SAATCHI BOLSTERS ITS PRESENCE IN LATIN AMERICA

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Saatchi & Saatchi Advertising Worldwide picked an unusual way to strengthen its Latin American operations.

Angel Collado-Schwarz, chairman-ceo of the newly formed NAZCA S&S, last week emphasized the network will be the first "created, controlled and operated by Latin American professionals."

And in fact, Saatchi & Saatchi Co. will hold just 20% of NAZCA S&S. A Saatchi executive, as yet unnamed but most likely a holding company executive, will havea seat on the network board.

Mr. Collado-Schwarz, a 20-year Saatchi veteran who was most recently chairman of the agency's Latin American region, will own 30%, with the remainder shared by individual investors, agency executives and employees.

The network includes 18 agencies in as many countries, with $315 million in annual billings. Until now, Saatchi has operated an affiliation of shops that paid a fee for using the name.

The arrangement will give Saatchi a greater presence without increased investment, said Ed Wax, chairman-ceo of Saatchi & Saatchi Advertising Worldwide, New York.

"I can't go to the holding company and say I want you to buy 100% interest in agencies in Latin America," he said. "This gives us more control than we've got."

Executives at other major agencies, however, said Saatchi's lack of control in NAZCA S&S gives the agency a weak Latin American link at best.

"Ownership is a fundamental concept because it gives the client the reassurance of an agency that doesn't have two masters to serve and can therefore serve the client best," said Marcio Moreira, McCann-Erickson Worldwide vice chairman and worldwide chief creative officer. "It gives the sense that you're in control of your destiny and can maintain your strategies."

Majority ownership in far-flung international offices is a concept championed by McCann, Young & Rubicam and Ogilvy & Mather Worldwide.

Other agencies, including BBDO Worldwide, have controlling shares of many of their international agencies but allow local management to retain equity as a business incentive.

Saatchi's 20% stake in NAZCA S&S comes not from cash but the transfer of Badillo/Saatchi & Saatchi Advertising, a successful agency in San Juan, Puerto Rico, that will serve as network headquarters.

The network's New York office will be overseen by Joe Ferraioli, who has joined as vice chairman-director of mergers and acquisitions from his post as chief counsel for Europe and Latin America at Y&R.

"It's clear we need Latin America in order to grow," Mr. Wax said. "This gives us more control than we've got. Currently, we have a band of associate agencies. We may have a degree of equity in them, but if we do, it's minor."

Jerry Roberts, network development manager at BBDO, said the move looks more like Saatchi is retreating from the area rather than committing to it.

"They're bailing out of Latin America so [the network] is a way of keeping a presence without having to fulfill the tough parts of commitment-buying, exposure and management," he said.

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