M of M and C

Wednesday 12 April 2000 00:00
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Lord Saatchi is pacing a large, open-plan office on the seventh floor of a building in central London. "I would never go back to being in an office on my own," he says. "If you'd asked me [10 years ago], would you like to work in an open-plan office I'd have said it was absolutely out of the question." Maurice Saatchi pauses and gestures at the rows of desks by the long, plate-glass windows. "This is much more alive. It's much more energetic." Each of the M&C Saatchi partners has a tidy white desk with a black leather chair, looking towards the Millennium Wheel. His desk is distinguished by a pile of hardback books. There is nobody else around.

He makes wry asides as he gives a quick tour of the top-floor room where he, his brother Charles and three other founding partners oversee the affairs of M&C Saatchi, the advertising agency they started in 1995 after the brothers made an ignominious departure from Saatchi & Saatchi.

Maurice Saatchi has a good reason to be jovial. Earlier this year, less than five years after the agency was founded, M&C Saatchi won the coveted Agency of the Year award from Campaign magazine. The agency has built up a client list including British Airways, the Dixons group, BT, Sainsbury's, the Mirror Group and Silk Cut. Its funky advertisements for companies such as Lastminute.com caught the eye of the award judges. Annual billings in 1999 were £240m, up 48 per cent on the previous year. M&C has become the sixth largest agency in the country (three places behind Saatchi & Saatchi in the rankings), with seven more offices worldwide, and staff of more than 250. Its recently launched "one-stop shop", eMC Saatchi, offers clients internet consultancy, design and advertising.

Yet those who have known Maurice Saatchi from before the split with Saatchi & Saatchi say he has changed, mellowed from the businessman whose famous dictum was, "It's not enough to succeed, others must fail", into someone more in tune with the gentler Zeitgeist of today.

"I never had a period of reflection," he says. "I did change but that hasn't come around through time sitting in a monastery thinking about things. It's just happened, which is probably the best way. There was never a moment when I can remember pacing around saying, 'Oh well, shall we do this, shall we not do this'. I don't know how to describe this without sounding too Zen about it but we [at M&C Saatchi] don't have those linear ambitions [that the old Saatchi & Saatchi had]. We don't want to be top of a league table or bigger than anyone else." It's a great contrast to the scenario five years ago when Maurice Saatchi was in the curious situation of being a newly appointed life peer who was also newly unemployed (the gong came from John Major, for his services in helping the Conservative Party get elected for four consecutive terms).

He and Charles had seen control of Saatchi & Saatchi wrested from them by an American investment fund that controlled the majority of shares. The brothers had overplayed their hands in an acquisition spree in the late Eighties, expanding into consultancy, PR and even plotting a takeover bid for Midland Bank, which came to nothing. "The Saatchi & Saatchi agency was the symbol of advertising-world wealth, decadence and excess," says one industry veteran. "Every account executive seemed to have a Porsche."

By the early Nineties, Saatchi & Saatchi was still the pre-eminent advertising agency, but management was increasingly seen as remote and eccentric, controlling dozens of acquired companies around the world. Few staff members of any of the companies ever saw Maurice and Charles. Then came their downfall. After a shareholder revolt in December 1994, Maurice resigned after being stripped of his executive roles. Charles soon followed. "It had been quite miserable for a year, maybe more," says Maurice.

Down but not out, the two brothers gradually fought their way back. "You may find this bizarre," Maurice says, "but [at M&C] there wasn't a philosophy in the sense of having a plan to do this or get 'there' or be 'that'." But have the experiences of the last few years altered him? He ponders. "I now have an ability to appreciate what a wonderful place this is and not be distracted by a constant desire to move on to the next thing. I was afflicted by that."

Maurice Saatchi looks young for 53; he is tall with a thick head of hair. He has a compact, analytical way of answering questions, but rarely speaks on the record to journalists. (Charles Saatchi, who has not given an interview about the business for more than 20 years, declined to talk.) Maurice uses short, logical sentences, and it doesn't seem surprising that his tutors at the LSE in the 1960s urged him towards academia before he joined advertising.

His departure from Saatchi & Saatchi (and the expectation that Charles would follow, as he did a few months later) prompted the resignation of the top tier of the agency's UK management, including its main creative team.

Bill Muirhead and Jeremy Sinclair, towering industry figures who had been with Saatchi & Saatchi since it was founded in 1970, and David Kershaw, the agency's US chairman, were determined to form a new agency. The "Three Amigos", as they were known, would have formed a formidable team, and insiders say they decided to work with the Saatchis only after a few conversations. Each of the five took a 16 per cent founding stake in the new agency, whose name, M&C Saatchi, came in 1995.

They recruited from the old agency. Nick Hurrell, who joined M&C as joint chief executive of the UK operation, a position he still holds, says the last Saatchi & Saatchi shareholders' meeting he attended, in January 1995, was "chaotic". Another observer says the Saatchi shareholders, shocked by the mass defections, "looked like rabbits caught in the headlights".

The money for the start-up was provided by the Saatchis, who took on a personal £2m overdraft facility. Many who were to join M&C were bound during the first half of 1995 by restrictive covenants on their contracts. This meant the agency consisted for a while of Maurice, Mr Hurrell and a couple of others, with other senior figures waiting on the sidelines, locked in to their Saatchi & Saatchi contracts, pending a fierce legal dispute between the agencies. At the end of January 1995, operations moved from the living room of Mr Kershaw's north London home (to the relief of Mrs Kershaw) to a small temporary office in Mayfair. There, Maurice Saatchi went back to doing what he had done 20 years before, phoning and pitching to prospective clients.

This time he had a few more contacts, and there were immediate cries of foul from the old company, as large clients such as PPP, Mirror Group (which at that time owned The Independent) and Gallaher's Silk Cut defected to the new agency. Saatchi & Saatchi's management complained of 'set ups', claiming the defectors were taking clients with them through high-level personal contacts, without the old agency having a chance to show it could still produce the kind of material the clients wanted.

Maurice Saatchi denies he had lined up clients before M&C was up and running. "We didn't know, when we started the agency, what was going to happen," he says. "It could have been an absolute calamity. Near the beginning, we had 40 of us on the payroll and no revenue at all.

"It was very dramatic. The reaction we had from clients over that [first] six months was extraordinary. And it's something for which we were incredibly grateful."

Mr Hurrell agrees. "It's not true that we set up all our new clients before leaving. Basically, there was David Montgomery (then chief executive of the Mirror Group) who said, 'I'll come with you but only if you can take the team with you'.

Peter Owen (now managing director) of PPP, said, 'I'm with the agency because of the people, the people have now gone so I will go to where the people are'. Gallaher said the same as PPP. But after that it was all pitching."

The first test was in April 1995, when BA, which through Lord King of Wartnaby had enjoyed a long-standing and close relationship with Maurice Saatchi, asked M&C to pitch for its business.

In a throw-back to the early days of Saatchi & Saatchi, when the brothers became renowned for giving the impression the agency was bigger than it really was, Maurice hired an office in Mayfair, and decked it out with cardboard scenery painted to look like an agency.

In the meeting room, the BA executives were greeted by Maurice, Tim Duffy, the account director, and four cardboard cut-outs with life-sized photos of the rest of the team, who were still contractually unable to take part. (They were, in fact, observing from behind the scenes.)

"Maurice had not done a pitch for a long time," says David Kershaw, one of M&C's co-founders. "In the 13 years I was at Saatchi & Saatchi, other than BA which was very much Maurice's personal pitch to Lord King, he didn't pitch at all, he had gone into growing the business. So it was a revelation for us to see him, because to be frank, you see why he was so brilliant in the first place.

"He has an incredible ability to distil hugely complex problems with which businesses are faced into incredibly simple, compelling solutions, reduce them, reduce them, reduce them, then express them in a clear, unjargonny way."M&C got the BA account and went for more, pitching (and winning) against long-established agencies for Dixons and Foster's lager. "If we were only interested in taking our old clients with us, why would we have bid for Fosters?" says Mr Hurrell. "At Saatchi & Saatchi I handled the Castlemaine XXXX account."

One client's marketing director, reflecting on the fact that most of the M&C staff had yet to join, said he was handing his advertising to an agency that didn't exist yet.

One notable absentee during those first months was Charles Saatchi, who wasn't able to work for the new agency until May 1995. Charles, now 56, had been the driving force behind the founding of Saatchi & Saatchi.

Seen as a temperamental, creative genius, staff at the old agency say he had grown increasingly remote during the past few years. (The Saatchis' grand personal offices had been on Berkeley Square, more than a mile from the agency headquarters on Charlotte Street.)

Charles was known for mixing in rarefied circles, enjoying the good life and spending time on his growing art collection. It was refreshing for executives of the fledgling agency when the man who had devised the legendary "Labour's Not Working" poster campaign that helped propel Margaret Thatcher to power in 1979 turned up at the cramped new offices and helped out. (Charles was also the man behind The Independent's seminal "It is. Are you?" launch publicity in 1986.)"Once during the first six months," Mr Hurrell says, "Tim Duffy [who was shortly to become MD of the UK operation] and I were sitting in the office writing a presentation when Charles came in and said, 'Are you boys all right,' and we said, yes, and he said, 'Are you hungry, can I get you some sandwiches?', and we said, er, yes.

"He asked us what we'd like, and we both thought, 'Hmm, what sort of sandwiches would Charles approve of?', and we both thought, chicken sounds uncontroversial. "He said, 'Good, chicken'. Then he said, 'Cake?' And we both said, pardon, and he said, 'The cake's very good', and we said, no cake thank you. So he went out of the room and got the sandwiches. And Tim said, 'I never thought I'd see the day when Charles got the sarnies in'."

Hostilities between old Saatchi and new Saatchi - which Campaign called "the biggest bust-up in UK advertising history" - formally ceased on 1 June 1995 when there was a legal agreement that M&C would not poach any more staff for 12 months, and that everyone who had already signed up to the new agency could start work immediately. "We've effectively gone our own ways since then," says Mr Hurrell.

This year's Campaign award judges noted: "Above all, the agency proved [in 1999] that it can contest and win important new business on its own merits and not because of high-level contacts by the founding partners in their previous existences."

They have created eye-catching campaigns - those for BA, Lastminute.com, Silk Cut and Whiskas have come in for the most praise - and less successful ones. While Saatchi & Saatchi took the Labour Party as a client during the 1997 election, M&C kept to the brothers' long-term commitment to the Conservative Party. The result was the widely derided "Demon Eyes" poster campaign, which one senior executive now admits was a mistake.

Of the brothers, Maurice is far more involved with the business. Charles comes in "for three or four hours two or three times a week", says David Kershaw, spending much of the rest of his time on his art collection. Senior executives wander up to the partners' shared office for advice on individual campaigns, and Charles may still drop creative hints, but Maurice is the more applied.

"In the case of this agency," Maurice says, "Moray (MacLennan, joint chief executive), Nick (Hurrell) and Tim (Duffy) run the show, and Simon is the creative supremo and they make everything happen. They very sweetly tolerate our occasional advice but it's really their business."

Yet the younger Saatchi brother's analytical skills are still in as much demand as his contacts. "If there are problems, Maurice worries about them overnight and in the morning he will walk in and he will have solved the problem," says Mr Kershaw.

Anthony Simmonds-Gooding, a senior Saatchi director more than 10 years ago, is quoted in The Brothers, by Ivan Fallon, saying: "The brothers don't actually see obstacles. They simply go straight ahead, then look back and say, 'Oh, was that an obstacle?'"

Maurice says he sees the internet as an opportunity. "Certainly the internet is changing advertising and it will continue to do so," he says. "Something like 50 per cent of the entire overheads of dot.coms is advertising. So advertising has found itself at the heart of this revolution.

"The public's ability to get information, particularly about price, means the internet is a force of commoditisation. It's creating a situation in which the lowest price is the only price, which can be threatening to traditional retailers and manufacturers. It's important to be able to advise clients in those circumstances."

The growth of M&C Saatchi has outstripped that of Saatchi & Saatchi in the Seventies, but has Maurice Saatchi learned from his mistakes? "Oh, yes," he says with a smile. "The catalogue of errors and mistakes would fill the British Library." Was the demise of the brothers' former empire due to hubris on their part? "Hubris. That would be about right, yes."

And now, if the brothers were to vanish off to a desert island, would M&C Saatchi carry on regardless? "Oh yes," Maurice Saatchi says emphatically. "No doubt about that."

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