Asia represents about 15 to 20 per cent of Draftfcb’s business and is the epicentre of growth market development. “I don’t want to lose the foothold in the mature markets, created the reputation and helped us fuel the other markets. But I am investing the markets that are rich, growing, and that have opportunity and I do want to see Asia grow to be 25 or even 30 per cent over the next couple of years.”

Another factor that had paid off for the agency, said Boschetto, is its policy of integration which combines capabilities such as media, creative, below-the-line, branding, direct digital, shopper marketing under one roof and tied to one bottom line.  “While not every office has the full range of capabilities, they all have, to a certain extent, media planning, creative and digital fully integrated,” he says. Where capabilities are lacking the agency compensates by alliances or drawing on the resources of the IPG network.

If the agency hadn’t embarked on this process of integration in 2008, it may not have weathered the global downturn as well as it has, said Boschetto. “We wouldn’t have been as effective an organisation, we wouldn’t have been as client-centric. When you have internal people competing for the same piece of the pie, the client’s best interests are not at heart.”

Based on past performance, Boschetto is confident in the agency’s ability to withstand a second economic crisis. “Our clients are being cautious but we haven’t seen significant budget cuts as we head into 2012, but should another global recession occur, we discovered that our model can help us weather the storm. Our strategy focuses our resources in nine of the world’s top markets (80 per cent of Draftfcb’s revenue) – if those market’s sink it’s all over. Doesn’t matter where you are in the world.”

“Whatever the state of the global economy, ultimately our goal remains to drive real, tangible business results for our clients. This means developing strategies that results in powerful creative ideas through a media-agnostic lens,” he concluded.