I’m gradually posting archives of my work as a sort of blog/portfolio. This is something I wrote for the Creative Business section of Financial Times in January 2002. It is about how a colourful and combatative Aussie adman (who fights in carparks) has got into bed with Martin Sorrell at WPP.
Would WPP boss Sir Martin Sorrell go into business with an entrepreneur who has traded blows in a car park with the head of an ad agency, and appeared in court accused of headbutting an accountant while drunk? Well, yes he would. Twice in fact.
The entrepreneur in question is Australian advertising boss John Singleton, and this unlikely marriage of convenience dates back to a deal in 1998 that saw Ogilvy & Mather in Australia and New Zealand merge with local group John Singleton Advertising.
This was unusual because instead of O&M taking control, the Australian Stock Exchange-listed Singleton Group ended up owning two-thirds of Singleton Ogilvy & Mather, and half of media buying shop MindShare with J Walter Thompson.
In spite of Singleton’s apparent dislike of accountants, the reason for the deal was all in the numbers – his group’s managers make some of the fattest ad agency margins in the world. In Australia, the average agency margin is less than 14 per cent. SO&M, whose client list includes Telstra, Qantas and Lion Nathan (Tooheys beer) makes almost 34 per cent.
Singleton’s group, capitalised at A$500m (£200m), expects SO&M’s profits of A$31m to grow more than 10 per cent this year while competitors are languishing in a post-September 11 depression.
Small surprise then that in December, Sorrell and Singleton did another deal, this time giving the Australian outfit 49 per cent of J Walter Thompson in Australia and New Zealand. WPP now owns 11 per cent of The Singleton Group, which changed its name to Singleton Tate WPP.
Behind these two deals looms the figure of John Singleton, affectionately known as “Singo”. Six times married, he makes even the usual array of colourful advertising figures seem grey – in April 2000 he spent A$30,000 on buying every racegoer on the course a beer after his horse, Belle Du Jour, won Sydney’s prestigious Golden Slipper.
His maverick approach even extends to appearing in court. Booked for driving at 160kmh he was let off, arguing that his Bentley was safe at that speed. He’s had his own radio and TV shows, been a boxing promoter and built up a large personal fortune.
But Singleton is also well-connected, counting media billionaire Kerry Packer and former prime minister Bob Hawke (pictured above with Singo) among his friends, and has business interests that extend from advertising and a stake in the travel publisher Lonely Planet to property and bloodstock.
One of the top copywriters in Australia, Singleton’s style is brash even by Australian standards, but he maintains a knockabout Aussie charm. And he has combined some wild ways with a relentless approach that dates back to his early days and produced rules that still stand in his agencies: no leaving the building for lunch and definitely no booze.
SO&M maintains this policy. Staff are compensated with one of the best bars in Sydney – on the 18th floor of SO&M’s building in Darling Harbour – which opens daily at 5.30pm sharp. Friday night is party night, when staff and clients rub shoulders with Australian sporting heroes brought in for the occasion. The agency does not bother going in for creative awards and shuns its competitors.
As Russell Tate, chief executive of The Singleton Group, explains: “We don’t go anywhere near the advertising industry. I regard it as the enemy.”
Increasing client sales is deep in the Singleton psyche. Every Monday morning the whole agency meets to review the sales success of their campaigns from the previous week.
Tate, who as well as running The Singleton Group, is head of SO&M, has client responsibilities and now sits on the board of JWT in Australia and New Zealand, says: “The whole ethos of this place is – John’s quote – ‘advertising exists to sell product’. David Ogilvy said very much the same thing.” Singo has been likened to David Ogilvy by many, including his own modest self and O&M’s worldwide chairman and chief executive Shelly Lazarus.
The JWT deal does differ from the O&M tie-up in some respects. At the time of the latter, John Singleton Advertising wanted to open up growth opportunities locally and there was significant rationalisation. At JWT, Tate is not operationally involved and works only with the top management.
“Ogilvy was doing pretty badly. It had very good revenue – high-quality revenue – but clearly it hadn’t been run well for some time,” says Tate. By contrast, JWT, whose client list includes Ford, Unilever, and Diageo/UDV, is already performing better than many local rivals, with margins of 18 per cent.
Yet, despite its comparatively hands-off arrangement, JWT will be subject to the same Singo formula as O&M – increasing margins by cutting pitching costs, eliminating headhunters and staff expenses, and cutting back heavily on travel, especially conference trips that have little or no impact locally.
As at O&M, Tate will also be looking to increase margins by encouraging the agency to use the marketing services companies it owns to offer clients a fully integrated service. At SO&M, reports Tate, “we made an enormous savings out of the synergies”.
Ultimately, Singo will no doubt be called upon to export his philosophy to sate Sorrell’s desire for higher margins across his empire. Tate admits that logic suggests that if the JWT deal works as well as the O&M deal, Young & Rubicam will enter their orbit. As Tate says: “We’re starting to look a little like the WPP in Australia.”