Cannes: Julian Boulding, president of thenetworkone Management Ltd, is in Cannes and scouting for independent, feisty, owner-driven agencies. Established in 2002, thenetworkone has an unusual business model: Based in London, the company custom-builds networks of independent agencies and specialists for multinational brands that include Johnson & Johnson, Nestle SA, Nokia Corp., Esselte Corp., and William Grant and Sons Ltd (makers of Glenfiddich whisky). A few years ago, the combined worth of thenetworkone was US$1billion (Rs4,290crore) in billings that could have doubled now, says Boulding, adding these billings of individual agencies are based on their own efforts. In an interview with Mint, he talks about the company’s India plans. Edited excerpts:
What are thenetworkone’s India plans?
Julian Boulding, president, thenetworkone
We found there are a lot of independent agencies globally that have great talent but clients do not offer them business because they are not a part of a network. It was then that thenetworkone was born; to bring multinationals together with independent agencies. We currently work with 300 independent agencies in 60 countries, including India.
We have been working with Mudra Communications Pvt. Ltd for some multinational businesses or projects, and looking at entering into an arrangement with the Madison Group soon. There are two client projects that networkone wants to introduce to Madison, but the clients are yet to sign up. One is a high-profile multinational.
How do you define an independent agency?
For us, Mudra is an independent agency (even if Omnicom Group Plc. has 10% stake in it through DDB Worldwide network) because it’s owner driven and there’s only a part of it that looks like it’s from a network.
But if you have Ogilvy and Mather written outside your door, then you most definitely are not independent; you are a part of a group that does the same things in other markets. A client like Johnson and Johnson could be working with as many as 15-18 independent agencies in Europe.
We have a relationship with agency 180 Amsterdam, which eventually was bought over by Omnicom. But 180 assured us with a page from the Omnicom annual report that 180 will run as an independent agency (with independent operations) under the Omnicom umbrella. So we continued the relationship. If Madison (which now also has a joint company with GroupM’s Mediacom agency) becomes Mindshare one day, then the game is over. But if they have a joint venture with WPP Group Plc. for Procter and Gamble Co., yes, they are still independent.
How does your model differ from rival networks?
We find entrepreneurial agencies, shake hands with them on a deal for a client and they work as per the client’s terms and conditions. What we get is a commission of 7% from their fee income of the first year.
There is no shareholding or ownership involved, hence this is a far more loose and flexible association, than, say, a Worldwide Partners Inc. (WPI) network, which requires shareholder agencies to pick 1% stake in the company. Also in case agencies wish to sever the relationship with networkone, they need to give three month’s notice. There is also a membership scheme that gives some added advantages to agencies, but it’s not binding.
Agencies pay $2,800 to avail of thenetworkone logos, presentation materials, and endorsements that can be presented to clients that they are a professional organization and use of networkone database and coordination team in London that will help build networks for them.
A fixed network like WPI enjoys edges such as continuity and people are more loyal to each other, but networkone has an advantage in terms of flexibility. If a WPI agency is not performing as well as it did five years ago, it’s far more difficult for WPI to get out of it.
Anyway, WPI and IN (another network of independent agencies) are collaborative partners rather than competition. We work with agencies belonging to their networks. For instance, we have worked with HAT in Hungary and Resonance in France, which are WPI agencies.
What is your take on global holding ad companies?
WPP, Omnicom, etc. are buying up independent agencies in various markets, but not agencies that are looking to make a mark. If one agency is bought up by a multinational, there are agencies like CreativeLand Asia Pvt. Ltd in India that come out of a multinational and start up on their own.
Also, who would you rather work with? The ones who got tired and sold out? Or people who are energetic and running their own agencies?
We work with agencies that are on their way up. Networks like WPP work with agencies that are on their way down.