Breaking up is hard to do

With the expected departure of Siegel & Gale from Saatchi & Saatchi, Clare Dowdy asks what went wrong and looks at the relationship between design and ad groups.

It wasn’t known as the happiest of marriages, and many in the design industry are not surprised to hear that Siegel & Gale is now believed to be pulling out of advertising network Saatchi & Saatchi.

A happy relationship between ad group and identity consultancy – judging by Omnicom and Interbrand, WPP and Enterprise IG, Interpublic and Diefenbach Elkins – should be one of mutually beneficial cross-referrals.

“Omnicom has been an incredible influence on our business,” from resources, networking and regional scope, says Interbrand chief executive officer Charles Brymer. He masterminded the sale of Interbrand to Omnicom in 1993. “I haven’t regretted it for a moment,” he adds.

However, this component seems to have been lacking of late in the S&G-Saatchi arrangement. Projects such as Schweppes and BP may have come through its parent, but by 1989 “the skids were on for cross-referrals”, says Simon Jones, who left his position as managing director of S&G London that year.

Alan Siegel sold to Saatchis in 1985 and since then the question of a buyout has risen a number of times, most notably during Saatchis’ financial troubles of the late-Eighties and early-Nineties.

While Jones was managing director in London, there was a move to go independent, with backers ready. It was scuppered.

“It doesn’t entirely surprise me that living with an ad group has been a bit difficult,” says Enterprise IG chairman Terry Tyrrell, hinting that the relationship between any design group and its advertising partner has to be worked at.

Any buyout at this stage is likely to cost S&G and its backers between 18m and 24m – based on a total group fee-income of nearly 21m. This would mean that Alan Siegel, in his 60th year, may be expected to spend several more years with the consultancy.

S&G’s rivals have mixed views as to whether an independent company would be more or less of a threat. While Brymer and Tyrrell don’t expect any new status to make any difference, Wolff Olins managing director Charles Wright expects it to make them “a more vigorous competitor, because it will breathe new life into them”.

The New York headquarters is well-placed in the buoyant US market, reflected in its fee-income of more than 18m last year. The London outfit, not nearly such a force, saw a string of managing directors come through, from Simon Jones who went on to the then Newell and Sorrell, to the incumbent Peter Gilson. The London office is now looking to grow its interactive offer, following the example of New York. However, if recent fall-out in this sector is anything to go by, the multimedia business is one to be approached with caution.

Its network of worldwide alliances “don’t stand up to much scrutiny”, and are better described as loose associations, says one observer. One question for a standalone S&G will be whether to consolidate its business or to push its international credentials. Diefenbach Elkins, Interbrand and Enterprise IG are all expanding – one of the obvious benefits of a cash-rich parent.

So where does this leave Saatchis? While several of its competitors are busy building up their identity capability, Saatchis has been honing businesses to concentrate on its core offer of advertising.

Its rivals are taking the view that a pure media agency “is not where they want to be in the future”, says Tyrrell. “There would seem to be a hole without it [a strategic identity business],” says Interbrand’s Brymer.

If Saatchis shares this view,it has the choice of replacing S&G or growing its own offer. Sister design consultancy Saatchi & Saatchi Design in London handles corporate identity, but not on the level of S&G. One option might be to boost this capability, though only as a long-term strategy.

In the meantime, a departure by a disaffected S&G might be something of a relief to Saatchis. After 14 years of ups and downs, says Wright at Wolff Olins, it’s “like a sullen teenager leaving home”.

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