WCRS must have been planning a pretty significant bash for its staff Christmas party even before the agency scooped the £75m BSkyB account last week (MW last week). It had already won eight of its last ten pitches, including Churchill, Weetabix, Transport for London and Littlewoods, adding £60m in billings this year.
The agency’s fortunes appear to have been rejuvenated by its management buyout last year from French holding company Havas and the appointment of a new management team led by chief executive Debbie Klein.
It was dying as part of Havas but it is now growing by 30% a year as part of Engine Group. Set up by WCRS owners Peter Scott and Robin Wight and other managers after the Havas buyout, Engine comprises 11 marketing services companies with standalone brands. They offer integrated solutions as part of Engine and standalone solutions under their own brands. Engine offers everything from direct marketing to brand consultancy, sports sponsorship to advertising.
While industry observers believe that the principles of the group are sound and the early signs are good, there are still questions about how effective the Engine model of integration will be until the rest of the group agencies have developed to the size of WCRS. As an ad industry source points out: “The easy part is setting it up, the tough part is making it work.”
Scott and Wight insist they have created the model for integration that is right for a 21st century communications group. Scott explains: “We had bought WCRS back and fixed the immediate things that needed fixing, but we realised that the model of a standalone creative agency was not going to be relevant in the 21st century.”
One year on, Engine has just won its first piece of group business, the global Nokia Siemens account, fighting off competition from global networks WPP-owned JWT and Publicis. It has also been forced to restructure its management following the departure of chief executive Stephen Woodford, a long-term WCRS executive who has left to join DDB London. Scott has taken Woodford’s place at the helm of Engine prompting speculation that Scott, an original founder of WCRS who returned to advertising after more than 20 years out of the industry to join the buyout team, had forced him out. Engine declines to comment, citing ongoing negotiations over Woodford’s contract.
Suki Thompson, managing director of Haystack Group, which helps brands find the most appropriate agency, wonders whether WCRS overshadows the other Engine agencies: “They are good quality agencies in their own right but Engine has to wait for the rest of the agencies to catch-up with WCRS.”
What’s in a name?
For this reason, industry sources question the need for developing the Engine brand rather than retaining WCRS as the group name. Scott, who is seen as the group’s business brain, says it adopted the Engine name because of its “desire to be seen as solution-neutral rather than as an ad-centric model”. He adds that Engine is about bringing together agencies that are “best in class” in their sectors but under one roof. He says: “[Branding consulting agency] Dave is Dave and it’s not Engine Brand Consulting because that would simply make us institutional, like a mini-holding company, and we don’t want that.”
Instead, according to Wight, Engine is the “first integrator”. He explains: “Engine integrates the companies to work together and the problem from a client’s point of view is that the other system of integration doesn’t have an integrator in its operational software to bring everybody together.”
Although Wight adds that this positioning is about a mindset as much as simply being under one roof. Klein agrees, and believes Engine has a cultural difference to other multi-disciplinary offers. She says: “The group will only work if people get on and are like-minded.”
But Scott, Wight and Klein are all keen to point out that the group companies are not forced to cross-sell. Scott says: “Cross-selling denotes that I am doing something that’s in my interest as a marketing services group rather than in your interests as a client. The whole relationship is based on mutual trust and respect; nobody will introduce a partner client because I say so or because Robin says so. It has to be client centric.”
The first year has been about “broadening relationships” with clients and Scott says that “about 24 or 27 clients” now work with more than one company. The strategy has resulted in about £3m to £3.5m being added to group billings so far and this is now spreading to new clients. Sky itself is expected to add at least £2.5m income a year.
Haystack’s Thompson agrees that it is growing but says there are “still relatively few” integrated pitches. She adds: “Clients still work in silos, so integration mostly works for existing clients rather than new business, but things are changing.”
Wight argues clients are changing but the communications industry is not. Indeed, he believes that the pace of change in media fragmentation and in the client world has been so great that it is a surprise that “no one has invented Engine before”. And Scott adds that WPP’s “star teams” that are created to pitch for business, such as for Sky and HSBC, is an attempt to replicate the Engine offer.
However, they do not believe that Engine “has cracked it” yet, and Scott gives the group’s progress “about five out of ten” so far and hopes this will rise to “a six or seven” in another year. But modest as that sounds, Scott adds that it wants to be “a very substantial business in the UK” in three years and will also become one of the top three standalone groups over that period.
Revenue for Engine over the year to December will be around £30m, it is forecast that this will rise to £35m next year and the group aims to more than double that by 2009. This will be helped by further acquisitions which will be across a number of disciplines but media, research and stakeholder communications are areas of particular interest.
Float far away
This significant growth, however, will not “necessarily lead to a flotation” or a sale of the business and, at present, neither Wight nor Scott appear to have an appetite for international expansion. However, one senior ad industry figure says that for Engine, a flotation would be “more about PR”. He explains: “Becoming a public company gets you more of the spotlight so I could see a flotation somewhere down the line”.
An ad industry source also points out that Klein “knows when to use Robin’s talents and when it is not appropriate” and she has done this to particular effect this year.
Some critics suggest that Engine is just about “charming oddball” Wight and “smooth as ever” Scott and that their departure would lead to a terminal decline of the group. But the success of WCRS under Klein, executive creative director Leon Jaume and managing director Will Orr, means that when, or if, Scott and Wight can ever tear themselves away from the ad industry, their agency and their legend may live on.
• Engine Group
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