Cheil Worldwide targets further acquisitions to go beyond Korea and Samsung

The move would follow a number of global acquisitions in recent years by the Korea-based agency, including PengTai in China, The Barbarian Group (TBG) in New York and Beattie McGuiness Bungay (BMB) in London. Most recently, Cheil took a “significant” stake in creative agency network Iris, which reportedly could lead to 100 per cent ownership over the next five years.

In an interview with Campaign Asia-Pacific, Michael Cheonsoo Kim, Global COO and executive vice-president of Cheil Worldwide outlined the agency’s acquisition strategy and said it would continue to invest in new capabilities.

“We don’t invest our money or our time and energy into agencies to grow our revenue size. We are not pursuing the scale of WPP or a large holding company,” said Kim. “We only invest in new capabilities or the capabilities that we don’t have.”

Kim began his career at Cheil in 1987 as an account executive and climbed the ranks to become an account director in 1994. After a period in Los Angeles where he headed up Cheil USA, he is now based at the Seoul headquarters, overseeing the global business growth.

“The business environment around us is constantly changing,” Kim said. “With big data, ever complicated consumer journeys, new technologies, it impacts a lot on our business.

“We believe we still need a very competitive data analytics capability and also digitised media planning and buying capability. So these are areas we are planning to invest in. It’s early stages; we are developing the corporate strategy in that area on how to approach and acquire these capabilities.”

When seeking the right agencies to invest in, Kim believes that it’s the creation of “complementary skillsets” that has allowed Cheil’s M&A strategy to flourish, and develop into what he calls "the network agency for the new age.”

“Because we have complementary skillsets, we can smoothly work together. We don’t have to fight among each other. The world is changing fast, no one can provide the right solution. What you need it to be agile and nimble.

“We are not a giant; we are small enough and we are a great collaborator. We have developed a collaborative process and an incentive programme, so it’s mutually productive and mutually lucrative.”

As of now, Kim says over 40 per cent of Cheil’s non-Korean business is coming from affiliate agencies and he anticipates that this could grow to be 50 per cent by the end of 2015.

Founded in Korea in 1973, it’s difficult to talk about Cheil without mentioning electronics giant Samsung. But Kim is quick to suggest that there is a misconception about the Cheil/Samsung relationship.

“Many people have misunderstood that Cheil is the in-house company of Samsung; it’s not,” he says. “We were established by the same founder of Samsung, but from the beginning we were independent.”

At the same time, Samsung affiliates own 28 per cent of Cheil, the rest of its ownership comprised of associations such as Korea's National Pension Services and the Saudi Arabian Monetary Agency. Cheil does also retain a good portion of Samsung’s US$14 billion creative and media business and before M&As and new offerings, Kim highlights the importance of Samsung in growing the agency on a global scale.

Cheil's 'Look At Me' campaign for Samsung recently won gold in the Direct catagory at AdFest 2015

“Cheil has been behind Samsung’s global brand building efforts for the past 20 years and we are very proud of Samsung’s success. We have grown thanks to Samsung,” he said.

But growing beyond Samsung and its Korean roots is clearly a big focus for Cheil, which already accounts 80 per cent of its revenues as coming from global (outside Korea) business. 

The agency recently developed its “global network team” out of London, including Malcolm Poynton, global chief growth officer, Simon Hathaway, global head of retail experience and Christopher Chalk, global chief strategy officer. “Our focus is developing more global and regional business relationships,” Kim said.

So much is Cheil looking beyond its current business that in January this year it created a “Beyond Cheil team” of more than ten people who are tasked to explore new business ideas and opportunities.

“They have no business profit-and-loss responsibility," Kim said. "Their responsibility is coming up with crazy ideas we need to explore. They come up with ideas and then the corporate strategy team will review its potential.

“It’s a very new experiment, and they have to define what is beyond Cheil.”