Will Maurice and Charles lose the golden goose?

The £60m British Airways account is the backbone of M&C Saatchi. After 23 years it is being put out to tender. The brothers are in for a bumpy ride, writes Alex Benady
Click to follow
The Independent Online

The truth is, however, that the brothers' greatest asset over the past 23 years has almost certainly been their tenure of the British Airways advertising account. It has been the engine of growth for not one but two advertising empires and a major contributor to their £127m fortune.

Now the Saatchi brothers are facing the prospect of losing the jewel in their crown following last week's news that BA was putting its £60m worldwide advertising business up for tender. BA says the move is merely sensible corporate housekeeping and does not indicate any dissatisfaction with M&C Saatchi.

"We have a policy that requires us to review all our contracts from time to time. We've had a long and successful relationship with M&C Saatchi and this is no reflection on M&C Saatchi's performance," said a BA spokesperson. "We are in the process of introducing new products and we want to make sure we have the right agency and the right brief in place when we launch next year."

A former M&C staffer says the relationship with BA has been tense lately. BA took the highly unusual move of editing its most recent commercial itself. But M&C Saatchi says it has every intention of hanging on to the business. "We obviously respect BA's decision and look forward to participating in the review in order to continue our successful partnership," said M&C Saatchi chief executive Tim Duffy.

Whatever happens, the outcome is unlikely to be positive for the brothers, say some in the industry. The mere news of the BA review wiped five per cent off M&C Saatchi's share value.

A key factor behind the review is the arrival at BA from Aer Lingus earlier this year of a new chief executive, Willie Walsh. He instigated the review as part of a drive to cut costs.

"It has put them [the Saatchis] in a no-win situation," said one senior industry figure. "If they lose the account it will obviously be a blow to their business. If they win, it is possible that they will have to reduce their fees by as much as £1m a year just to keep it."

Advertising is a notoriously volatile industry. They say that even the strongest agencies are never more than a couple of phone calls away from bankruptcy. While there is no suggestion that BA is M&C's "first phone call", BA amounts to six per cent of worldwide revenues, which last year totalled £62.2m. Losing the account would make a nasty, albeit far from terminal, dent in their income.

These days Charles and Maurice each hold about seven per cent of the company shares. Charles seems to have effectively given up advertising - he hasn't been seen in the agency for over a year. But Maurice still finds time, despite his duties as Conservative party deputy chairman, to visit the vast office he shares with his partners on the agency's seventh floor almost every day. To lose the BA account would be a slap in the face for him in particular, and would represent a real setback for his plans to grow M&C Saatchi into a global advertising network able to compete with his former company.

This is just one reason why the review is likely to become adland's most fiercely contested and controversial pitch of the year. Almost every major agency fancies its chances with what is still regarded as the most prestigious account in British advertising.

"It's the last genuinely world-beating British brand," said Grant Duncan, chief executive of French-owned advertising giant Publicis. "It's a blue-chip account with a fantastic legacy of absolutely majestic epic advertising. Any agency worth its salt is going to want it."

Another agency head joked last week, "Martin Sorrell is probably getting his pilot's uniform tailored as we speak," a reference to the chief of advertising group WPP's penchant for getting involved in agency pitches, even to the extent of dressing up for dramatic effect.

J Walter Thompson, one of his advertising networks, is known to have been stalking the BA business for at least 15 years.

BA says it plans to compile a long-list of 10 prospective agencies and then shortlist three or four to pitch alongside M&C Saatchi. The account may be highly prestigious, but the industry is more than a little wary. First, the sheer expense of pitching these days is staggering. Senior advertising figures say the total cost to the industry could reach £1m. "Those in the final round could easily spend £200,000 each on research, executive time and creative development," said one senior industry figure.

But adland has not forgotten or forgiven the bad smell that surrounded the last BA advertising pitch 10 years ago. Then BA chief executive Bob Ayling was within a whisker of appointing another agency, BBH - best known for its Levi's and Audi work - to the account. But at the last moment he was overruled by BA chairman Colin Marshall, who insisted the business go to the new Saatchi agency.

It has left the industry fearful that this pitch might be another formality with the outcome already decided. BA denies this, although the bookies currently have M&C Saatchi odds-on favourites to retain the account.

There is a real question, however, over the ability of the BA to act as a creative showcase in the way it used to. In the 1980s it helped propel the brothers Saatchi & Saatchi to global domination. They coined the slogan "The world's favourite airline" and followed it up with a string of high-profile brand-building commercials that are still remembered to this day. A film showing the island of Manhattan taking off is now regarded as an advertising classic. Another ad showing hundreds of people forming a face on a desert island is almost as well recalled.

As their fame testifies, the brothers are masters of spin and the art of persuading clients to give them their business. In truth, their creative reputation throughout the 1980s was built by assiduously talking up a handful of great ads; the reality was that the bulk of their output consisted of rather average campaigns for soap powders.

It was a similar story when they set up M&C Saatchi in the mid-1990s. British Airways followed them and became their founding client and the good work kept on flowing. In particular there was one commercial featuring the American writer P J O'Rourke discussing the nature of Britishness.

Their ability to win new business, often through a chairman-to-chairman intervention by Maurice, was unrivalled. Their growth has been explosive. But it hasn't been quite matched by the quality of their output. Some former M&C employees complain of a culture of "client appeasement" reducing the quality of their creative oeuvre.

The combination of 9/11, Sars and the rise of the low-cost airlines has changed the airline industry fundamentally. Whereas BA was once about big brash ideas for a big brash business, now the emphasis is on cost and cost savings. It has become what the advertising world calls slightly contemptuously " a retail account" - dealing with price promotions and special offers.

Although M&C Saatchi's work recently won a major award for effectiveness, it has won few recently for creativity. That talent they seem to reserve nowadays for their new-found careers in art and politics respectively.


Not great timing

By one of those grim coincidences, the day of the London bombings coincided with the publication of a thriller in which London suffers a terrorist attack. An embarrassed Chatto & Windus felt obliged to issue a statement in which it said that Incendiary, by Chris Cleave, "is a powerful and moving indictment of political violence and all acts of terrorism. In the light of the terrible events of 7 July we reiterate the novel's condemnation of terrorism and acts of violence and express our sympathy for all the victims of these attacks." A spokesman said the situation had been "incredibly upsetting" for Cleave. It remains to be seen what the timing does for sales.

George can't win

Meanwhile, the Daily Mail excelled itself in the aftermath of the bombing. It was happy to carry a piece by Andrew Alexander in which he said that "now we see some of the consequences of our decision to let ourselves be hauled along in the wake of the Americans..." It was also happy to carry a piece by Max Hastings in which he said that "the price of being America's foremost ally ... was always likely to be paid in London, in innocent blood". But when George Galloway, the new Respect MP for Bethnal Green and Bow, stood up in the Commons and said that "tragically Londoners have have now paid the price" for ignoring warnings that the attacks on Afghanistan and Iraq "would increase the threat of terrorist attack in Britain", the Mail reported the speech under the headline "The twisted logic of Galloway".

Headline acts

What's with this new trend of rock bands taking the inspiration for their names from the world of newspapers? The latest issue of Time Out carries an ad for a band called the Editors, and another for a band called the Features. A band called Cut Copy receives a rave review.

We look forward to the debut single from Overmatter and perhaps even a signature album from The Nibs.

You Doughty rat

With Who's the Daddy?, a play about the lively sex lives of Spectator staff, opening in London this week, news that "love rats" may not be the only rodents infesting the magazine's Doughty Street offices. A Rentokil box has been spotted in the gents' loos, a mere cream bun's throw from the office of editor Boris Johnson.

Messy Moscow

With the exception of reporters from the News of the World - always the most tidily dressed - we hacks tend to favour the casual look. But if recent events in Moscow are anything to go by, perhaps we should look out. Local politicians in the Russian capital are so fed up with being interviewed by scruffy journalists that security guards at the town hall will now turn away journalists with open shirts, as well as those with patched jeans, string vests, tight shorts or flip-flops. TV crews are the worst offenders, apparently.