By Andrew Warren. The “big three” Australian surf brands have found themselves in choppy financial waters.
Billabong, one of Australia’s most iconic surf brands confirmed a $386 million refinancing agreement with US consortium Centerbridge-Oaktree Capital Management acquiring a 40% share, guaranteeing the struggling brand’s short-term future after it posted an $859 million loss last financial year.
Like Billabong, public surf company Quiksilver has reported declining revenues, asset write-downs and growing losses, recently announcing third-quarterly earnings had declined 84%. Privately-owned Rip Curl has also been in profit free-fall. In mid-2012 Rip Curl founders Brian Singer and Doug Warbrick engaged Bank of America Merrill Lynch to help source a prospective buyer for the brand. The planned sale was abandoned in March with a lack of interest at the asking price of $400 million.
The current woes are a long way from the heady days of the 1990s and 2000s, which saw each of the big three surf brands aggressively pursue international expansion and high-profile sports sponsorship deals.
So, why have the Big Three surf brands found themselves struggling? And what is the way to calmer waters?
by Johanna McDowell (@jomcdowell) NEW YORK CITY: Day 5 was quite spectacular as our first meeting was a surprise — John Wren, CEO of Omnicom. The AdForum Worldwide Summit Forum has not seen him for a few years but he accepted the invitation to join and give us an update on the Publicis Omnicom merger.
by Johanna McDowell (@jomcdowell) NEW YORK CITY: On Saturday, I arrived in the Big Apple for the 2013 AdForum Worldwide Summit New York City, 6-11 October, a “by-invitation-only” programme for agency search and management consultants and global agency CEOs. Our role is to listen, ask questions and keep ourselves informed about what the agencies are doing to identify and embrace new trends, to give feedback and to bring our news back to our home countries to share with our clients and agencies there.
By Herman Manson (@marklives) The African continent isn’t quite the growth honeypot ad agencies had been hoping for. That said – it’s certainly a growth market. While it doesn’t match the growth rates in Asia or even Latin America, listed agency networks seem to have decided any growth is good growth given the state of especially their European operations. North Africa remains fragile – ZenithOptimedia forecast only 1% growth in ad revenue in the Middle East & North Africa as political turmoil post the Arab Spring continues to rock the region. The company expects 2%-3% annual growth from 2013 to 2015.
Growth in adspend globally is predicted by ZenithOptimedia to hit 4.1% in 2013 and 5.6% in 2015. South Africa will be one of the top ten contributors to that growth between 2012 and 2015.
South Africa in the South, Kenya in the East and either Nigeria or Ghana in the West of Africa generally gets the most buzz from agencies seeking investment in the region.
by Herman Manson. A new Durban based agency, Conversation LAB, launched August 1 after three TBWA\Hunt\Lascaris staffers broke away to go it alone, has successfully been picking up significant new business.
by Herman Manson (@marklives) Here is a South African ad agency with just about its entire business sitting in Nigeria. Leftfield has some bragging rights for bagging (several jono swanepoeltimes) the advertising account of Nigerian dairy giant FrieslandCampina WAMCO – worth R100 million.
FrieslandCampina WAMCO (with its Peak and Three Crowns milk brands) is the Nigerian affiliate of dairy cooperative Royal FrieslandCampina of The Netherlands (with an annual turnover of 9 Billion Euro).
Leftfield founder, Executive Creative and Strategic Director, Jonathan Swanepoel (or just Jono in the office), has had quite a storied career in ad land, including a stint in South East Asia where he joined Leo Burnett, Ho Chi Minh City, Vietnam, as ECD. It’s here where he helped the agency pick up the regional dairy account for Friesland Foods which saw it produce campaigns for markets in Thailand, Indonesia, Vietnam and Malaysia and helped it grow from 45 to 150 people in three years.
Swanepoel built his reputation in the emerging markets of Asia and when he returned to South Africa he launched Leftfield with the FrieslandCampina WAMCO business. He was surprised to have to fight for the business only six months later in a competitive pitch but managed to retain it. Leftfield recently again successfully defended the account – now worth a R100 million – beating several well established Lagos based agencies.
Mike Barnwell, the recently appointed ECD at Draftfcb Cape Town, wants agency language focused on compartmentalising the communications trade to go. Instead of below-, above- or even through-the-line thinking, he wants his agency to talk about strategically sound solutions instead.
Can Cape Town become to Johannesburg what Austin is to Dallas, Barcelona is to Madrid or San Francisco is to LosbAngeles – not as big, not as industrial but certainly more creative, entrepreneurial and tech-centric? Gavin Levinsohn, CEO of Ogilvy Cape Town asks the question, but already it seems rhetorical.
Financial results for the first quarter of 2011 from some of the world’s largest ad agency networks are showing rapid growth in emerging markets. Increasingly, agency networks expect their future, and future profits, to be tied in with markets outside the US or Western Europe. The stars of the show? China and Latin America. Digital spend, also in emerging markets, is driving quite a bit of the growth as well.