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Agencies go global to keep up with client expansion

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As U.S. marketers seek to expand into international markets, b-to-b agencies are pursuing different models of globalization, from mergers and acquisitions to joining independent networks. Some of the biggest agency holding companies, such as Publicis Groupe, have been buying up digital agencies around the world in an effort to expand their global footprints. In the last three months, Paris-based Publicis acquired Stockholm-based mobile agency Monterosa and Mumbai-based digital agency Convonix; and it merged its Boston-based Digitas digital agency with Amsterdam-based LBi to form DigitasLBi. “This gives us more nimbleness, speed and flexibility; we have more people in markets where our clients want to be,” said Dennis Reilly, senior VP-global practice lead at Digitas North America, referring to the DigitasLBi merger, as well as Digitas' access to other Publicis agencies around the world. “In pitches about global capabilities, it is not good enough to say, "Oh, yeah, we can be there.' We are there now. We have someone we can call and they will be there tomorrow.” For example, Digitas New York recently collaborated with Dentsu Razorfish Tokyo, a sibling Publicis agency, on a campaign for client Panasonic. The work involved a redesigned website and mobile experience to give the Panasonic site a consistent look and feel. Meanwhile, independent b-to-b agencies are merging with global partners to broaden their international reach. In March, New York-based Stein+Partners Brand Activation merged with London-based IAS b2b Marketing to form SteinIAS. “For our current client list—ADP [Automatic Data Processing], CBOE [Chicago Board Options Exchange], etc.—there is some requirement for global marketing,” said Tom Stein, president of SteinIAS Americas, New York. “When we look across our client base, if we're not global in a meaningful way, we leave a huge opportunity on the table in terms of clients we want to serve.” Through the merger, SteinIAS now has offices in New York, London, Paris, Shanghai and Manchester, England. SteinIAS is also a member of the Business Branding Network (BBN), an alliance of 16 independent b-to-b agencies in 27 locations around the world. “BBN offers a lot of value; it's an important vehicle that makes sense,” Stein said. “We can leverage BBN and BBN can leverage us to provide more reach and global presence.” Smaller b-to-b agencies say joining an international network gives them global reach that might otherwise be difficult on their own. Nelson Schmidt, Milwaukee, has been a member of Magnet (Marketing and Advertising Global Network) since 1978. Magnet is a network of 45 independent agencies (b-to-b and b-to-c), operating in 17 regions around the world. “Truly, the reason we're able to expand globally is that we're able to serve clients globally from our locations in Milwaukee and Madison, [Wis.],” said Dan Nelson Jr., president-CEO of Nelson Schmidt, who is serving a two-year term as president of Magnet. “From our clients' point of view, they are telling us that the ability to be on-demand at any time in any geography is very desirable to them, compared to the logistics and bureaucracy of working with an agency [holding-company] network. We can align the agencies to dovetail with a particular client's geographic or market-based needs.” For client Alliance Laundry Systems, a commercial laundry system provider based in Ripon, Wis., Nelson Schmidt is in the process of rolling out a campaign in every major region of the world as Alliance seeks to expand its global presence. Last month, Nelson Schmidt held a meeting in Brazil with Alliance and TotalTargets, Sao Paulo, also a member of Magnet, which will serve as the lead agency in Latin America for the Alliance campaign. “We selected TotalTargets for Latin America because that is where Alliance has a pretty strong footprint, and TotalTargets can tap into other [Magnet] agency partners,” Nelson said. The Magnet agencies have a revenue-sharing model. With the Alliance campaign, Nelson Schmidt will receive a share of the revenue paid to TotalTargets for the campaign. “The real financial aspect of this is, without having that formal relationship with our partners, Nelson Schmidt wouldn't be able to capture that additional revenue,” Nelson said. He added that the agency network provides essential connections. “It's having the ability to know the right people in the right market,” he said. “If I get stuck, I know I'm just a phone call away.”
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