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А.Оюунгэрэл

The United Kingdom and Two agencies with name Saatchi

Part one: Country Profile

The United Kingdom is multicultural nation like the United States of America. Even U.K. inhabitants often confuse the names England, Great Britain, and United Kingdom. England is just one country within the kingdom. Great Britain comprises England, Wales, and Scotland, while the United Kingdom also includes Northern Ireland (although the name Britain is sometimes used to refer to the United Kingdom as a whole). Wales and England were unified politically, administratively, and legally by the acts of union of 1536 and 1542. In 1707 Scotland joined England and Wales in forming a single parliament for Great Britain, although the three countries had previously shared a monarch.

The area of the United Kingdom is 94,251 square miles (244,110 square kilometers). At its widest the United Kingdom is 300 miles across. From the top of Scotland to the southern coast of England it is about 600 miles. No part is more than 75 miles from the sea. The national capital is London, situated on the River Tames in the southeastern corner of England.

The United Kingdom is characterized by a long history and by political and cultural links with other areas of the world, the latter mostly a legacy of its large former empire. In modern times the United Kingdom is perhaps best seen as a middle-sized, middle-ranking industrial country.

The political system of the United Kingdom has provided stability and consistency since the 19th century. It is a unitary system centered on London, with some responsibilities devolved to local governments. The national government is a parliamentary democracy dominated by the monarchy, which links the executive, legislature, judiciary, armed forces, and Church of England. Although in practice almost all responsibilities are deferred, the monarch and the royal family are a source of unity and national spirit. In Parliament the House of Lords still consists mainly of hereditary or appointed peers, while members of the House of Commons are elected by a simple "first-past-the-post" system.

This stability of institutions contrasts with and complements the striking heterogeneous social character of the United Kingdom. There is a vocal nationalist spirit in both Wales and Scotland, while division between the Protestant and Roman Catholic communities plagues Northern Ireland. Northern Ireland's troubles have led to terrorist actions, most notably by the Provisional Irish Republican Army (IRA).

Official language: English. Other languages: Welsh, Gaelic

Religion: Churches of England and Scotland. Roman Catholic. No established church in Northern Ireland or Wales.

Religious affiliation: Christian 65.9%, of which Protestant 53.4% (Anglican 43.5%, Presbyterian 4.5%, Methodist 2.2%), Roman Catholic 9.8%, Orthodox 1.0%, other Christian 1.7%; Muslim 2.6%; Hindu 0.6%; Sikh 0.5%; Jewish 0.5%; other/nonreligious 29.9%.

Major cities: Greater London 7,074,300; Birmingham 1,020,600; Leeds 726,900; Glasgow 616,400; Sheffield 530,400; Bradford 483,400; Liverpool 468,000; Edinburgh 448,900; Manchester 430,800; Bristol 399,600; Kirk lees 388,800; Wirral 329,200.

Internationally, the United Kingdom is part of the European Union. The country benefits from historical and cultural links with the United States and is a member of the North Atlantic Treaty Organization (NATO). This diversity of interests, together with a network of international relations, means that the United Kingdom is not easily identified as belonging to a specific geographic block among the Western industrialized nations.

Imports: £184,305,000,000 (machinery and transport equipment 42.2%, of which electrical equipment 19.8%, road vehicles 11.2%; chemicals 10.0%, of which organic chemicals 2.6%, plastics 2.4%; food 7.9%; clothing and footwear 4.3%; petroleum and petroleum products 3.1%; textiles 2.8%; paper and paperboard 2.7%).

Major import sources: Germany 14.7%; U.S. 12.4%; France 9.6%; The Netherlands 6.8%; Japan 4.9%; Italy 4.8%; Belgium-Luxembourg 4.7%; Ireland 3.9%; Switzerland 2.9%; Spain 2.7%.

Exports: £166,340,000,000 (machinery and transport equipment 44.1%, of which electrical equipment 19.8%, road vehicles 8.6%; chemicals 13.3%, of which organic chemicals 3.1%; petroleum and petroleum products 6.2%; food 4.2%; professional and scientific 4.0%; iron and steel products 2.4%).

Major export destinations: Germany 12.3%; U.S. 11.8%; France 10.2%; The Netherlands 8.0%; Ireland 5.2%; Belgium-Luxembourg 5.1%; Italy 4.8%; Spain 4.0%; Sweden 2.6%; Japan 2.5%; Switzerland 1.9%.

Economically the United Kingdom has benefited since the 1970s from production of oil from deposits in the North Sea. London has remained a leading world financial center, the time zone allowing it to bridge the gap between trading in Tokyo and New York City. The United Kingdom's traditional strength in manufacturing, however, has been eroded, with employment in manufacturing falling in absolute terms. This has undoubtedly contributed to the stark differences in the social and economic composition of the industrialized north and the more service-oriented, prosperous south, creating a north-south divide.

The United Kingdom now ranks among the top industrial countries in growth rates, productivity, and competitiveness. The share of manufacturing's contribution to gross domestic product has declined to about one-fourth of the total, with services providing the source of greatest growth. The United States is a major influence and trading partner, and Japan has become a significant investor in local production, Japanese companies often choosing the United Kingdom as their European base. In addition, other fast-developing East Asian countries with export-oriented economies include the United Kingdom's open market among their important outlets.

Gross national product: U.S.$1,152,136,000,000 (U.S.$19,600 per capita).

Budget (1996-97). Revenue: £280,900,000,000 (income tax 33.5%, value-added 16.9%, social security contributions 16.6%). Expenditures: £308,500,000,000 (social security 24.9%, health 11.0%, debt interest 7.2%, defense 7.2%).

Material well being. Households possessing: automobile 69.7%, telephone 92.4%, television receiver 98.3% (color 95%), refrigerator 98.5%, central heating 85.3%, washing machine 90.9%, video recorder 79.2%.

Transport. Railroads: length 23,518 mi, 37,849 km; Roads: total length 228,042 mi, 366,999 km (paved 100%). Vehicles: passenger cars 20,505,000, trucks and buses 2,712,000. Merchant marine: vessels (over 100 gross tons) 1,631; total deadweight tonnage 4,355,063. Air transport: passenger-mi 77,575,900,000, passenger-km 124,846,500,000; short ton-mi cargo 2,662,600,000, metric ton-km cargo 3,831,900,000; airports 57.

Monetary unit: 1 pound sterling (£) = 100 new pence; valuation (Sept. 25, 1998) 1 £ = U.S.$1.70; 1 U.S.$ = £0.59.

Socially the United Kingdom suffers pockets of poverty, with some inner-city areas among the worst in Europe. The growth in ethnic minorities from former colonies has enriched the nation's cultural fabric but added to social tensions, occasionally fueling violence. In contrast, home ownership is widespread and, while the state supports an educational system, public schools--which despite their title are part of the private sector--thrive. With some exceptions, notably curbs on public servants, freedom of expression is not restricted, and the United Kingdom is renowned for the strength of its arts.

Literacy: total population literate, virtually 100%

Educational attainment. Percentage of population age 25 and over having: primary or secondary education only 89.7%; some postsecondary 4.8%; bachelor's or equivalent degree 4.9%; higher university degree 0.6%.

Quality of working life. Average workweek (hours): male 43.3, female 30.2.

Social participation. Eligible voters participating in last national election (May 1997): 71.3%. Population age 16 and over participating in voluntary work: 22%. Trade union membership in total workforce 32.0%.

Leisure. Favorite leisure activities (hours weekly): watching television 17.1; listening to radio 10.3; reading 8.8, of which books 3.8, newspapers 3.3; gardening 2.1.

Demographically, just under half of the total population is in the labor force. Within this group are small numbers of self-employed workers, as well as members of the armed forces and of work-related government training programs. The highest proportion of employees (more than two-thirds) is in the service sectors, with financial services and distribution the largest. Manufacturing, although it has declined, employs more than one-fifth of all workers. Smaller numbers are in construction, energy, agriculture, forestry, and fishing. The number of part-time workers has increased considerable.

Population (1998): 59,126,000.

Density: persons per sq mi 627.3, persons per sq km 242.2.

Urban-rural: urban 89.4%; rural 10.6%.

Sex distribution: male 49.09%; female 50.91%.

Age breakdown: under 15, 19.5%; 15-29, 20.1%; 30-44, 21.9%; 45-59, 18.0%; 60-74, 13.3%; 75 and over, 7.2%.

Population projection: (2010) 60,800,000.

Ethnic composition: white 93.7%; Asian Indian 1.8%; Pakistani 1.4%; Black 1.4%; other and not stated 1.6%.

Average household size: 2.4; 1 person

Immigration: permanent residents 245,000, from United States 11.0%, Australia 8.6%, Bangladesh, India, and Sri Lanka 4.5%, New Zealand 4.1%, South Africa 3.7%, Canada 3.3%, other 64.8%, of which EU 14.7%.

Life expectancy at birth: male 74.4 years; female 79.7 years

Food: daily per capita caloric intake 3,149 (vegetable products 67%, animal products 33%); 125% of FAO recommended minimum requirement.

Part two: Advertising agencies’ current situation

There are two advertising agencies with name Saatchi: Saatchi & Saatchi and M&C Saatchi. Both of them are worldwide and UK based. The difference is in their ownership and size. Saatchi & Saatchi has shareholders, but M&C Saatchi is purely private company. Saatchi & Saatchi has its branches in 90 countries, M&C Saatchi-in nine countries. The website introduce them in the following ways.

Saatchi & Saatchi Advertising

Saatchi & Saatchi's comparatively brief period of independence started in December 1997, when the agency was demerged from corporate parent Cordiant in a curious reversal of the procedure by which original founders Charles and Maurice created their advertising empire during the Eighties. In June 2000, acquisitive French group Publics, keen to strengthen their hold on the US market where Saatchi’s generate the majority of profits snapped up the network. Pre-acquisition, Advertising Age ranked Saatchi's as the #12 ad organization worldwide in 1999 with gross income of $732m and billings of $7.5bn. Excluding specialized marketing subsidiaries, the agency brand was ranked #17 ad network with gross income of $568m on billings of $5.7bn.

Formerly the holding company for both the Saatchi & Saatchi and Bates Worldwide agency networks,

Cordiant demerged its two principal businesses in December 1997. As a result, the group has ended up as a virtual independent, although it now tops most industry lists as the most likely target for merger or acquisition by a larger marketing group. Advertising Age rank Cordiant as the #13 ad organization worldwide with gross income of $713m and billings of $9.3bn (http://saatchi-saatchiplc.com).

M&C Saatchi

M&C Saatchi has built up a strong position for itself since formation in January 1995, largely through the much-publicized support of longstanding clients British airways and Mars. Though it doesn't begin to compare t o Saatchi & Saatchi in worldwide size, the brothers' agency still holds a unique position in the UK industry. There's limited scope, however, to mine the existing client list. Though it has offices in nine countries outside the UK, and handles such clients as British Airways, Qantas, Glaxo Smithkline, Pfizer, Rover and Pfizer Consumer Healthcare in various countries, only British Airways can be counted as a truly global client, handled in six countries (http://www.m&saatchi.com).

Further we can find many facts related to current activities of two agencies on the web sites. For instance, Saatchi & Saatchi’s eponymous ad agency provides creative advertising and marketing services to such clients as Sony and DuPont through its 150 offices in 90 countries. Toyota and Procter & Gamble account for 20% and 14% of its sales. Saatchi & Saatchi owns 70% of creative services firm The Facilities Group and 50% of media buying and planning unit Zenith Media Worldwide. The agency also offers public relations services through Rowland Worldwide. About 50% of sales come from North America. Saatchi & Saatchi is a division of French ad firm Publics Groupe.

Regarding to M&C Saatchi we find following information. M&C Saatchi was named by Campaign, the British trade newspaper, as 1999 Agency of the Year. The award not only recognizes the agency's achievement of becoming the UK's sixth-largest shop within four years of its controversial launch, but also a period in which BT, Rover and Sainsbury's all joined its client roster. TBWA GGT Simons Palmer and WCRS ran the agency close. But M&C Saatchi won on the strength of its ability to tailor itself to client needs and win business on its own merits, rather than the connections of its founding partners. Above all, the award marks the agency's coming of age and this year it answered criticisms that the agency's most powerful driving force was Maurice Saatchi's desire to get even.

The last branch-office of M&C Saatchi opened its door for clients are in South Africa in December 2000. The new agency started with a small client previously handled from London, the Spier Festival, but first priority is to win more business.

The Saatchis had done some of their best work for British Airways before they were ousted from their first agency, and the client remained loyal to them when they left. But other clients have come on board since, helping to build M&C Saatchi into Britain's sixth-biggest agency, with billings of R2, 7bn.

Two strong admen connect these two different advertising agencies back in history. Maurice and Charles Saatchi are two venerable and legendary names in advertising business. After Maurice and Charles Saatchi were ousted five years ago from Saatchi & Saatchi, their names started to relate to M&S Saatchi agency.

It is interesting to know how did they start in advertising business? How did they become so famous?

History of the brothers

Ivan Fallon (The brothers. 1989) and Kevin Goldman (Conflicting Accounts. 1997) wrote separate books about the brothers. *** Both authors tell detailed description of history how the brothers started.

In the middle of May 1970 Charles Saatchi emerged from the office and announced that Cramer-Saatchi agency would become Saatchi & Saatchi. “It’s bloody good name for a new advertising agency,” he went on. “Saatchi & Saatchi-it’s so bizarre no one will ever forget it in hurry.” (Fallon, p.42). Before that he run with Ross Cramer ad agency three years. They were good partners. Ross Cramer wanted to leave. He did not want to enter the agency world again. Therefore he took his younger brother Maurice who encouraged him all the time. Maurice had never worked for the agency before but he had other virtues. Maurice left his work at Haymarket publishing company for Saatchi & Saatchi.

Charles and Maurice Saatchi are Iraqi Jews. They were born in Baghdad: Charles in 1943 and Maurice in 1946. They are middle of four sons of Nathan and Daisy Saatchi who immigrated with their children to England in 1947. “Sa’aatchi” in translation from Arabic means “watchmaker” or “watch dealer”. However, Nathan Saatchi was a successful textile merchant. His sons were growing in “very religious family” in strong family tie. But all of them have so different characters and personalities.

Charles was “the problem child”. He left school at seventeen. He was an avid TV watcher, absorbing both the culture and TV advertisements. Charles did more than watch: he raced (Fallon, p16). While he was racing on the transverse-engined Mini, his brother Maurice was his faithful supporter and mechanic.

In contrast, Maurice was quieter, shyer, and academically far brighter. He was consistently honor student at Tollington Grammar School. He is only university graduate among employees of Saatchi & Saatchi. He graduated the London School of Economics. His professor Persy Cohen remembers Maurice’s habit of listening and observing and not committing himself quickly: “You could never imagine him panicking.” (Fallon, p.17)

The have registered their agency in August 1970. Wile Charles was dominating the creative output, preparing pitches and even presenting to clients, Maurice was drumming up new business. Charles made much of concentration on creativity. His philosophy was simple. “The creative function is the main one of only two services an agency should provide: the other is media buying”, he said (Fallon, p.69). He wishes all his creative people would have to act as if they were salesmen.

Maurice was not greatly involved in the creative side. First thing he did for the agency was moving it to the elegant building on the Golden Square. He run errands, did research, made twenty-five telephone calls. He proved to be an excellent new business getter and presenter. He was also a natural organizer. He did a lot to present the agency saying oh the phone: “Hello, may name is Maurice Saatchi, and we’re a new advertising agency. Although you’re very happy with your present advertising agency, I think it would be worthwhile your coming to talk to us and see a presentation we have prepared for you.” (Fallon, p. 72)

Charles had ability to generate personal publicity. He conducted one-man press campaign by telephone when he was working with Cramer. He picked up ad-industry gossip and shaped into news items, and phoned them to magazines. In return he expected some favorable mention of his own activities. He cultivated fame in another way too: through recognition for the quality of his creative advertisements. His Ford ad was included in the 1967 Selfridge’s ad annual.

First time the Health Education Counsel was only one client. Then Citrus Marketing Board of Israel became the second one. Imaginative ideas of Maurice to hire food retailer, to provide management consultancy, to have a good media buyer, or to hire a woman for creation of cosmetics ad kept the agency to grow and grow. At the end of first year the agency had made a profit nearly 20,000 pounds. Toward the end of their second year, the Saatchis decided to buy out the original investors: Lindsay Masters, Mary Quant, and Plunket-Greene. That year its profit was 90,000 pounds. They wanted to acquire everything: research, management, and marketing companies. They wanted to be number one.

The ad “The pregnant man” by Jeremy Sinclair brought recognition to the agency on the international arena. I became an icon of sorts for the agency. In 1987 Harvard Business School did a case study and concluded “pregnant man established Saatchi & Saatchi’s reputation as the UK’s creative agency. The ad for the conservative party was credited by many with propelling Margaret Thatcher into power as a Prime Minister.

Saatchi & Saatchi had a policy not to meet clients. Also, they had a policy not to seek 15% compensation on billings, the traditional industry standard. The Saatchis described it as ‘dying system,” so they would charge clients 22%.

Everything went well with its ups and downs until, the board of directors under threat fired Maurice the firm’s largest shareholders in December 16, 1994. Then Charles left the agency following his brother. They started over again a month later with a new rival agency name M&C Saatchi. It quickly snapped up former Saatchi & Saatchi clients, most importantly British Airways.

By May 1996, Saatchi & Saatchi Advertising lost its status as the UK’s largest ad agency for the first time since 1988 (Goldman, p.347). But Saatchi & Saatchi survived with the Cordiant.

References:

Fallon, I. (1989). The brothers. Century Hudson

Goldman, K (1997). Conflicting Accounts. Simon & Schuster

http://www.britannica.com

http://saatchi-saatchiplc.com

http://www.m&saatchi.com

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*British Airways is the world's busiest international passenger airline group; carrying more than 45m passengers in 1999 in over 1,000 flights a day to 474 scheduled destinations in 103 countries.

**Owned and controlled by the Mars family, this US confectionery giant is one of the world's biggest private companies, but also one of the most secretive. The seeds of a global empire were sown in a bitter row during the Thirties between founder Franklin Mars and his son Forrest. Now the business has interests ranging from pet food to electronics, from Uncle Ben's rice to vending machines. (Advertising Age estimate a 1998 global media spend of $1.1bn, of which $793m was outside the US, making it the world's #11 advertiser).

***Tim Bell, media director is considered to be the third brother for the Saatchis