UK-based Engine Group searches for partnerships in Asia

Peter Scott is on the hunt for potential suitors to bring a version of the London-based marketing services company Engine Group to Asia.

His ambitions for regional expansion are fuelled as much by client demand, as a need for survival. Two years ago, Engine — which owns ad agency WCRS and PR group MHP — lost its GlaxoSmithKline business because of its international shortcomings. “We realised that we could stay in Britain and have a short life, or we could take an international journey and build a future where the global brands are,” says Scott, the company’s chairman and joint chief executive officer.

Scott, who has earned a reputation as an opportunist and dealmaker having acquired Carat for WCRS in the late 80s, claims the credit crisis put his plans on hold. But Engine finally has the money it needs for expansion after raising US$101 million from ventures and private equity provider HIG Capital. Armed with the cash, the group entered North America last year — the start of attempts to create international hubs in China, India, and Latin America.

Led by former Aegis Asia chief David Liu as chairman of Engine Asia, as well as consultants R3 and Results International, Engine has identified and met with several mainland agencies and Hong Kong-based independents over recent months. But establishing a credible partnership in the region isn’t proving to be easy. A deal with Eight Group, which could potentially have given the company a foot into the mainland market, collapsed in February. Engine is now understood to be close to signing on with a Shanghai-based branding consultancy and a digital marketing specialist. However, neither was confirmed at press time.

In the UK, Engine houses 14 disciplines under one roof. It has a wide range of services, including brand advertising, social media, lobbying, consulting, search engine marketing and media planning. Unless it can line up a number of key acquisitions in Asia, it’s offering will appear thin.

Then there’s the challenge of culturally integrating a Chinese business into Engine’s ‘Western’ model.

Scott argues that he’s keen for companies that join the Engine group to keep their identities and cultures. He wants business partners who want to share knowledge.

The group uses a combination of stocks and cash — without earn-outs — to integrate companies. It wants all of its partners to share the same vision and ideals, and uses equity to drive that. “We never buy a company,” explains Scott. “We will only offer deals that are half cash, half shares. So, you become shareholders. Then I know you’re looking after my back and you know I’m looking after yours. It’s a clean business.”

But will brands in Asia buy into Engine’s offering? Perhaps. Clients increasingly require an integrated solution. However, not everyone is convinced. “Their model worked in London because of fragmentation at the time when they launched. But the industry in Asia is instinctively more integrated. And, they will need scale,” says the regional head of an ad agency.

Scott prefers to describe Engine as a ‘solutions’ or ‘media-neutral’ company. And while he did lead the buyout of one of Asia’s most creative agency brands, The Ball Partnership, in 1988, he admits China presents a unique set of challenges. The composition of the Engine business, he argues, will need to be adapted.

Part of his plan is to help Chinese brands go global. Haier, for one, has already turned to Engine for help. Scott says: “We’re not arrogant enough to believe what we’ve practiced in the UK  should be exported. Where we are differentiated, however, is that we are not the big command and control structure that, I’m sorry to say, you do get in an Omnicom or WPP.”

This article was originally published in the April issue of Campaign Asia-Pacific.