U.K.'s Creston Thrives by Backing Shops, Not Smothering Them

Holding Company Bills Itself as Alternative to WPP and Omnicom, Eyes U.S. Expansion This Year

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When Don Elgie, Creston's chief executive, buys a company, the acquired company knows it's not joining Omnicom Group or WPP Group.
Creston's chief executive, Don Elgie, sees the U.S. as a 'phenomenally important' market.
Creston's chief executive, Don Elgie, sees the U.S. as a 'phenomenally important' market.

"We want to be seen as the alternative to the large trade groups by clients, by staff who are fed up with the suffocating culture in large holding companies and investors," Mr. Elgie said.

Last week he hired Steve Blamer, the former CEO of Foote Cone & Belding, as the U.S. CEO in charge of getting the U.K.-based marketing-services company into the U.S. this year.

Crossing shores
Given its size, the U.S. is "phenomenally important," Mr. Elgie said. And Western Europe and Singapore will follow soon. "We want to repeat our U.K. success in six or seven markets."

Mr. Elgie has spent more than 30 years in marketing services. He sold his first agency, Grandfield Rork Collins Group, to Saatchi & Saatchi in the mid-1980s and headed Saatchi's European operations during his earn-out period. Then he launched Elgie Stewart Smith, sold to his partners, and started a marketing-strategy consultancy.

He founded Creston in 2001 as an alternative to big groups such as WPP and Omnicom, and focused on a mix of marketing services rather than traditional advertising. He leaves media buying to others. And unlike MDC, which buys large minority stakes in agencies such as Crispin Porter & Bogusky, he acquires 100%.

"We have a light touch," Mr. Elgie said. "We buy well-run companies and don't interfere; if we bought the right companies, why the hell should we? Our energy goes into generating the right solutions for our clients. Profit flows from that."

Just big enough
Nick Ward, media analyst at U.K. stockbroker Panmure Gordon, said: "The whole area of smaller marketing-services companies that are not dependent on above-the-line advertising and media buying will do well. Creston is an attractive business at an opportune moment. It's large enough and has just enough critical mass to be appealing."

Creston buys companies through cash-and-stock deals and does not offer earn-outs. "We call it buying in, not selling out," Mr. Elgie said. "The greater proportion of the deal is in cash, but we believe that pure-cash deals encourage silo thinking with no loyalty." Some 43% of Creston staffers are shareholders.

Mark Lund, CEO of London ad agency Delaney Lund Knox Warren, whose clients include Campbell Soup, General Motors Corp., Sony, Pfizer and eBay, sold to Creston in March 2005. "It allowed us to take money off the table but to carry on doing what we enjoy and what we've proved we could do."

Bankrolling Creston
Creston's deals are funded by bank loans or fundraising share deals. "We have had three fundraisings [in six years]," Mr. Elgie said. "They are always oversubscribed."

Delaney Lund's two years within Creston have been the agency's best, with billings growth of 50% to 60%. "Creston is comparatively new, so we are a big enough part of it to help influence what it is doing," Mr. Lund said.

The big holding-company groups compete these days with private-equity investors to buy digital businesses, which younger Creston has been able to build in from the beginning. Delaney Lund, for instance, has a thriving digital unit that has been growing at 100% a year since it was set up in 2001.

Mr. Elgie is happy with the balance of the 14 Creston-owned businesses -- in direct marketing, research, health-care advertising and Delaney Lund. "It is very much as I pictured it," he said. "There are no legacy issues, no overdependence on conventional advertising. Around 21% of our profit comes from conventional advertising."
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