ANALYSIS: Direct - Singapore agencies rush to build up CRM skills base. Singapore agencies hone their CRM skills as budgets grow

<p>As the latest - and the most publicised - in a series of agency </p><p>build-ups by far, Ogilvy & Mather's decision to merge a loyalty </p><p>marketing company and a call centre business into its direct agency says </p><p>plenty about the direction ad agencies in Singapore are headed. </p><p><BR><BR> </p><p>Ostensibly to drive economies of scale at its customer relationship </p><p>management (CRM) company, O&M merged the Singapore offices of loyalty </p><p>company, The Lacek Group, and call-centre business, Tele-Direct, into </p><p>OgilvyOne. </p><p><BR><BR> </p><p>The merger came just weeks after Grey Worldwide launched Grey </p><p>Relationship Management, which incorporates Grey Direct, Grey </p><p>Interactive, Beyond Interactive and Web Insight. Other networks have </p><p>been just as rapidly strengthening their CRM muscle. </p><p><BR><BR> </p><p>J. Walter Thompson has established JWT Ventures, a pan-Asian diversified </p><p>marketing group. </p><p><BR><BR> </p><p>DNC Advertising Singapore has established DNC Group, a diversified </p><p>marketing business, which has just acquired a large stake in Basskaran & </p><p>Partners International (BPI), a new PR firm. The spate of mergers and </p><p>launches to build up CRM skills is largely client-driven. For OgilvyOne, </p><p>regional growth has been nothing short of explosive. Its Asia-Pacific </p><p>president, John Goodman, said its CRM business grew 400 per cent in the </p><p>last four years. </p><p><BR><BR> </p><p>In Singapore, OgilvyOne's revenue is forecast to reach over Sdollars 18 </p><p>million (USdollars 10 million) in the 2001 calendar year. Goodman </p><p>insists that the regional growth has not come at the expense of the ad </p><p>agency. That may be the case for O&M, but shrinking budgets for </p><p>television have increasingly become a fact of agency life. And to stay </p><p>relevant to their clients, agencies are now prodded to offer a wider </p><p>range of services, once derided as below-the-line. </p><p><BR><BR> </p><p>Bernard Chan, chairman of DNC Group, says there has been a shift in </p><p>funds away from mainstream advertising into these specialist marketing </p><p>areas. </p><p><BR><BR> </p><p>It's a shift of some permanence, he adds. </p><p><BR><BR> </p><p>The issue is highly pertinent in Singapore. In recent years, the bulk </p><p>advertising has been more tactical and price-driven. Branding campaigns </p><p>are few and far between in a city where it's reckoned that four or so </p><p>agencies out of more than 60 are profitable in any given year. </p><p><BR><BR> </p><p>The situation is not unique to Singapore. Last year's annual results for </p><p>WPP, owner of J Walter Thompson, Young & Rubicam and Ogilvy & Mather, </p><p>and Omnicom, which counts DDB, TBWA and BBDO in its stable, made </p><p>interesting reading. For the first time ever, they derived more profits </p><p>from their diversified marketing businesses than their ad agencies. </p><p><BR><BR> </p><p>So the business is there for the taking. But few agencies in the region </p><p>can yet boast the breadth and depth of skills or resources to deliver </p><p>the holistic approach clients demand, as CRM encompasses an array of </p><p>marketing disciplines - direct marketing, interactive marketing, public </p><p>relations, database management, loyalty marketing and so on. </p><p><BR><BR> </p><p>Paul Gotham, managing director of integrated relationship marketing firm </p><p>Rapp Collins Singa- pore is confident that future profits for agencies </p><p>will come from providing skills in building and nurturing customer </p><p>relationships. </p><p><BR><BR> </p><p>"There's a finite number of major clients but there is huge growth to be </p><p>had from specialist marketing services," he says. The company has grown </p><p>dramatically from three employees and zero billings in September 1999 to </p><p>20 employees and around Sdollars 10 million in billings today. Rapp </p><p>Collins Singapore is not the only success story on the island. </p><p><BR><BR> </p><p>FCB Singapore has nearly doubled in size in the last 12 months largely </p><p>due to growth in FCBi, the agency's direct marketing and interactive </p><p>arm. </p><p><BR><BR> </p><p>Another integrated relationship marketing agency, DraftWorldwide, owned </p><p>by Interpublic Group, (IPG) launched in July last year and now has 20 </p><p>employees. It expects to double its head count by Christmas. </p><p><BR><BR> </p><p>The race to acquire, merge and launch CRM services has also heated up as </p><p>agencies realise they need to plug the gap, if only to stop rivals from </p><p>developing a more solid relationship with their clients. </p><p><BR><BR> </p>

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