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

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

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