The Fall and Rise of the Brothers Saatchi - Saatchi & Saatchi (A) & (B)

Saatchi&Saatchi led the British "tidal wave" of British-based advertising agencies in the 1980s and 90s. Brothers Maurice and Charles engaged in a voracious acquisition spree, which took them from a tiny agency to a global player in a matter of years. But as Distinguished Visiting Professor Paul Verdin explains, hyper-expansion and over-diversification would eventually prove the brothers' at-least-partial undoing. Nonetheless, the advertising industry worldwide will never be the same … and the Saatchi brothers are far from being out of the bigger picture.

by Eline Van Poeck,Paul Verdin
Last Updated: 23 Jul 2013

Until the 1980s, a few US-based advertising agencies dominated the Western market in terms of both market share and creative talent. Saatchi&Saatchi led what became known as the "tidal wave from Britain". By using continuous earnings growth to fund a voracious acquisitions campaign throughout the decade, Maurice and Charles Saatchi's "big is beautiful" mentality saw their agency grow from its founding a modest consultancy in 1970, to one of the ad world's major players in a mere 15 years. But hyper-expansion and over-diversification would eventually prove the brothers' at-least-partial undoing.

In the (A) case study, Distinguished Visiting Professor Paul Verdin examines the multifaceted character of Saatchi&Saatchi and the profound impact it had on the industry globally. First and foremost, the brothers embraced the concept of globalisation. They strove to be able to identify comparable customer segments irrespective of national boundaries, and wanted to be able to offer clear advantages in terms of economies of scale and cost sharing, as well as being able to provide effective servicing for their global accounts.

The authors recount how the Saatchi's approach quickly gave rise to both enemies and naysayers. The industry in most Western countries had been relatively stable for decades, with very low client turnover. Overt promotion was largely frowned on, and a good many senior executives saw the ad world as having a "mystique" that put it above the fray of being a "mere business". The Saatchi upstarts were a blatant threat to all that, with their belief that volume was essential for getting the visibility needed to attract the right clients and executives.

The firm was also highly innovative in wishing to offer "one-stop shopping" for all clients' management services needs, bundling advertising, PR and promotional activities into coordinated packages. To do so, the Saatchi's bought up a wide range of managerial consultancies, PR firms and various marketing firms around the world. (Although their eyebrow-raising 1987 bid for one of Britain's biggest banks was blocked by national authorities.)

However, the brothers were also firm believers in autonomy. Headquarters had little direct oversight of its very many companies around the world. Even within these, different divisions were treated as independent profit centres. The financial planning and control systems for each company, however, were both highly centralised and uniform throughout the group. Alas, by the late 80s a defection of key personnel and two loss-making major acquisitions began to hit heavily. Investor confidence was badly shaken, even after the Saatchi's announced a fundamental scaling back of operations.

The "B" case details the brothers' swift and largely successful efforts to resurrect the firm by returning to core activities. Sadly, this did not prevent a 1994 shareholder revolt, prompting Maurice Saatchi to cut all ties with the firm he had founded. (Charles was soon to follow.) The authors describe the extraordinary developments involving the brothers' departure; the original firm's struggle for survival during a severe industry downturn, and the subsequent success of Charles and Maurice's new venture, M&C Saatchi, after being acquired by French giant Publicis - a level of success rarely enjoyed by many other advertising "super groups" in recent years.


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