O&M to expand its operations in North Asia: Young

<p>Last year was one of impressive growth for Ogilvy & Mather </p><p>Asia-Pacific but regional chairman Miles Young isn't satisfied - not by </p><p>a long shot. </p><p><BR><BR> </p><p>The agency chalked up a revenue growth of some 30 per cent to an </p><p>estimated USdollars 1.9 billion, had a hand in winning the USdollars 400 </p><p>million global Motorola account which will almost ensure double digit </p><p>growth for it in the region in 2001, and aggressively expanded its </p><p>Internet advertising and marketing services. </p><p><BR><BR> </p><p>But instead of taking it easy for a bit, Mr Young has over the past few </p><p>months been huddled with his inner circle of senior executives pondering </p><p>over the next move. </p><p><BR><BR> </p><p>And for the next move, his gaze has fallen on Korea and Japan because </p><p>they are huge markets in their own right and because these countries are </p><p>now less inward-looking and xenophobic and more responsive to external </p><p>influence. </p><p><BR><BR> </p><p>Mr Young, therefore, believed that North Asia is where his agency would </p><p>likely see the biggest growth opportunities in the next five years. </p><p><BR><BR> </p><p>"In a portfolio as big as O&M's, there are huge issues to do with </p><p>relative strengths and weaknesses in different parts of the region. So </p><p>what we have to bear in mind is that while we have been strong in most </p><p>parts of Asia - Hong Kong, China and Southeast Asia in particular - we </p><p>have been relatively weak in North Asia, that is, Korea and Japan. </p><p><BR><BR> </p><p>"Looking ahead, my absolute priority is to increase our presence there </p><p>over the next few years," Mr Young told MEDIA. </p><p><BR><BR> </p><p>O&M has had independent offices in Japan for about five years and in </p><p>Korea less than two years, which isn't that long considering that some </p><p>multinational agencies have had a presence in those markets for </p><p>decades. </p><p><BR><BR> </p><p>Mr Young said that "you don't have to be a genius to figure out that </p><p>Korea and Japan" are the markets with the largest potential together </p><p>with mainland China. </p><p><BR><BR> </p><p>Because of the new focus on North Asia, Mr Young will spend more time in </p><p>Korea and Japan. And in order for him to do that Mr Tim Isaac was </p><p>recently promoted to regional vice-chairman with special responsibility </p><p>for Asean markets. </p><p><BR><BR> </p><p>One of Mr Young's biggest challenges will be to expand O&M's client base </p><p>to include more local companies. </p><p><BR><BR> </p><p>"This is the most intellectually and physically challenging task we </p><p>could set ourselves, but having said that I must say that we are </p><p>starting to build a local client base which is a positive </p><p>development. </p><p><BR><BR> </p><p>"In a normal situation, O&M would expect a 50:50 local to international </p><p>client base, but in Korea and Japan our mix is heavily skewed towards </p><p>multinationals." </p><p><BR><BR> </p><p>A major reason for the skew has been because the agency has decided to </p><p>go the independent route and not buy into local agencies. </p><p><BR><BR> </p><p>"I would rather have no local business at all than have a whole bunch of </p><p>management problems arising from a buyout which diverts us from properly </p><p>servicing our international clients. Simply slapping your brand name </p><p>onto a poor quality local agency is really not the answer," Mr Young </p><p>said. </p><p><BR><BR> </p><p>The slow, painful independent route appears to be the sensible course to </p><p>take, especially since there is now more interest in the Western style </p><p>of branding and brand building in Japan and Korea brought on in part by </p><p>economic slumps - long drawn out and chronic in the former and </p><p>short-term but dramatic and severe in the latter. </p><p><BR><BR> </p><p>Branding has also become more important because of the fragmentation of </p><p>media and because of an explosion of product and service choices. </p><p><BR><BR> </p><p>However, O&M will have to demonstrate the value of its various </p><p>communications disciplines because in Korea and Japan, agencies are paid </p><p>on a commission system, which results in them giving away services such </p><p>as interactive, PR and below-the-line as an added value. </p><p><BR><BR> </p><p>"It's not strange for them to operate in this manner. They regard many </p><p>of the communications disciplines as lost leaders because the way they </p><p>make money is through a commission system which is highly generous to </p><p>advertising agencies." </p><p><BR><BR> </p><p>Nevertheless, Mr Young stressed that changes are occurring "not a sea of </p><p>change, but changes nonetheless", which would allow an agency like O&M, </p><p>which is positioning itself as a provider of 360-degree solutions, to </p><p>carve out a substantial niche for itself in market such as Japan. </p><p><BR><BR> </p><p>"Going in as a traditional agency - earning from buying media - isn't </p><p>going to cut it. Our point of differentiation is the fact that we offer </p><p>360-degree advertising solutions. </p><p><BR><BR> </p><p>"That is our strategy and we strongly believe that it will be successful </p><p>because there is genuinely a passionate interest in a Western recipe of </p><p>branding and brand-building," he said. </p><p><BR><BR> </p>