"The war is far from over," says Alison Fendley, author of Commercial Break, the Inside Story of Saatchi & Saatchi. "M&C Saatchi executives have made it clear they would return to battle come the new year." Ron Leagas, chairman of the advertising agency Leagas Shafron Davis and a former Saatchi employee, agrees: "The revenge motive is still prevalent." But, he adds: "It's not healthy for long-term business growth."
The war between Maurice Saatchi and Saatchi & Saatchi, the agency he and his brother, Charles, created, is the most public of battles. After Maurice's ousting by institutional investors in December 1994, a number of top Saatchi & Saatchi personnel defected, taking a number of lucrative clients - including Dixons, British Airways, Qantas, the tobacco company Gallaher and the Mirror Group - with them. All were eager to stick with Maurice.
The reasons vary. Friends - such as the bosses at Mars - did not like the way Maurice had been axed. Others were disillusioned with the old Saatchi & Saatchi. "M&C has the magic. Saatchi & Saatchi, without them, does not," says one. Neither Gallaher nor BA will comment on the split, but John Clare, Dixons group chief executive, says: "An advertising agency account is a people business, not a company business. We stuck with people we know."
After a legal wrangle over the use of the Saatchi name, Maurice and Charles named their new business M&C Saatchi; the old Saatchi & Saatchi Worldwide group became Cordiant (the London agency remains Saatchi & Saatchi Advertising). M&C has since won new business, including Sekonda, Head, Courage and Glaxo. By the end of 1995 the company was claiming billings worth pounds 300m and - the icing on the cake - the Tory party parted company with Saatchi & Saatchi after 16 years. Last week a new ad for the Conservatives was launched, created by M&C, and the agency's first BA work.
At Saatchi & Saatchi Advertising, the troops remain battered but unbowed. "Last year was not exactly a year of growth, but we gave a creditable performance," says the chair, Jennifer Laing. Despite losing pounds 90m to M&C, it made up the loss by the end of last year through increased work from existing clients - Coca-Cola, Schweppes Beverages and Norwich Union - and new business, including Comet and Playboy TV. Other clients - such as Gillette and Harvey's of Bristol - reviewed their needs and decided to stay.
"We remain the UK's largest advertising agency. Our bedrock will continue to grow," Laing says. Yet she is also aware that the agency's London business is under threat: "M&C will have a go. But there are 300 agencies competing for business - we're always a target." She believes the most vulnerable accounts have already gone: "M&C have probably got all their friends with them now ... It will be tougher for them going forward from here."
City sources agree. "While it would be wrong to say M&C pose no threat, it's easy to get the threat out of proportion," believes Katherine Pelly, media analyst at SBC Warburg. "The UK represents only 15 per cent of Cordiant's total business." Still, M&C will certainly be interested in blue-chip Saatchi & Saatchi clients like Camelot, and smaller pieces which are likely to grow, such as Two Way TV. Industry sources suggest M&C wants chunks of Two and Procter & Gamble in 1996. But neither of the two companies will comment.
The types of business M&C can take will be limited by the agency's size. "The advertising business today is about more than creativity," Pelly explains. Big is best: "Clients want agencies to help them spend more efficiently and effectively. You have to be a global network to provide the breadth that bigger clients demand."
However, some question Saatchi & Saatchi Advertising's readiness to deal with such an expert poacher. "It should be on a war footing - they seem complacent," says one rival agency executive.Reuse content