Mike Abel puts his money where his mouth is

Mike Abel could have been your dentist. His grandfather, Phillip Perl, the son of a Russian émigré, had matriculated at the age of fifteen and left South Africa for London on his own steam, to return six years later as a qualified dentist from the The Royal College of Surgeons. Two years into his practice a drill bit would blind him in one eye. This didn’t stop him from building the largest Orthodontic practice in his home town of Port Elizabeth – one he would run to the age of 81.

It’s an inspiring story, and one Abel shares with me at his new offices at 30 Hudson Street, in Cape Town’s trendy De Waterkant. So how did he land up in ad land with his name up next to that of the legendary Maurice and Charles Saatchi?

His romantic vision of the world of dental care was dashed when his best friend asked him straight out of high school whether he could really face spending the rest of his life looking into other people’s mouths. The answer, obviously, was no. A stint in architecture also lost its allure on the first page of his new textbook on plumbing design. After completing a BA he decided to follow a three year diploma in marketing. Finally something that stuck. He was going to be a copywriter.

Except that, on completing a one year post-grad course at the AAA, nobody would give him a job. No longer able to postpone the draft Abel headed into the defence force, and having done three months of basic training, was put in charge of the army shop at EP Command. He transformed the store, introduced a video shop and credit for his customers, and increased turnover 400%. Reading consumers suddenly seemed more interesting than writing copy.

His career in advertising would only take off once he joined The White House in Cape Town (it would later merge with Johannesburg’s AM-C to form DDB SA). Six months in and he was made account director working on Woolies. Within a year he was sent off to Jozi to establish the agency there. He was only 23.

He would soon be headhunted by Ogilvy Cape and become account manager for Volkswagen. He joined that agency in 1993 and much of his career in advertising was closely tied up with the Ogilvy group. By 1995 he was running the VW as well as the Old Mutual businesses for Ogilvy, and in 1997 he was appointed to the holding board of the agency. The account integration model he developed for VW would be rolled out world-wide. In 2001 he became Managing Director of the Ogilvy Cape Group, where he restructured the agency and would grow it into the third biggest in the country. He later became Chief Operating Officer of Ogilvy South Africa, and in the same year, 2006, won Financial Mail Agency Leader of the Year.

Abel describes Ogilvy as a place he left ‘with much love in my heart’ in 2008 after he decided to immigrate to Australia following an armed robbery on his family. Here he restructured his new charge, M&C Saatchi Australia, with a new operating plan in place within four weeks of his starting the job. He was there for 16 months and helped the agency to one of its best years to date, all this in the middle of the Great Recession.

Moray McLennan, Worldwide CEO of M&C Saatchi, asked Abel to investigate the possibility of launching an office in South Africa of part of his region which also included New Zealand. Abel’s wife, Sara, desperately unhappy in Australia, decided she wished to return to her home country, and Abel agreed to follow. He informed McLennan of his decision and offered to launch the South African business himself. M&C Saatchi Abel was born, with the SA office the only one in the network to carry the name of its CE, something Abel fails to highlight at meetings, but which his team often does.

For a remarkable career spent at Ogilvy, his return would herald a less than enthusiastic response from his former employers, who welcomed him back with a letter reminding him of his restraint of trade, according to Abel. The restraint finally fell away in October 2010.

The new agency, the most significant industry launch for several years, has struggled to win over the larger industry. M&C Saatchi Abel has been unable to register with industry body the Association for Communication and Advertising (ACA) since the new office has not been in business for two years as per that body’s constitution.

Abel says this seems counter-intuitive as clearly M&C Saatchi Abel comes with a major investment by an established and reputable name in the advertising industry, from a London listed enterprise no less. As the branch office of an established international enterprise the two year rule doesn’t make sense to him. (ACA chair Wayne Naidoo counters that the ACA requires financial statements to calculate membership fees, which works on a sliding scale, and that the two year rule has never been relaxed for any of the other major agency launches in the past, but some veteran industry commentators suggest the two year rule wasn’t put in place to exclude agencies with the size and ambition of M&C Saatchi Abel, or for local offices of established global groups).

Adding insult to injury, the 2010 edition of the FM’s AdFocus failed to give a single mention to the agency, arguably the most significant agency start up for several years, while Ogilvy swept the titles’ awards quite thoroughly. This sense of animosity, perceived or otherwise, clearly troubles Abel, shrouded as it is in the near zero visibility world of agency politicking. Be liked or be real, says Abel, and if it came down to it he would rather be real. He intends to follow his own truth.

It hasn’t stopped him from building a significant and diverse agency in the year to date (the agency turn one this February), with offices in both Cape Town and Johannesburg, nearly thirty clients, and a list of employees which includes plenty of industry heavyweights. Entering 2011 combined annual ad spend from M&C Saatchi Abel clients will reach R250 million. These include Prescient Investment Management, Rezidor Group (Radisson Blu and Park Inn), Sanlam Private Investments, Bentley Motors, MWEB (PR and projects), Boschendal, Look & Listen, Take2, Oracle Airtime Sales, Pronto, RamsayMedia, Mr Delivery and Australia Unlimited, to name a few.

With clients coming online between January and April 2011 the agency will be hiring for a total staff compliment of 48 – the number required to service its established client base. Abel expects his agency to break-even at the end of 2011.

The M&C Saatchi Abel launch team consisted of Abel alongside Peter Badenhorst, Zeyad Davids, Denise van der Westhuizen, Vumile Mavumangwane and Mark Winkler. They would be joined by Jacques Burger, recruited from the The Campaign Palace to run the new Johannesburg office, as well as Nick Liatos and Mick Shepard, along with Michelle de Gouveia, who left the agency they found with the backing of the Lowe Bull Group, Mick+Nick, to join Burger as creative partners, with de Gouveia joining as head of operations.

Start-ups are high pressure businesses, and Abel lost a core member of his team early on, when Badenhorsts’ services with the company were terminated. Abel doesn’t address details of this termination during the interview except to say that it was a painful experience that affected him personally rather than it did the business.

Abels’ London partners will be investing tens of millions of Rand into the agency which they view as their ticket to expand onto the African continent. South Africa is simply phase one of a larger African strategy, Abel insists. His aim, says Abel, is to build the most sought after and admired marketing communications company in Africa. And you read right – he doesn’t refer to his company as an ad agency.

For Abel ad agencies have become disconnected from their clients and from the larger public. Ads no longer address key communication issues and are not being leveraged to transform organisational growth. The ‘real’ needs of clients now differ greatly from what ad agencies are offering. At Tony Koenderman’s recent Brainstorm conference Abel told delegates that “most advertising and communication currently out there has little or nothing to do with the very real challenges that the client organisation faces. Most of South Africa’s biggest spenders are throwing mega money at trying to entertain consumers through advertising that has no meaningful consumer benefit, differentiated offer or reason to purchase. And it is not linked to their key challenges.”

“Agencies today are largely thinking in executional ideas rather than brand ideas,” Abel continued. “And in truth, most clients and agencies can’t tell the difference between the two. Agencies are still largely paid for execution or time spent and not the solution.”

Launching a start-up means the agency is born with a “pure genesis right from the start,” says Abel,” without legacies and old school structures.” He has thrown out the traditional agency fee structure which focuses on production (which is why TV ads pay, even when they don’t pay off) in favour of remuneration linked to clients’ business performance based on pre-agreed measurables. Clients pay a base admin fee and a sliding percentage of total sales turnover or an upfront strategy and concept fee and an additional x cents for every item sold. It’s the doorway to channel neutrality and is the reason 80% of the work M&C Saatchi Abel does is what would be considered ‘below-the-line’.

Accountable creativity, as championed by Executive Creative Partner Gordon Ray, finds creative solutions to real business problems, across any medium, and across the line. For Abel the Johannesburg office will make the agency, sorry, marketing communications company. The Jozi and Cape Town offices operate on a collaborative basis and as a single business with a single bottom line meaning clients can expect backing by the group rather than a single office.

For Abel leadership consists of action rather than position. He attributes his managerial success to knowing his business from the bottom up rather than from the top down and in creating an environment that attracts and nurtures talent. Successful managers believe in people’s ability and allow people the space they need to fly, says Abel, and behind his desk in his office hangs a framed Jerry Welsh quote that reads “The people with the best people win.”

Abel isn’t shy with what the company he leads hopes to achieve. He has taken heavy duty industry names and mixed them with a much more client friendly business model and culture. Instead of setting up competing businesses in different cities he created offices for a single collaborative business, and his billing model offers clients the real possibility of working with an agency of scale which still offers them media neutrality. And he’s gone big right from the start in a gamble much of the industry felt was overly ambitious for a start-up, never mind one launched in a recession. It was a bold move that has landed his group entry into boardrooms other start-ups only dream off. Abel should know whether it paid off by the end of 2011, but so far the indications are positive, and Abel has reason to flash his bright smile. He is Phillip Perl’s grandson after all.

This story was first published in the February 2011 edition of AdVantage magazine.