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Merger to up firms’ footing in Africa

CARTOON
By | May 3rd 2010

By Peter Okong’o

The partnership announced on Friday between Ogilvy & Mather Worldwide and Scangroup Limited will completely change the landscape of media buying, public relations and advertising in Sub-Saharan Africa.

The tie-up opens the door for the two companies, both associates of the WPP Group, to use their strong networks to attract the big international clients, offering them a one-stop shop for services.

Billings by the WPP Group of associated companies rose by three per cent $58 billion (Sh4.5 trillion) last year. But Scangroup CEO and founder Bharat Thakrar says small advertising agencies need not worry, as the link-up is not meant to squeeze them out of business.

However, they have to accept that in the increasingly competitive industry, firms that can make strategic acquisitions and partnerships will prevail.

In an interview with The Standard on Sunday, Thakrar said that for Scangroup, the intention of the partnership, first reported in The Financial Journal, is not to increase the listed marketing and advertising giant’s dominance in the local market, but to use Ogilvy & Mather’s infrastructure to increase its Pan-African footprints.

"O&M is also seeking to expand. They already have a presence across Africa through their affiliates and are looking to increase their investments," said Thakrar.

Competition for clients

Now Scangroup can tap into O&M’s networks in Kenya, Nigeria, Namibia, Ivory Coast, Senegal, Cameroon, Gabon and Burkina Faso, but will continue to compete for clients. He said it was important to look at the deal as a triumph for Scangroup, a truly Kenyan company that has managed to become an international player. "Looking back to how I started the company (Scangroup), I began at the bottom. This swap allows Scangroup to build on areas where Ogilvy has the infrastructure but not the creative resources," noted Thakrar.

This, he said, will allow both companies to benefit from each other’s strengths to offer better services to big clients.

"We now have a Kenyan company that will take over an international co-ordinating role through a tie-up with a multinational agency. This way, Scangroup becomes a truly Pan-African entity," said Thakrar.

Bharat said the problems facing small agencies and startups was mainly due to their failure to invest in the creative side of the business, which limited their ability to meet the strenuous demands of big clients.

"They lack the creative and strategic resources necessary to convince big firms that they can meet their demands. Multinationals like Unilever and Coca-Cola, and big local firms like Equity Bank want to know that if they pay for 10 advertising spots in radio and TV, for instance, they will see results in sales. Large clients seek depth, and the key to providing such depth is by investing in the creative side of the business," said Thakrar.

Setting standards

One of the advantages of such linkages as that between O&M and Scangroup is the entrenchment of global best practice that helps set standards for the local and regional market.

"Public relations are more than just press relations. We realised that above the line advertising can’t do the job on its own, hence our joint venture with PR firm Hill & Knowlton which has global footprints and best practice in PR," said the Scangroup chief executive.

He added that digital advertising "is the next big thing", which is why Scangroup sealed a partnership with Squad Digital, a specialised digital marketing agency.

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