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

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

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