Waiting game

In Advertising, Communicate, Dubai, Published journalism, Q&A on November 23, 2010 at 6:07 pm

Leo Burnett’s global CEO says forward planning has prepared his agency well for the economic slump. But all any agency can do now is watch and see what develops

Originally published in Communicate, May 2009

Tom Bernardin has been Leo Burnett’s global CEO since 2005, when he moved to the agency from Interpublic Group of Cos.’ Lowe. When he came to Dubai recently, Communicate caught up with him and regional managing director Kamal Dimachkie to find out how the global financial crisis is affecting Leo Burnett abroad and at home, and what others can learn from the agency’s approach to the slump.

How’s Leo Burnett doing in the current economic situation?
Tom Bernardin: Overall, if you look at 2008 we had a particularly strong year even given the challenges the economy threw at us. We had substantial growth in North America, we had substantial growth in this region and many of our regions around the world. As we look at 2009, that’s where a lot of the questions come in. In our client base, certainly there’s no cancellation on a mass scale of media and advertising spending, but there’s a cautious approach to planning this year.
It’s going to be a year of really watching very, very carefully where our clients’ business is going, where the tolerance for spend is. A lot of it is going to be dictated by some of the economic indicators that come out around the world. I think that one big indication will be in the United States – the unemployment figures for the first quarter will certainly have an impact on the economy.
On the other hand we have a new president – which the whole world seems to be excited about, as they should be – and that’s always a positive thing.

How closely is the MENA region tied to Leo Burnett North America?
TB: It’s very closely tied because Raja Trad, who is the CEO of this region, reports directly to me and sits on my management team. So we meet regularly, along with the other key managers around the global network, to make all the decisions for running the global company.
So it’s very specifically and closely tied to the global company. And in terms of market performance, they have double-digit growth this year. They are a large region, and they have consistently contributed, year-on-year, a very strong growth rate. So they play a big part in our global company.

If Leo Burnett in North America, for example, takes a hit, will that result in lay-offs across Leo Burnett, or will it be regionally compartmentalized?
TB: If Leo Burnett in the US took a major financial hit, we would operate that company – and whatever we needed to do in that company – in that geography. It isn’t appropriate to spill over for the rest of the world. For each one of our agencies around the world, whatever their issues, whether they are growing or whether they are shrinking, we adjust in the local market.

How is this region doing compared to other parts of Leo Burnett?
TB: This is a star region for us, with double-digit growth this year and consistent performance over the years.
Our global organization has very high regard for this region. Raja plays a key role in the global management of the company. It’s a wonderful, huge global company, with talent throughout the world and I thought it was very important to reorganize the company a couple of years ago, to move from a very American-centric management style, and to bring our key leaders from the key geographies and markets to sit with me to run the global company. And I think the proof in that strategy has been how well we’ve done in 2008, and how our creative reputation has increased so dramatically.
The region is definitely a star in our crown.

How do you predict this region will do over the next year or so?
TB: It’s hard to predict. The only thing that I am confident of is that the management team here will carefully monitor what’s going on so that we will be able to watch the increases or decreases in our clients’ spend and operate our company accordingly.

What steps have you taken to avoid, or to minimize, job cuts?
TB:  I think not only we, but other responsible companies as well, slowed down hiring [in 2008] and were very cautious in taking on more staff, knowing that we might have issues in 2009. So I think we’ve done the best we can to control something that we really can’t control.

Are you likely to see a shift in terms of where your client base is? Do you have many real estate clients?
Kamal Dimachkie: We have a couple. And because we were very strict in observing no conflict relationships, I suppose this responsible approach has helped to protect us, and our people and our clients. So there’s very little change. We work mostly with Dubai Properties and we know for sure that we will continue to work with them. Obviously Dubai Properties, being a real estate developer, is not immune to what is happening around the world, particularly in the real estate industry – especially here. But they will continue to operate. The plan is for us to continue to service them.
KD: Our strategy has not changed, in the sense that we’ve always wanted to have a diversified approach to our portfolio. So we constantly are monitoring gaps in our portfolio, other categories where we are well-represented elsewhere in the world and not here, or we feel there is no need for us to be represented, or that have been working very diligently.

How can agencies protect themselves now?
TB: There are things that we focus on. First of all, we’ve always focused on creativity, because the power of creativity and the importance of it has never been greater than right now. Clients absolutely understand that creativity is the connective tissue between all the different contact points with people, so we really focus on that.
We focus on understanding people and their behavior, and getting the right kind of talent in our agency. That is related to the creative process, because ultimately knowing that creativity has the power to transform human behavior, that’s what we focus on.
In addition to that, of course, we have brought Arc, our digital and shopper marketing arm, very close, and we continue to reinforce that. We look at bolstering those parts of the company.
I do not believe this is the time, in terms of the overall management of the company, to hunker down and retrench, I think that would be a big mistake. I’m hoping a lot of my competitors are doing that, because I, on the other hand, am taking an approach where we have to watch everything very carefully, but now is the time to look at where the best talent in the market is and bring it into our company. Now is the time to look at where acquisitions might lie that would enhance our product offering. Now certainly is the time to focus on the digital talent that every company needs today, and to try and bring that in. So my management team knows that’s the other thing we need to do in this economy.

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