Building a Successful Agency Growth Strategy David Blois Regional Director 1 st October 2007

Share some insight Across the total Marketing Services landscape Understand levers for growth Immersed in developing Agency Business models Partners in transition and reinvention Credentials 2

Strategies for Growth?  Rare Species  Financial Targets and Vision  No Route map just imperatives from the Board room  Fundamental lack of own business intelligence  Doesn’t cascade or impact anywhere  Must result in an action 3

Levers for Growth 7R’s Business model: Measures Confidence at the heart of the Agency against  Revenue Growth  Relationships  Reputation  Resource  Return  Reality  Route

1 Reputation Revenue Growth Relationships Reality Reality Return Resource Route CONFIDENCE 6

Four Deadly Sins  Margin Improvement  Positioning  Business model  Communication (There are more but not for today)

Margin Improvement  Good management reporting  Address low client profitability  Fame or Fortune only  Fee negotiation/open dialogue  Commercialise your people and reward them

Margin Improvement – Fame or Fortune % of Income 60% 25% 15% Number of clients Client Model

% of Income 68% 20% 12% Number of clients Example – Client Gross Profit Summary 1.Unilever 2.Nike 3.Tesco 4.Premier 5.Express 6. GSK 7. BMW 8. L’Oreal 9. Mars 11 – 34. Others

Margin Improvement - Client Mapping Re-negotiateGolden 40% Up or OutLock and Load 200% 100% 0% Low Med High Profitability Growth

Positioning  Strongest Commercial driver not fluff “ Creating and owning a territory in the minds of your people and clients that allows you to differentiate and dominate.”

Positioning Can Achieve:  Olympian Status  Only Choice  One overall offer; multi revenue streams / buying points  Value Price  Increase market share with clients  Create new budgets  Separate Thinking from Doing  Gain real Client Intelligence

Adding Value ‘Think For me’ The Wider Perspective Great Implementers Reliable Tactical Reactive Predictable Safe Nice people Project based Business Partners Outsource Align visions & growth strategies Align business models Share the prize Long term partnership Contracted Passive Active Positioning - CLIENT INTELLIGENCE ServicePartnering Marketers Challenge Inspire Lead Be demanding Measure Real Talent Retained ‘Do for me’ Doing a Good Job ‘Help me think’ The Client Agenda

Business Model The way an agency is organised and structured…..to deliver the best quality of service and profits.

Business Model  Splendid Isolation  Lack of management control and measurement  Inefficient, linear, silo based  Scalable?  Running harder to stand still  New chassis, old engine  Understand the new models  Start to value time  Profit from people

Communication  Poor across the sector  Internal and external  Critical success factor in achieving growth strategy  Agencies still structured in silo’s, baton passing  Engage and empower every mind

Effects of a Successful Growth Strategy on Exit Valuation Premium Values  Strong reputation  Intellectual property rights  Strong management  Distinctive positioning  Long term contracts  Sustainable business model brand  Timing ahead of curve  Scale Discount Values  Low margins >10%  Unsustainable profit record  Lack of succession management  Reliance on one client  Narrow field of services  Weak positioning- not distinctive.

Proof of the Pudding.. Some Recent Transactions

If you’d like to know more…

Global Dynamics One day Conference with an evening cocktail party Friday, 2nd November 2007 Hyatt Regency Istanbul, Turkey

Leading experts in the industry will provide insights into:  Acquisition and integration best practice  Trends in gaining a digital advantage  Developments in search & mobile marketing  Routes to international expansion  Obtaining private equity  Funding growth and expansion  Maximising shareholder value

Speaker Selection Key Note Speaker- Richard Pinder, Chief Operating Officer, Publicis Worldwide

Thank you. Any Questions?