Saatchi & Saatchi Advertising

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Established by brothers Charles and Maurice Saatchi in London, when partnership of Charles Saatchi and Ross Cramer (CramerSaatchi) dissolved, 1970; name changed to Cordiant Communications to disassociate the agency from its founders after resignation of the Saatchis, who left to form their own agency, M&C Saatchi, 1995; Cordiant divided into two entities— Saatchi & Saatchi and Cordiant Communications Group, 1997; Saatchi & Saatchi purchased by Publicis Group, 2000.

Brothers Charles and Maurice Saatchi established Saatchi & Saatchi Advertising in London in 1970. That September, Tim Bell left London-based agency Geers Gross to serve as media director at Saatchi & Saatchi. In 1972, the Saatchi brothers also added Bill Muirhead, an experienced account executive whose resume included a stint at Ogilvy & Mather, recruiting him from Dorland Advertising.

That set the basic structure of the agency. Charles held sway in the creative department, while Maurice handled the client side. The brothers established a reputation for aggressive practices early on when they broke with standard agency practice to go after other agencies' clients directly.

In 1973, the agency set out on an aggressive series of acquisitions designed to build it to the No. 1 position in the world. Some purchases were successful; others were not. In the first category were E.G. Dawes, an agency in Manchester, followed by Belgium-based Public Synthese and France's Optadragon. But George G. Smith, a small London agency the brothers acquired, was found to be virtually bankrupt.

Saatchi & Saatchi continued to acquire companies at a rate that astonished executives at other agencies. At the same time, it made a name for itself based on creative output as well. Among early efforts that helped to establish Saatchi & Saatchi's creative reputation was an ad for the Health Education Council. "Pregnant Man," promoting the use of contraceptives, showed a picture of an apparently pregnant man while copy posed the question, "Would you be more careful if it was you that got pregnant?"

Martin Sorrell

In 1975, Maurice Saatchi decided to hire a business manager for the agency. He attempted to recruit Ron Rimmer, then manager-director of Garland-Compton, which handled advertising for Procter & Gamble Co. In the course of conversations, Maurice's pursuit of Mr. Rimmer led to a merger between Garland and Saatchi.

Instead of Mr. Rimmer, the brothers hired British businessman Martin Sorrell to manage the increasing number of mergers and acquisitions. At about the same time, the brothers expanded the scope of Saatchi's acquisitions, targeting research companies, management consulting firms and other marketing services-oriented companies in an attempt to build their shop into a full-service agency that made it unnecessary to go elsewhere for any type of service.

In 1978, Saatchi & Saatchi put together one of its most noted campaigns, an effort for the Conservative Party endorsing Margaret Thatcher for prime minister of the U.K. The ad displayed a seemingly endless line of unemployed workers; the copy read "Labour isn't working" (a reference to the U.K.'s Labour Party). With the help of that campaign, Ms. Thatcher became prime minister.

In March 1982, Saatchi & Saatchi purchased New York-based Compton Advertising, beginning a trans-Atlantic expansion. In June 1983, the brothers also bought McCaffrey & McCall and, in 1984, after buying Yankelovich, Skelly & White/Clancy Shulman, a market research company, they acquired the Hay Group, a management consultancy with offices throughout the world, followed in 1985 by the Rutland Co., a New York-based public relations firm.

By then, Saatchi & Saatchi was so big that the brothers decided to divide the company in two. Half was organized as the communications division, comprising advertising, sales promotion, corporate promotion marketing and public relations; the other half housed consulting services for management, research and recruitment.

The split forced the brothers, for the first time, to look beyond their tight circle of friends for someone to run the communications division. Anthony Simonds-Gooding, chief executive at Whitbread Brewery, was hired to head up that division.

In May 1986, Ted Bates Worldwide, the No. 3 U.S. agency at the time, was bought by the Saatchis. Bates owned Campbell-Mithun, Minneapolis, and William Esty Co., New York. That year, the agency also acquired New York-based Dancer-Fitzgerald-Sample and Backer & Spielvogel.

Financial problems

In 1987, for the 17th year in a row, Saatchi & Saatchi reported growth. On those results, the company set out to diversify with the purchase of Midland Bank. Saatchi & Saatchi bid $6.4 billion for the bank, but its bid was rejected by Midland's board. Before the Saatchis could respond, the stock market crashed on Oct. 19, 1987. Saatchi & Saatchi's stock value dropped by one-third in a single day.

David Newlands, who had succeeded Mr. Sorrell in 1986, began to warn the brothers that they were simply going to run out of money. Indiscriminate acquisitions over the years had left the company in a difficult position. Adding to this concern was a growing trend among marketers toward reduced ad spending during the tough times that followed the market crash. In 1991, overall spending by advertisers declined for only the second time in 50 years, and advertisers cut many agencies' commissions to 11%.

Charles Saatchi approached Mr. Sorrell, then the chief executive of WPP Group, in an attempt to merge WPP and Saatchi under the Saatchi & Saatchi name. Mr. Sorrell, however, refused the offer.

Focused on the goal of making Saatchi & Saatchi the world's leading advertising agency, Maurice began to consider selling off the consulting side of the business while maintaining a minority stake.

In need of help to guide them through financial peril, in October 1989, the brothers coaxed Robert Louis-Dreyfus, a scion of one of France's richest families, out of retirement to become chief executive of Saatchi & Saatchi Co. Mr. Louis-Dreyfus set out to transform the company, a move that saw some of the Saatchi brothers' closest friends lose their jobs. Mr. Louis-Dreyfus also focused his energies on the sale of the consulting unit.

In 1990, Saatchi & Saatchi caught the attention of American investor David Herro. Despite the company's poor financial condition, he attempted to turn it around. Chief on Mr. Herro's list of changes, however, was wresting control of the agency from Maurice, whose actions as chairman, Mr. Herro felt, had not been in the best interest of shareholders. Tension between the two grew.

In May 1990, Saatchi & Saatchi had a new board less sympathetic to the Saatchi brothers that also included Charlie Scott, Mr. Louis-Dreyfus' hand-picked ally. Together, Messrs. Louis-Dreyfus and Scott began the financial restructuring of Saatchi & Saatchi.

By 1991, Maurice and Charles had faded further into the background of their own company, control of which the board convinced them to give up for the well-being of the company. In 1992, Mr. Louis-Dreyfus retired from the company and Mr. Scott succeeded him.

Dissension and dissolution

At a meeting of the board in December 1993, Charles was voted off the board and given a new, albeit empty title of honorary VP. Both brothers were asked to leave the company's Berkeley Square offices. Charles resigned in 1994; Maurice followed him in January 1995.

After his resignation, Charles and three other former executives of Saatchi & Saatchi opened the New Saatchi Agency in a less pricey section of London as soon as legal matters could be straightened out. In May 1995, the new company won the British Airways account away from Saatchi & Saatchi. A mutiny began at Saatchi & Saatchi, and more and more of its employees left to join the new enterprise.

Saatchi & Saatchi launched a barrage of lawsuits against the new agency and many of its top employees and, partly to distance itself from its founders, changed its name to Cordiant in February 1995. In the acrimonious environment, several major clients dropped Cordiant.

The New Saatchi Agency also changed its name, becoming M&C Saatchi.

For a time, it seemed that the Saatchi brothers had gotten the better part of the deal, but in 1997 Cordiant announced it would "demerge," creating Cordiant Communications Group (with Bates Worldwide as its chief agency) and a new iteration of Saatchi & Saatchi. Each retained a 50% share of Zenith Media, the earlier shop's profitable media arm. New Zealand brewing executive Kevin Roberts was named CEO of Saatchi & Saatchi.

Two years later, Saatchi & Saatchi suffered another blow when its hot New York creative shop, Cliff Freeman & Partners, bought itself back from its parent. In 2000, the Paris-based Publicis Groupe acquired Saatchi & Saatchi for $2 billion, creating the world's No. 5 advertising company.

The agency suffered its ups and downs since its acquisition. In 2001, the shop closed its San Francisco office, a victim of the demise of the dot-coms. But in April 2002, P&G consolidated its worldwide Pampers disposable diapers account at Saatchi & Saatchi.

The agency gained a number of new clients, including General Mills, after parent Publicis merged with Bcom3 and closed its D’Arcy Masius Benton & Bowles in late 2002. However, Saatchi & Saatchi lost its prestigious Johnson & Johnson Tylenol business to rival Deutsch, an Interpublic Group of Cos. shop, at the end of 2003.

For 2003, the agency had U.S. revenue of $195.6 million, a 10.9% increase over 2002 figures, and worldwide revenue of $543.1 million, a 14% increase.

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