Octagon duels IMG for pole position

A year after global consolidation, Octagon is giving sports sponsorship king Mark ‘the Shark’ McCormack some serious competition.

It was billed as one of the greatest sporting contests of all time, in which British challenger and advertising legend Frank Lowe would slug it out with US giant Mark McCormack for the right to be crowned sports marketing champion of the world.

Few believed he could do it, but it seems that at last we have a true champion and “Mark the Shark”, the man who invented the business, is on the canvas.

It has been nearly a year since Lowe’s company shed its disparate brands, such as API and Advantage, and was rebranded Octagon Worldwide and most observers believe Lowe’s mettle – combined with Interpublic’s cheque book – has enabled the company to overpower McCormack’s IMG.

However, Alasdair Ritchie, global president of Octagon Marketing, stresses: “That’s a comparison we use less and less. Our businesses only cross over in a couple of areas – IMG was founded on athlete representation and that is its stronghold. Our strength is in consultancy and event management.”

The London-based company now has offices in 20 countries, employs nearly 1,200 people and in three years has boosted revenue by over 500 per cent, with billings of more than $1bn (£666,000).

Former Football Association commercial director Phil Carling is the latest recruit. He has been appointed vice-president of Octagon Worldwide to oversee its football interests (MW last week).

These include German Bundesliga club Eintracht Frankfurt and US side DC United. It is also understood to be helping officials in Korean capital Seoul to set up the city’s first domestic football club.

Ritchie says: “A company of our size needs to be in football – it’s the world’s biggest sport.”

Interpublic’s buying clout has certainly helped. On a global scale, Octagon has made acquisitions in South-East Asia, South America, Australia, New Zealand and Benelux to name but a few.

The European operation has been the most visible from the UK, especially the motor-sports division. It has paid £120m for Brands Hatch, which gives it the right to stage the British Grand Prix from 2002, and is also launching a car version of the Super Bikes series.

But it cannot be accused of simply throwing money at everything. Last year, Octagon pulled out of a joint bid with rival ISL Worldwide for the global relaunch of the ATP men’s tennis championships, when the price went above $1bn (£666m).

At the time, an Octagon spokesman said: “Such guarantees represent too high a risk and would be unlikely to show, in our opinion, a reasonable return on investment.”

It could be argued that the decision has been vindicated, with industry insiders claiming ISL could lose between $30m (£20m) and $50m (£33m) in the first year of the tournament.

Octagon has also stepped up its consultancy business and is handling some major brands, including highly acclaimed work for Guinness at the Rugby World Cup and Lloyds TSB’s sponsorship of the Six Nations competition.

Some of its most high profile work has been at this year’s Euro 2000 football championships, where it represented no less than six sponsors – Sony PlayStation, Sportal, Hyundai, MasterCard, Pringles – a Procter & Gamble brand – and Cereal Partners Worldwide.

But, as one director of a rival sports marketing agency cautions, there are inherent dangers in representing so many clients at a single event.

He says: “Even an organisation the size of Octagon can’t possibly give all six equal billing. How do you make sure everyone gets the most out of the event, and how do you explain it when, inevitably, one client realises another has had a better response?”

Ritchie counters: “I can understand that assumption, but these clients all had different objectives. Hyundai used Euro 2000 to drive dealer traffic, P&G used it for a distribution push and so on.”

Rivals also claim the company’s strategy of buying rights and handling clients could jeopardise its reputation for understanding consumers by providing “a truly marketing-led approach to the business of sport”.

One sponsorship agency director says: “It is difficult to be a rights holder and a sponsorship agency – you are either one or the other. Octagon has made a huge investment in motor sports, for instance, so it has to get its money back from somewhere.

“It could be tempted to sell a motor sport sponsorship package to an existing client – even if it doesn’t fit its target market.”

Ritchie adds: “We would never shoehorn clients into an event simply because we owned it. What would be the point? We would soon be found out.”

These concerns could, of course, easily be dismissed as sour grapes. Companies the size of Octagon invariably stamp on a few feet and there have been some senior departures, including Brands Hatch chief executive Nicola Foulston, ex-Millennium Dome commercial director Kevin Johnson, and US president Harlan Stone.

Yet others have joined, including joint global managing director Tim Moufarrige from IMG, Tom Bury from Ogilvy & Mather and last week Carling.

Ritchie says: “We have always been completely upfront with our clients, we believe we give them the best advice available. This is a very competitive market – there are plenty of agencies trawling for more business.”

And he should know, he used to work in one of the most cut-throat businesses in the world – advertising.

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