Hakuhodo's Kyu Prowls the World for 'Maker' Agencies Heavy on 'Doers'

One Year In, Kyu Looks To Expand in Europe and Elsewhere with Sid Lee Acquisition

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Michael Birkin
Michael Birkin

This week the Kyu marketing-services unit of Hakuhodo in Japan acquired Montreal-based Sid Lee, an experiential agency.

It was just the latest move by the mini-network, which was set up in May 2014 after the acquisitions of branding shop Red Peak Group and consultancy SY and last month bought Digital Kitchen.

Kyu was formed to diversify Hakuhodo's portfolio beyond Japan as well as form what Michael Birkin, the former Omnicom vice chair and Red Peak founder who runs it, calls a "collective" of agencies representing the future of advertising.

Ad Age caught up with Mr. Birkin to talk about the new deals and his vision for Kyu. Our conversation has been condensed and lightly edited.

Advertising Age: What was the strategy for your latest acquisition, Sid Lee?

Mr. Birkin: We have to look at what Kyu is trying to do, which is to be a collective of core brands who represent the future of our industry and represent the best chance of providing the fullest service for brand-building for clients. I've admired Sid Lee for years, and when we got going with Kyu a year ago they were very high on the list. They were the poster child of an agency of the future -- strategically, creatively and managerially.

Ad Age: What is it about Sid Lee that has you seeing them as the agency of the future?

Mr. Birkin: They don't abide by rules. They've evolved through their own creativity and managerial excellence by developing a range of services. They moved into advertising but their heart was in experiential and events. But also the way they're looking at their architectural practice, where they have 40 people, rings true for the way I believe agencies need to think. The attractiveness is the fact that they have a very forward thinking mindset about what clients need, they go deep into what they need and they do excellent work.

Ad Age: Are you looking to grow Kyu beyond North America, which seems to have been where the majority of acquisitions so far have been?

Mr. Birkin: We are looking going to grow in Europe, that is for sure. We're thrilled that Sid Lee has offices in Amsterdam and Paris. But we are also looking to build Kyu out beyond Europe. We are going to build Sid Lee out in Europe and other regions, because the strategy of Kyu isn't to collect tens of agencies but to collect a few and build them more rapidly than they may be able to do on their own.

Ad Age: Kyu is just now over a year old. What's your overall vision for Kyu and what do you hope to accomplish this year?

Mr. Birkin: What we've accomplished in the first year is to set up the vision. I would say in terms of making the vision and creating our purpose, we've made all the progress. But we have a long way to go.

I'm not in a mad rush to go crazy and buy up the world. But it's an interesting time in our industry where there are remarkable businesses that are looking for a different approach of how they develop. Kyu is being set up as a collective, and Kyu itself will not just be a holding company but will have a point of view and will help facilitate growth. It's a type of consulting model.

We're in a very good place, we have an amazing backer in the case of Hakuhodo and it has a very powerful position in Asia, which is extremely important.

Ad Age: What kind of other acquisitions are you looking to do for Kyu?

Mr. Birkin: I'm very attracted to firms that have what have a maker mentality. I feel there's a shift in the attractiveness of service providers, away from advisors to doers. Now I think what's happening with millennial thinking is that it's the makers and doers that are the heros.

I don't want too take it too literally, but when I look at Sid Lee and Digital Kitchen, they make and do and don't just advise on things. I am looking for firms that have a strong perspective on product and not just on a piece of communication -- they have to have that anyway. Generations coming through aren't persuadable just on advertising, and we've got to go deeper than that. We want to get our hands dirty in terms of understanding products, and technology linked to product is where it's all going.

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