read original article

more Portuguese stories?

Here, the new heads of Lowe Portugal, Joćo Franēa Martins and Armindo Costa, speak to the local advertising and marketing magazine, Meios & Publicidade (M&P), about just that. They explain how they want to do with the agency, now that its capital and management are entirely in local hands, while it remains affiliated to the Lowe network.

Lowe Portugal:
now in local hands

  
The Portuguese office of the advertising agency, Lowe, is now once more in Portuguese hands, says M&P. Joćo Franēa Martins holds a 60% stake and and Armindo Costa the remaining 40%. After concluding the deal with Interpublic, the new owners reveal here how they plan to continue

M&P: What was the basis for giving you the confidence to buying the agency together?

Armindo Costa (AC): When we met, seven years ago, we had a frank discussion about what we wanted to do in Lowe. From the first day, there was a chemistry between us, which we still have today. Obviously, we have differences of opinion. Even between ourselves, we have to negotiate.

JFM: It's all based on trust and on dividing the workload. That touches on something which is somewhat of a taboo in the marketplace. Most people in charge of agencies are not businessmen, they are advertising people. I am managing director of the agency, but I don't strictly have all the necessary knowledge. In essence, I am an advertising professional. So you need two people. As an agency develops, you add new faces. We cannot nor should not do it alone. The time we gain will be allocated to developing the local business. We expect two or three people to come to join us. One of those is Joćo Pires.

M&P: Why as creative director of the agency?

JFM: Joćo Pires started out as art director of this agency. We thought we should give him the opportunity to become creative director. It's an evolution. He neither should nor could be judged after one year. After the campaigns for Vaqueiro, Skip and Skip, just to give some examples, we started to see him in a completely different light. You just have to ask which creative director has done the best work in categories as difficult as those in which he works - we are not talking about mobile phones or soft drinks...

M&P: Is that why the agency didn't have the visibility it should have had?

JFM: Part of it is our fault. From now on, we feel that Joćo Pires is the extra piece we need to be able to gain that visibility. We have gambled on achieving it. We didn't do it because we though the agency was on the slide. In September of last year, with the financial details resolved and signed, we thought things would take less time to resolve themselves.

M&P: Was buying out from Lowe a good deal?

AC: Yes, but we still have to wait and see. It was a purchase with its own special characteristics. We were running it as if it was our own, even if there were international impositions from time to time. It's clearly the opportunity of our lives.

M&P: What are the risks of being in the advertising business without the backing of a multinational?

JFM: We continue to have a multinational behind us, but only in the way that suits us. We have the know-how, expertise and client legacy.

M&P: What led Interpublic to sell Lowe Portugal?

JFM: It's not up to us to talk about the group's international orientation. They themselves can talk about that, it's a question of reading Advertising Age or Campaign. What I can say is that Portugal is not an isolated example. It shouldn't be seen as a sale, but as a purchase. Since 1997, we had been fighting for a real, active stake in the agency's capital.

AC: The concept and realities of networks are undergoing change. All the controls which publicly-quoted companies are obliged to implement come from outside and it becomes very difficult to manage on a local level. You can't ask an agency with 1,500 staff to have the same controls as one with 50. You just can't have a director of human resources, a managing director, a finance director to control the whole process. If we implement controls that increase costs, what's going to happen then? We were losing a lot of time on administrative work and, at the same time, they were asking us to grow the business. It's just not possible, because you have to be more focused. The scandals that occurred in the United States were the impetus that have given rise to this kind of opportunity at all levels, and not just in ad agencies. It's an opportunity for real growth in international "affiliation" agreements, giving the power and management responsibility to locals and sorting out other forms of remuneration. Bring together the best of both worlds.

M&P: How is your relationship with the Lowe network going to work?

AC: From an administrative and financial point of view, we are completely independent. From an operational point of view, everything is shared. We have access to the international tools available within the holding company. We continue to maintain relations with all Lowe offices across the world, to take part in internal creative pitches and be present on international pitches. At the end of the day, we are Lowe's representatives in Portugal. We combine the best of both worlds. On the other hand, they are going to be more relaxed, because there is a lot of additional cost involved in controlling every country.

M&P: Will there be changes at the level of remuneration or fees for clients that are aligned?

JFM: I'm not going to talk about figures, because they are confidential, but basically, things will go on as they were.

M&P: Why won't you say how much you paid for the agency - I'm asking if the price was less than that you would have paid if the economy was in better shape?

AC: No. Between 1992 and 1994, there was an enormous crisis. Not knowing the realities of all companies in the market, I would say that practically all of them, if not technically insolvent, were in difficulties. They would have been much cheaper then. That's not the case now. The company didn't come any cheaper. It's a healthy company. We have set objectives for it and we are convinced that we are going to achieve them, and we pay taxes. That alone says something.

M&P: Now you have total control over management of the agency, is there some kind of redefinition of your objectives?

JFM: It's one thing to define the annual objectives, take decisions and make concessions that are economical rather than relating to management. We are now laying down a 3-year plan for the agency. I have objectives that I plan to establish in the medium-term, on two dimensions - in creative, relating to work that the agency can do in other areas, because we are already active in some of the most complicated ones in the market. Then we'll establish profitability indices. Whereas, in the past, we were always chasing big accounts, large invoicing volumes, now we are open to medium-sized accounts that allow us greater profitability in terms of the allocation of resources. We have a small, agile team. We have no heavyweights here. A ranking position is not, at this point, an objective, but a consequence.

AC: The panorama has changed in Portugal. There is more rotation and movement in medium-sized accounts than in large ones.

JFM: Even the large accounts are fragmented now. The concept of one big account at one agency doesn't exist. I think that, in the future, there will be some investment. Management is getting more and more used to advertising, and at the end of the day it is them who assign the money and give the OK for things to move ahead. They themselves are going to see that communication has to have a clear direction and cannot be fragmented.

M&P: Is Lowe is going to become an agency that we are more used to seeing on pitches and in new business?

JFM: Competing on pitches doesn't only depend on us. Every pitch involves an investment on the part of the agency. What I can say is that clients are open to new value propositions, but not just out of curiosity. What is important is to arrive with a communications proposal that has value, but also with a business proposition. That's where we'll now have more time to focus. We will now absolutely have to turn up at pitches with our credentials, so the client can see what's available. We are going to show that we are paying attention, that we have business ideas that it would make sense to investigate. Go to clients with just a different campaign isn't enough.

M&P: How do you think the agency will be perceived in the marketplace in a year or so?

JFM: Our preoccupations derive from three factors. The first is spontaneous awareness of the agency. An agency such as Lintas has been in the business for 43 years and enjoys a spontaneous awareness, according to the latest study by Consultores de Publicidade, of about 47%. Spontaneous awareness of Lowe is at around 40%. It's interesting how an agency that has been in the market for 3 years should have such a high level of awareness. There's a great deal of potential here for the Lowe brand. In our case, because of the successive name changes, the brand currently lacks substance.

The big objective is to fill that through our work. Within a year, I want recognition of our work to be at the same level as that of spontaneous awareness of the brand.

M&P: How are you going to do that?

JFM: By putting the team at the centre, with Joćo Pires as its most prominent member. Our second objective has to do with consolidating the creative work that we have been doing for existing clients: right now, I'm looking at the positioning that has to do with our creative edge: to be the agency that produces the best creative work in categories in the most difficult markets, that is detergents, margarines and household cleaning products. Elsewhere, we want to win local business in areas that are more sexy, such as telecommunications, cars, banks and soft drinks.