Sunday, 10 June 2012

Why mergers are like marriages

Why mergers are like marriages
Hollie Shaw  Jun 8, 2012 hshaw@nationalpost.com
Independent agency Bos of Montreal announced last week it was being acquired by Tokyo-based Dentsu Network, the world’s fifth-largest advertising holding company. The merged companies will operate in Canada as DentsuBos and the principals remain intact, though their roles are changing. Bob Shropshire, formerly Dentsu Canada’s CEO, has been made chairman of the new business; Michel Ostiguy, once president of Bos, is CEO of DentsuBos and president of its Montreal office. Claude Carrier, formerly executive vice-president of Bos, is now president of DentsuBos Toronto. He spoke with Financial Post‘s Hollie Shaw about the perks of being in a global network and how mergers are like marriages.

Q How and why did this deal come about? You and Mr. Shropshire knew each other from being on the Institute of Communication Agencies’ (ICA) board of directors — did that help?
A Yes, we became interested in each others’ businesses — enough to take a plunge! From the Bos perspective, we have been independent for almost 25 years and you look at the market and where you are, and you say, “How do we get to where we want to get, how do we keep growing, how do we get access to clients that we don’t have access to now?” There are pitches that we can’t get invited to because we did not have any global reach, for example, or because we did not have enough depth in Toronto.
Together we will now have two very strong offices, each with over 100 people. For Dentsu, they are obviously gaining [an entry] on the Quebec side; they were not present there before and they used to do what most agencies would do: cut deals with agencies [to execute French work]. Now [Bos is] part of a global network we never had. We can take a client in this market and offer them help in another market, whether it is in the States, or in Asia, where Dentsu is by far the No. 1 agency. Every eye now is kind of turning to China, and Canadian companies have been accused of not paying enough attention to China, and this is a market where Dentsu is the No. 1 agency.
Q How do you feel about no longer being an independent? We have seen some of the biggest independents in Canada become part of a worldwide network. Do you lose anything in the process?
A The sense of loss is emotional when you have been your own boss for all those years and a new, bigger organization has different structures. We asked ourselves these questions very seriously and over a long time. I use the word marriage to describe this because there was a courting period and we came to a point where we liked each other enough to share a house and a life together and we got married. Once you are willing to share your life and understand that the other has a lot to bring to the table — we both win. At Bos, we have always wanted to run one operation that has two doors: bicultural, Toronto/Montreal. You pick individuals from either office to sit on a team based on what your needs are.
Already, within one week, I have received two international calls from people in the network saying, “We need you to help us on a pitch we are doing because you have expertise in that area.” This notion of collaboration is very similar to the way we built our business. We both share the same approach to business and it does not feel at all like we are losing anything.
Q Are you concerned about conflict? Dentsu’s biggest client is Toyota and in Quebec, Bos works with the Quebec Honda Dealers Association. What will happen there? Conversely, are there any synergies between the two of you for clients?
A Dentsu has been very invested with Toyota, Lexus and Scion in Canada and we have been handling the Honda Dealers Association in Quebec and there are discussions around that. We are willing to do what is right for our business. The real question is whether the market is changing, as it is in some other countries, and whether there are ways to deal with those situations other than just having to resign the business. I think the expectation is clearly that we will be focused on the Toyota business in this case, and we have reassured them to that effect, but I can’t tell you any more at this stage. Here is a synergy: Canon has been a global client for Dentsu for many years and Dentsu Canada had done work for Canon for a long time on a corporate level. We do quite a bit for Canon in the consumer photography area. The synergies also come from the depth of both businesses. The Dentsu network has invested significantly in digital and Dentsu invests tens of millions into pure R&D every year. You never know up front how much you are going to get out of [the R&D], but it is our firm intent to leverage every bit of it that we can.
Q What are the biggest changes faced by the Canadian industry?
A We can see the pressure there is with every client to make every dollar count and, obviously, as an industry, we have to become better at that than we used to. Every agency now has to have a better understanding of how to help clients build their brands. You have to be multidirectional. You have to have access to expertise — it becomes essential to the success of our clients. Another area that is becoming much more important [and one] where I feel Dentsu has worked hard for many years is in analytics and data — everything that helps model how we develop campaigns, how we evaluate the results and how we tweak and adjust those campaigns on the fly as we go.

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