Inside the ideas machine: the evolution of Colenso BBDO

Sitting down for lunch with the Nicks of Colenso BBDO—managing director Nick Garrett and creative chairman Nick Worthington—it’s difficult not to notice the differences. Garrett speaks quickly and carefully, the consummate account man, with his fancy watch, his bright orange iPhone case, his macchiato and his rosé​. Worthington speaks languidly and openly, the consummate creative with his classic t-shirt/jeans/goatee/glasses combo, his laid-back smatterings of ‘yeah, cool’, and his Coca-Cola and earl grey. But it’s also difficult not to notice that, like many good duos, those differences are part of what makes them such a formidable team. And playing to different strengths is a philosophy both men have tried to apply to the agency they run.  

Colenso was founded in 1969 and it gradually worked its way into the upper creative echelons, with many of the country’s top creatives having spent time behind a desk on College Hill Rd at some stage in their careers. The agency has won too many local and international awards to name, but Garrett says 2012 was the best year creatively in its 42 year history and it culminated in an award that saw the agency placed at the top of the Big Won report, which tabulates rankings for agencies—and their staff—based on the number of awards won.  

So do they really think they’re the world’s best? 

“I think it’s a ridiculous notion to have a best agency, but when they look at the stats we’ve ended up at the top and that’s quite extraordinary,” says Worthington. “We don’t know all the individual metrics and how they get there, but we’ve always tried to be amongst the best in the world. We’ve got a real belief that you can do great work from here. We want to be top ten, or top 20. And not just this year, but every year. Consistency is one of the things that Colenso has had. But I don’t think anyone thought we would ever be number one.”

Nick Worthington, left, and Nick Garrett assume each other's identities. Photo: Paul Statham. 

Chop the poppy 

Colenso, which now has around 130 staff, was the first Australasian agency to win this accolade and it beat out agencies more than ten times its size to get it. So you would think this quintessentially Kiwi ‘punching above its weight’ tale would be met with praise. But, judging by some of the online commentary, the Kiwi clobbering machine came out in force and many (admittedly anonymous) commentators seemed to feel the win was somehow ill-gotten, the very meta award was meaningless and Colenso was just really good at writing awards entries. The fact is, however, winning awards is a good way to gain momentum in this industry; most local agencies enter the big programmes because they like to see their best work recognised on the world stage and they offer a chance to benchmark performance against competitors; and, in the networked world, stocking the mantelpiece is a legitimate KPI. 

“The response I got from overseas, and from the likes of David Walden and another half a dozen senior people here who know how hard it is for any agency—and any New Zealand company—to get recognition was great,” says Garrett. “Healthy competition is good and we’re all fiercely competitive. But I was a little surprised by the negativity. We’re proud, we know our work works, and our five or six biggest clients have given us more work than they’ve ever given us. They wouldn’t give us more business if we weren’t doing right by them … There’s not one piece of creative thinking that we’re proud of that hasn’t also had a fundamental impact on the client’s bottom line,” he says. “So there is a correlation between our creative awards and our Effie awards.” 

Of course, it’s not just one award Colenso is hanging its hat on to prove that it has all the plates spinning. Garrett says “a lot of the time agencies don’t do their most creative work for their biggest clients”, but the awards it has won over the past few years for the likes of DB, Frucor, State and Mars show that hasn’t been the case with Colenso. It also clocked in with its best financial results in about ten years, increasing profit in 2012 by 19 percent from the year before—a year in which it lost one of its biggest clients, Vodafone—and it also won the Campaign Asia-Pacific and Admedia agency of the year titles, which are judged by business leaders, audited by accountants and take into account creative performance, business innovation and business results. 

“We won ten pieces of new business [last year]. We’ve innovated the company. And we’ve done a lot of stuff that most of the local market probably doesn’t know about,” Garrett says. “But the work hasn’t suffered … We don’t shout from the rooftops about a lot of stuff we’re doing really well. So I think there’s probably a perception lag about Colenso today.” 

Looking inside

Awards are one obvious way of quantifying success for a creative agency, but Worthington says it has done a lot of work trying to figure out what success means over the past few years, which has led to some big changes to the agency’s mindset and structure. 

“Generally agencies just get busy, make lots of work and see where the dust settles at the end of the year,” says Worthington. “But we worked out how we defined success. There’s the obvious creative excellence and we firmly believe great creative work leads to great business results. Effectiveness is another measure of success. And the third one is having an amazing relationship with a client, which leads to them wanting another [campaign]. And when we looked back at the campaigns we’d done it was actually fairly rare we were hitting all three on the same projects. If there’s some amazing creative work and the agency loses the business 12 months later, which seems to happen a lot, then they might be missing the third part.”

Making a “healthy, respectable profit and charging for what you do” is also important, says Garrett. And while the finances of the whole Clemenger Group, which owns over 50 comms businesses across Australasia, are available on the Companies Office, the results of its individual agencies are not. Garrett was unable to comment on how much profit Colenso BBDO made last year, but sources familiar with the agency’s finances said it was likely to be around $3 million in 2012 on revenues thought to be in the vicinity of $20 million. 

More than ads

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Clockwise from top left: State Insurance’s ‘Break My Stride’, a finalist in Fair Go’s best and worst ad categories in 2012; New World’s well-liked brand work with .99; Monteith’s ‘Sorry about the twigs, folks’; DB Export Dry’s very funny ‘The Wine that Sold Beer’; the V Motion Project, which was developed with Assembly; and Pedigree’s ‘Donation Glasses’, which was developed with Finch.  

Garrett, 38, admits he felt the weight of expectation when he arrived from BMF Sydney in early 2010 and took over from the well-liked and well-respected Brent Smart, who moved within the BBDO network to San Francisco. “I didn’t want to fuck it up, really,” he says bluntly. But he also knew some things had to change. Creativity had always been in the agency’s DNA, but he says the fact that it used to be referred to by some as ‘the kids on the hill’, perhaps because of a perceived naughty streak and a focus on being artistic rather than commercial, was something that needed to be rectified.

“When I arrived, a lot of people were there because they wanted to work in a creative place. I’m not sure they all necessarily believed in creativity for business. As an agency you need a single vision and I’m not saying we’re perfect or have articulated that vision to the level we’d like to, but we now say we’re in the business of commercial creativity. It’s a really simple idea for everyone to get. And that one word, commercial, which is not necessarily the sexiest word in our business, changed the way everyone looked at their jobs. So instead of fighting for an ad, you play the long game by solving business problems, earning the love and trust of the client and trying to think two steps ahead.” 

Worthington, 50, who arrived at Colenso in 2007 after a four-year stint at Publicis Mojo and now has his New Zealand passport, says most who work in this industry still think the solution to a business problem will be advertising of one form or another. But he says Colenso doesn’t jump to that conclusion on any of its projects.

“It might be that advertising will play a role but we try to dig a bit deeper and we spend a lot of time trying to find out what’s standing in the way of business success. It could be a product, it could be distribution, and that makes it fascinating.”

The ‘we don’t do advertising, we solve business problems’ refrain is a common one these days. And it’s hard for some cynics to swallow, given Garrett admits the majority of Colenso’s money is still made from “communications services”. But when asked for an example of solving a business problem that wasn’t advertising, Worthington points to the DB Export campaign from 2010.  

 “The job was to try and change the fortunes of Export Gold, the biggest brand of that portfolio,” he says. “But the solution was to go back and relaunch a beer from the ‘60s to tell the story and give the portfolio some mana. It’s a product relaunch and telling that story became the most important thing. Now we’re into advertising those brands, but the initial piece was anything but.” 

Garrett points to the Impulse Saver app it developed with its ex-client Westpac because it’s a product that offers utility. “And by the way, we advertised after it was launched,” he says. 

Creeping creativity

Worthington points to research conducted by Coca-Cola’s Jonathan Mildenhall on the correlation between creative success and business success. Mildenhall showed that most of the Cannes Advertiser of the Year winners reached an all-time stock-price high in the same year they won the award. 

“But the real correlation was that those companies that had embraced creativity at all levels and not just in advertising, had started making more innovative products,” Worthington says. “It’s not creative because the wacko creative comes up with blinding inspiration after two bottles of rosé. It’s creative because you understand the business problem.”

And understanding business problems means getting closer to businesses. 

“Nick and I would meet most client chief executives at least monthly,” says Garrett. “And we’re spending as much time at the moment with R&D, sales, innovation and distribution directors as we are with marketers … I think there’s a sense of renewed optimism and clients are spending more money and taking more educated risks. And I think there’s a renaissance back to creativity as a powerful thing for business. The number of chief executives who are reading Steve Jobs’ book is awesome. When people who don’t understand creativity start to see the effect of it on their business, that’s exciting for creative agencies and creative thinkers.” 

It’s all in the mind

During the ‘knowledge wave’ years in the early noughties, business evangelists spoke rapturously of New Zealand’s weightless ideas going global and powering the economy. No more would we be reliant on cutting up animals and selling milk powder. Ahem. And while Colenso does the majority of its work here, it is increasingly selling its ideas overseas and being sought out for international work. 

In a previous role, Garrett worked in the entertainment industry, and he says the ‘one success for every nine failures’ formula was often abided by. In advertising, he says it’s basically the opposite. But Colenso is trying to “flip that model on its head”. 

“In the first business lunch I had with Nick and James [Hurman, who’s now managing director at Y&R] we said we wanted to change the way we make money and get paid for our thinking. Execution is important, but it is somewhat commoditised in terms of price. So we’re creating a model where we’re charging a fair market price for thinking and we’re very protective of our IP. And it’s not just advertising IP, it may be technology and products.” 

Floating down a new revenue stream 

As a result of this philosophy, it’s rewritten all the contracts with its existing clients and each new client has an IP clause about shared ownership outside of advertising and outside of New Zealand. 

“It’s different by client and totally collaborative, but you can do great thinking in New Zealand that can be used overseas for brands of the same category that are non-competing,” Garrett says. “And clients are excited by this, because we’re sharing in success.” 

This new revenue stream isn’t small, either: Garrett says upwards of ten percent of its profit in 2013 is expected to come from licensing IP overseas. And “it’s growing quickly and it will be significant”. 

“We’re also in negotiations with three clients to launch new products based on our own ideas. And where the IP area has worked well for us is when there’s mutual respect and a recognition that we will both be rewarded for success” (for example, the sale of Westpac’s Impulse Saver app into other markets saw the proceeds split three ways). 

Worthington believes it’s limiting for Kiwi businesses to think only of the New Zealand market—and also limiting to think a creative agency is only able to influence the advertising.

 “You’ve got to recognise we are part of a global marketplace,” he says. “Even the tiniest New Zealand start-ups need to sell their stuff overseas, and we’re also working for brands with global footprints. So they’re looking for the same solutions all over the world. It’s crazy to think region by region. Ideas don’t work like that these days. Ideas spread super fast. So why can’t we do it from here?” 

Patch protection is one major reason. But going back to Worthington’s days at Publicis Mojo, he says the agency really took off when it started doing work for Diet Coke and Powerade globally. Some would argue that global brands know exactly how advertising egos work, so they aim to get plenty of effort for not much outlay by approaching smaller, overseas agencies. But as Worthington says, the game—and the money—completely changes when it’s global. 

“There was one instance when one little project we did internationally for Coke made more money than we made for the entire year on the regular business. And while it’s brilliant having people ringing you up from overseas, it can be distracting if it’s not your core purpose. But it’s not a distraction for us. We recognise we don’t live in a bubble.” 

Reputation is everything

Being part of the BBDO network has also opened the foreign doors, as evidenced by the fact that the award-winning Pedigree ‘Donation Glasses’ campaign, which was created in conjunction with Finch for global BBDO client Mars, is soon to be rolled out in the US and Europe. 

“We’re over the moon,” says Worthington. “‘Donation Glasses’ is going to reach millions of people around the world … So whether it’s us developing it here and exporting it to the rest of the world, or whether it’s the international guys ringing us up and asking us to help solve their global problems, either of those things is great.” 

But it doesn’t stop there. Mars is also using Colenso for more work on several of its major international brands next year and it is being asked more regularly by the BBDO network to help out on global pitches; last year it did two international projects for Pepsi that stemmed from the work it has done for Frucor; it was called by a top ten Canadian company to pitch for a major piece of brand communications and won (in what could be seen as a form of torture for an agency that’s pretty good at self-promotion, it had to sign an NDA and never take credit for the work); and it was recently given the creative and strategic work for a mid-sized Australian client, with execution being handled in its local market.  

Digital dollars 

As well as the seemingly ever-decreasing importance of borders, Garrett says the agency is also cognisant of the fact that technology is an increasingly common part of the answer to client problems and often forms the basis of the communications. And it appears there’s gold to be found in them thar digital hills. 

It has been negotiating with some big music and movie houses for the rights to do a TV show based on the V Motion Project, which hacked Xbox Kinect technology and was developed by Colenso and the production company Worthington believes is “the best in the world”, Assembly (Assembly was also invited to present it at the worldwide Microsoft Global conference). It’s also just signed a deal with a major TV network for a show based on another piece of technology (Garrett couldn’t discuss the deal, but Pedigree’s Doggelganger seems a likely contender). 

The joy of selling IP, says Garrett, is there’s often a lot of extra money at stake for little extra work (as an example, it’s thought the TV deal mentioned above could be worth as much as $300,000), but while he’s comfortable negotiating deals, he says it does require robust contracts and business nous to get them across the line and this is an area where Jim Moser, an American who took over from Roger MacDonnell as chair of Colenso BBDO and chief executive of the Clemenger Group in 2008 after eight years as managing director at Clemenger BBDO Melbourne, has been instrumental.  

Moser is not hugely public-facing. But Garrett says his support and knowledge has been invaluable and he spends a huge amount of time and guiding the group from behind-the-scenes. 

“We couldn’t have done what we’ve done without the absolute support of Jim, who gave us the opportunity to try something and was always there for guidance through the tough times,” says Garrett.

In addition to the international suitors, Worthington says domestic companies like Fonterra and Frucor have international aspirations, so he’s excited about helping take them to new markets. And Garrett says improving the lot of this country by creating global brands is one of major reasons he’s still here and not in Australia. 

“We’re never going to have it easier to export great ideas out of this country, no matter what business you’re in, so I think we owe it to ourselves to do it and give our industry and other industries a chance to step-up,” says Garrett. “… I don’t think New Zealand is an innovative country at all. We’re very entrepreneurial. And there’s a big difference. But we have a freedom here that I’ve never seen anywhere else in the world. Clients, even those not in marketing roles, are up for doing great things and are so respectful of good ideas.” 

Turning the tables

The cobbler’s children often have no shoes. But Garrett and Worthington have tried to apply their transformative philosophies to their own business. 

“It may seem like words on a piece of paper but we went from a management team to a leadership team. A lot of people say Colenso’s model is creatively top-heavy. But if we’re charging for our thinking, and have a commoditised model for production—like Assignment Group—then suddenly the model works. We’re just doing it on a bigger scale. We’ve got a much higher percentage of New Zealand’s best talent at a senior level than any other agency in New Zealand, but we are charging appropriately … If it wasn’t working we wouldn’t be financially viable. And it’s financially viable.”

Garrett says he inherited a management team that consisted of 10-12 people, but they had no autonomy in the business and weren’t contributing as managers. He calls it square table management, because it was impossible for people to separate their roles, so he and Worthington, with the blessing of Moser, attempted to switch it to round table management, when “you come with no agendas, want to contribute to [the agency’s]success and you’re not in your role”. He says there were a range of smart people who loved the agency, the people and the brand, so it was about giving them more opportunities to show that and recognising the top brass “didn’t have to be involved in everything”. 

“There was a bottleneck in the day to day management of the agency. I wasn’t spending enough time with senior clients and helping to build capability. So we abandoned the management team and opened it up to about 16 people who we felt were the most influential in the agency, both in terms of culture and business. We divided the agency into eight sections—new business; culture; process;  people/training and development; finance; client engagement; innovation; and external comms and PR—and put teams of three and four to run and direct each section. They have autonomy and set financial and business KPIs and they go and do it. They report to us every month. So we divide and conquer and, my god, it’s freed up about 30 percent of my time, powered a whole new level of exciting potential leaders to own and run part of an agency and made us infinitely more productive. It’s not perfect, but it’s made a big difference.” 

Low def

Worthington says creative departments are well-modelled in the ‘guys at the top know best’ mentality and, historically, the silo factor meant very specific skills were developed. But the quest for commercial creativity has led to much less defined roles in the agency and created staff with different skillsets.  

“Our creative directors are now spending more time in front of clients than ever before. There are a lot of creatives who don’t have any experience of presenting because it’s not part of their agency’s culture … But the single biggest part of commercial creativity is when you’re in a room with a team of clients, everyone should be able to do each other’s job. We don’t want to pass the baton. It’s really dangerous to have a relay race approach. The moment a senior account person can’t talk about a creative idea or when a creative person can’t talk about the business problem, then you’ve got a massive issue.” 

Garrett, a big football fan (and also one of the rare few 38 year olds without a driver’s license), pulls out a sporting analogy: “The team that wins the season isn‘t the team that has the best starters, it’s the team that has the best bench.” 

Playing to the strengths 

At the beginning of a project Worthington says clients want the strategic guys to work out what the problem is and create a clever strategy. And the creative people cross over on that, because they need to find a good solution to that problem. 

“But then after the client has put their money on the table and said ‘this is what we want to do for the next 18 months’, they want to talk to the people who are going to make it happen on time and on-budget,” he says. “So really we’re trying to change the agency to reflect that and have the right people spending the most time with the right part of a client’s business. We don’t want people sitting in meetings for six months saying ‘I’m waiting for my time’. So playing to people’s strengths is the main idea that plays into the restructured ideas of the agency.” 

Garrett: “We’ve put one toe in the water with this and by the end of next year we’ll have both feet in because we’re dismantling account management. We want to split the function of execution brilliance and business leadership in half.” 

Workflow and staff issues are two of the things that keep them up at night. So, in recognition of this—and as an example of the way the freelance workforce can now be tapped into—Colenso is also equipping itself to better adapt to change. 

“There are moments of growth that can’t be sustained,” says Worthington. “Big, grunty clients have a big effect on your ratio of staff. It’s like you’re an organism and you grow an extra head, and then at some point it contracts, so you actually have to sever it. It’s super traumatic, not just for the head, but for the whole body. So we’re trying to make the agency more organic so it can breathe in and out.” 

And this means it has a stated goal of eventually having 20-30 percent of its total staff on a short to medium-term project basis. 

Both Worthington and Garrett look up to the likes of Wieden + Kennedy, Abbott Mead Vickers, Mother, BBH, 180, Crispin Porter and Sid Lee. And they are respectful, if slightly dismissive, of the local competition—but only because Garrett says they are “internally focused and worry about our own game”. 

In the past, however, it has had to worry about the game of its fellow Clemenger cohort, .99, which began life as a small retail department inside Colenso and eventually moved out of home in 2003. There have been some fairly well-documented tensions in the past. But Garrett and Worthington say the agencies are now well and truly forging separate paths. 

“When you’ve got two agencies that have a lot of love but are also ambitious, the shared clients are a bit difficult,” says Garrett. “We don’t tend to share clients anymore [although Colenso still does some brand work for Foodstuffs]. It’s not a dictate from on high but we’re not going to compete … We don’t need each other to win big clients anymore. And I don’t think the relationship has ever been better.” 

While they admit Colenso and .99 both have different skillsets, they are increasingly intersecting, with .99 dabbling in brand work and Colenso setting up a fast turnaround service in 2011. But as Garrett says, summing up what he feels is one of Colenso’s major strengths: “I don’t think there are territories anymore. You have good and bad. And good agencies do more good work for the client needs. If you have to be in more areas doing more work across more touchpoints, then you do it. You diversify.”  

• This article originally appeared in the May/June edition of NZ Marketing.