BREAKING: Y&R brand falls away in SA as VML takes over
by Herman Manson (@marklives) The Y&R brand will exit the South African market as the last office of the agency, in Johannesburg, is being integrated into VML South Africa. This was announced as VML SA charts a new course towards a full-service offering, including a management shakeup at the agency.
- Jason Xenopoulos, former NATIVE VML CEO and chief creative officer, steps into a new global role at VML, becoming its chief vision officer plus chief creative officer for EMEA
- Jarred Cinman, former NATIVE VML managing director and a co-founder, becomes CEO
- Diane Wilson, former operations and finance director and a co-founder, steps in as deputy CEO
- Danelle Stiles, former NATIVE VML operations director, takes over as MD
NATIVE Media and Y&R Labstore will also both be folded into the new agency.
According to Cinman, VML globally is collapsing country brands into a single international brand and the time was right for the South African office to align and position itself with its global parent. While NATIVE VML has built a reputation as a full-service digital agency locally, the market has shifted towards through-the-line agencies and, by collapsing Y&R SA into the group and leaning on the international umbrella brand, VML in SA is positioned to take advantage of this trend. “VML gives us a chance to reboot the business as an integrated agency,” he says.
VML and Y&R SA, he says, has shared a single management team for the past 18 months and it made sense to stick to a single network, rather than be torn between global network brands. A global role for Xenopoulos gives the local agency some sway in the larger organisation, and VML has seen rapid global growth.
Y&R SA has had a tough couple of years, he continues, culminating in the closure of its Cape Town and Durban offices in 2017. Its major remaining clients are Edgars and Amstel Lager. He argues that the agency lacked a digital component and that building a digital capacity, when one already existed in VML, made little sense.
Cinman confirms that, as a result of the restructuring, Y&R will no longer operate in the South African market. There will be some redundancies as duplicate positions are consolidated, mostly on the administrative side of the business. Staff will soon be moved into the VML building.
The newly combined agency, operating as VML South Africa, will employ close to 300 people, generate more than R200m in revenue and offer a fully integrated service to clients using a pod structure — basically, mini-agencies that run as independent units under the VML brand and allows the agency to handle competing business. These pods will become full service as former Y&R and Labstore staffers are integrated into the business, and as and when required by clients.
NATIVE in its various incarnations had been building a digital reputation for the past 20 years, says Cinman, but the integration of Y&R fast-tracks its full-service offering. The agency is inheriting skill sets it lacked in the past. He says the integration of Y&R into VML SA adds between 15–20% to group revenue, making it a manageable merger, and that the agency has purposefully avoided attaching rather than integrating the two groups. It simplifies organisational structure and does away with one of the cost points for clients.
While there is considerable sentimentality around the Y&R brand in South Africa, WPP is also consolidating its holdings globally (as seen through the creation of Superunion, which has brought together five branding agencies into a single entity). Cinman expects more announcements along these lines in future.
That a single management team has been running both agencies will simplify the merger, he says, who also notes that the agencies have been working together on shared clients. Proof of success, according to him, will lie in showing the combined agency does better united than in its composite parts. This means winning work as an integrated agency. He is at pains to point out that VML SA will not simply be NATIVE VML with a new brand; instead, it signifies the bringing together of different agencies and skill sets to become a new entity.
Herman Manson (@marklives) is the founder and editor of MarkLives.com.