After 18 years of partnership, the agency formally known as Saatchi & Saatchi Levant has split from the Saatchi & Saatchi worldwide network to become M&C Saatchi Middle East and North Africa, under Eli Khoury’s strategic leadership. Through this new partnership with M&C Saatchi, Khoury, chief executive officer of Quantum Group, is adopting a business model that may be a harbinger of a new way to conquer the market: one client at a time, one ad at a time.
Khoury says his drive for growth and continuous learning force him to challenge his status quo with every coming decade. After launching Quantum Group and its components in consultancy, content and communications in 2000, the advent of 2010 was a catalyst for Khoury to reassess his company’s standing and the way it provides services.
Companies need to design strategies in line with new trends in tools and technology if they want to stay on top of the communications game. The inability of big networks to keep pace with the shifting momentum of the industry fueled Khoury’s decision to split from Saatchi & Saatchi. “If you want to offer a client something in communications, you have to walk in knowing what is happening online, offline and everywhere else,” he said. In a transforming industry, Khoury advocated a thorough mastery of the new trends in communication and how to apply them to any agency or network’s core strategies.
“It’s not only about bringing the cyber age into communication,” he said. “You have to really understand it. It has to be part of your first thinking.”
When Khoury first partnered with Saatchi & Saatchi network, as Saatchi & Saatchi Levant, it was still with the brothers Maurice and Charles, who founded the firm in 1970. The brothers later split from the network to start M&C Saatchi in 1995. In the mean time, Saatchi & Saatchi turned into a global network owned by Publicis Group. But then the network’s advertising spirit lost its essence, said Khoury.
Splitting from the pack
With half of the region managed by Saatchi & Saatchi and the Levant area managed by Eli Khoury, under the Quantum Group, the network was much less concerned with the small Middle East market than it was with the larger and more lucrative emerging markets of Brazil, Russia, India and China. After careful examination, Khoury could no longer see the relevance of being bound to a global network.
“Their agenda for the Middle East was something that we could not find our way through,” he said, noting that the agenda was not just about the future plans and strategies, but also about the clients they cater to, as well as allocation of their competencies and talents.
Diverging agendas with the Saatchi & Saatchi network was not the only problem though. The impact of the economic downturn on the mega group trickled down to the regional agencies and then to the clients, due to budget restrictions and lack of investment opportunities. The disagreement was also rooted in the disparity between how the Saatchi & Saatchi network wanted to do business, how it could adapt to the change in the industry, and Khoury’s vision and aspirations. Saatchi & Saatchi worldwide, a network operating in many countries, had an inefficient formula that, according to Khoury, was outdated in today’s changing industry.
While he agreed that larger networks provide a presence worldwide, this presence does not always deliver as it should.
“That big network name doesn’t give you added value,” said Khoury. “The myth of a network agency doing better because it belongs to an enormous machine doesn’t exist.”
In reality, the network’s operating costs were high, its resources, core competencies and talents diluted, and the investment opportunities were limited as a result of the economic downturn. Consequently, agencies in the Middle East were penalized by budget restrictions and their relationships with clients were jeopardized.
“If you look at networks that are owned by mega groups, [they] cannot invest as we speak, [even] if they have an important client they need to cater to,” Khoury explained. “Somebody who lives in a far off land is taking decisions on behalf of the region, whereby [that] region might have its own specific needs, its own specific hunger and investment requirements.”
Another issue was that business coming from the network was limited.
“Some 95 percent of our revenue and of our work is from our agency’s clients, which did not come from the network,” said Khoury.
The network was also squeezing the already limited resources to maximize services for minimum fees, while the revenues and operating costs remained the same. As a result, the network was not accommodating clients properly, and neither could Saatchi & Saatchi Levant, given the nature of the agreement with Saatchi & Saatchi worldwide network.
Additionally, having a fully operating agency in almost every market is no longer optimal, as it erodes both revenues and talents.
“The thickness of your talents working together is nuclear,” said Khoury. “It is like any good paste, you dilute it too much [and] it becomes watery.”
On the other hand, through the strategic partnership with M&C Saatchi, an agency that also has a multinational presence, Khoury claims he is acquiring more flexibility in terms of his core strategies, resource and competency allocation and, more importantly, decreasing operating costs.
A fresh start
Along with a new name and partnership, comes a new business model. With M&C Saatchi, Khoury sees it as more efficient and effective to behave like a consulting group, with a back office — which he calls the “lighthouse” — being the main hub of competencies in Lebanon, and a front office of consultants and talents, acquired as necessary.
Such a centralized business model with an expansion strategy helps his company make use of economies of scale to provide a better service for the client, at a lower cost. It also offers flexibility to service choice clients and concentrate on lucrative markets, while still having the freedom of getting in and out.
The focus will not be on increasing market share or on going after market advertising expenditure, but rather on following target clients.
“We will be driven by the client not the market,” said Khoury.
Similar to supply-chain management, the new business model relies on building a competitive and competent infrastructure and leveraging the logistics, all in synchrony with demand. Hence, new acquisitions, if any, will be to diversify the services, and supply new competencies to the clients.
Completing the Saatchi circle
Quantum Group’s communication services are now referred to as M&C Saatchi MENA, with a minority stake going to M&C Saatchi. The MENA agency also features Brand Central, Fusion Digital and Vertical Media, regional brands that offer expertise for offline and online communications and brand building tasks, servicing clients with a wider range of interests.
Geographically, there will be no more limitations as to which clients Quantum with M&C Saatchi can access, in the Near East, Middle East, North Africa, and beyond if need be. Without the restrictions set by alliances with mega-networks, Khoury can also cater to any client anywhere without worrying about having an office in that specific location, with the specific competencies that will deliver a quality service.
“If our client is a multinational and wants us to be in five different countries, we will be in five different countries at the same time,” he said.
Having established a firm regional standing in media and communications, Khoury endeavors to thrive on continuous growth and push industry standards higher every decade. The value of his group has been its propensity to push the red lines, acting unconventionally while addressing the effects of new media on the industry, and incorporating new tools into core strategies that better serve the client.
In spite of the current industry changes, Khoury believes that when delivering a message, the principles will always be the same. The template, through which that message is delivered, however, is in flux.
In the process of globalization and the extension of the worldwide network, Khoury felt advertising work lost its zest.
“It’s becoming so mechanical that it is not even interesting anymore,” he said.
With little added value from the global network, the split was a natural progression, with the criteria for choosing the best new partner for Quantum tied to increasing their coverage and the thirst for learning new skills.
“We are aiming at a competency relationship rather than just a network membership,” he said. Nostalgic for the 1980s and 1990s, and the era of “true-spirited advertising”, Khoury saw in M&C Saatchi a shared passion. Just like in most industries, enthusiasm and dedication were most likely to be found in smaller agencies where creative people still thrive on making ads, rather than expanding.
“M&C Saatchi is an independent network, but it’s not a machine. It’s about Soho, it’s about Charlotte Street. We did our lengthy turn to go back to Saatchi, from Saatchi & Saatchi to M&C Saatchi. Basically, you can call us Saatchi. This is where it all started, and, it seems, where it had to end, or to start again.”