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.
