Mergers and acquisitions have been fairly rare throughout These Difficult Times, but the Clemenger Group has made a significant addition to its communications coterie and is hoping to create a formidable advertising force by fusing .99 and direct/CRM/1-to-1 agency justONE.
As a result of the merger, Ben Goodale, who founded justONE seven years ago, will become managing director across both businesses. Craig Whitehead, who's had the dual role of executive creative director and chief executive at .99, will now be able to hang up one of his hats and will take up the role of chief creative officer.
Clemenger Group chief executive Jim Moser says he met Goodale when he arrived in the country in 2009 and they got on really well (Goodale and Whitehead have known each other for years and worked together at Ogilvy 12 or 13 years ago). And after a long-term strategic planning session around two years ago looking at where .99 was going and what retail clients were demanding, it started up a conversation with Goodale about working more closely together.
"We saw Farmers putting huge emphasis on its loyalty efforts as it changed from the Beauty Club to Farmers Club," says Moser. "And we thought this is the future because retailers are more and more looking to have a closer relationship with their customers, so that was the catalyst to open up the dialogue with Ben."
Following on from this successful relationship with Farmers, it has also worked together on Foodstuffs and Genesis Energy, which is won after a united front for the pitch at the end of last year against every man and his dog.
The addition of justONE obviously brings a few new clients to the table and an additional 18 staff to add to .99's 110 (together it will be similar in size to Colenso BBDO and Proximity). But Goodale says it's not about billings.
"It's really about the overall offering. What's been interesting is increasingly clients are demanding integrated solutions. Clients are moving into big data, smart CRM lifecycle systems, not just email lists and blasts, and then there's mobile, digital and the instore experience. All of that stuff is integral to effective retail and CRM. In a way retail is now leading the way in CRM/Loyalty and leaving other areas like FMCG and financial service behind. So increasingly we're talking more and more about that and working together."
The businesses are planning to operate out of the .99 premises on Richmond Road, but will operate separately so there will still be distinct clients. But Goodale says it's about upping the horsepower, having that direct expertise sitting inside .99 and trying to sell them on the whole package.
"If I do say so myself, I don't think anyone touches us for what we do in this country and .99 is by far the market leader in retail advertising, so it's pretty powerful."
"It really is a future play," says Moser. "As separate companies they're not nearly as strong as co-operating agencies so we have huge expectations. Across the region, we’re seeing a demand for integrated retail solutions that combine retail, brand and production in channels including digital, social media and increasingly loyalty, data and CRM. Harnessing this technology for retailers is critical for the future."
While Whitehead says it's normal to go into these deals with some trepidation, he knows it's going to work because they've already done it, they know each other and the cultures are similar. Added to that, there are no client conflicts, the company colours are the same and, for the mathletes and superstitious folk out there, Whitehead points out that .99 plus justONE equals 100.
In 2003, .99 split from Colenso BBDO to create a standalone retail offering and Whitehead says that vision has now come true (at its height, it was second only to Clemenger BBDO Melbourne in the Clemenger Group in terms of turnover, ahead of Colenso BBDO). It certainly had a rough year in 2012, losing Air New Zealand and Vodafone, but it's had five wins in a row (including Tower Insurance, Genesis Energy and Warehouse Stationery), it's grown by more than 25 percent this year compared to 2012 and it's also back hiring again, so he hopes this latest vision of the future of retail will also come to fruition.
"There's a lot of agencies that talk about being good at retail and who like doing retail, but the fact is most of them aren't and don't," Whitehead says. "From day one we've stood up and hand on heart said we love retail. And that difference has helped our pretty impressive growth and carved out a niche."
Goodale says the success of .99 has been Whitehead's passion for retail ("People like Craig are quite unusual," says Moser) and the agency's single-minded proposition. And that's also been his philosophy around direct/DRM/loyalty.
Some indie agencies start up with the eventual goal of being bought out, but Goodale says that wasn't what he had in mind (he's always hated the phrase indie, he says, because it's not about your ownership structure, it's about what you offer and, as such, he's pitched himself against the big boys as the best in a particular area).
"We've had our suitors over the years. In some cases it hasn't gone past a phone call because the view I had was I would only ever do it if it was the right fit. The business has been profitable from day one. We've won Agency of the Year two years in a row. So we're not desperate to sell. But I guess it's about being open-minded as to what's the right thing to do for business success. You'll never resolve the debate about what is the perfect agency. Is it best of breed and specialists? The super agency? The only thing we have to sell are our people and our expertise ... When the Clemenger Group came calling we could see we could build something very strong and powerful. So if you want just the CRM or the retail advertising, that's cool. But you can also get the whole package. An analogy would be saying it's a bit like going into a shopping mall and you dip in and out of the boutiques for what you need."
A gentleman never reveals the price paid for his business, of course, and all Goodale would say was "yes, some money changed hands".
"A lot of things have to be right before you talk about the money."
Goodale's timing seems good, however, given its recent accolades, including the RSVP Grand Prix for its work on Subway’s loyalty programme at the NZ DM Awards and more wins for Farmers, Farmlands, and Ziera. It also took out the Fairfax AdMedia Agency of the Year awards in 2011 and again in 2012. But he says it's also good timing for .99, which is back on a winning streak.
As for clients, between them they already have a pretty good line-up. But they're certainly looking for more. And, as Whitehead says, it's not just bricks and mortar. A recent trend he's noticed is that a number of services providers, like Genesis Energy, now think of themselves as retailers and are looking to improve their 1-to-1 relationships with customers.
"There are gaps," says Moser. "And we do believe this offer will be very appealing to where those gaps are. There are a few that need to look out."
Moser says it could take a similar approach to Proximity and Colenso BBDO, where a relationship with one side can be a way of "getting a foot in the door and impressing the hell out of the client and showing them what the other side can do".
The Clemenger Group's last acquisition was Touch/Cast about 18 months ago and Moser says there is another one soon to be announced.
"I don't see any of our competitors making acquisitions," he says. "I think the last major one here would've been Shift by Omnicom, but I don't think there are many other competitors looking at how they're going to strengthen their total offering like Clemenger Group. We were looking in direct, still looking in data, research is another area we're really keen on, and there's one company we're particularly interested in. And we're also looking at experiential and sponsorship and shopper marketing."
Clemenger Group has 15 companies in New Zealand, with another 40 in Australia.