• by December 6, 2004

RESEARCH & DEVELOPMENTS: AEGIS CHIEF SPEAKS OUT ON NEW DIRECTIONS, ECONOMICS AND, OF COURSE, SEX - Many people still think of Aegis Group as a holding company for media services shops like Carat and Vizeum, but the reality is that Aegis has emerged as one of the global powerhouses in marketing and media research, according to some interesting stats trumpeted Monday by CEO Douglas Flynn. Speaking during Aegis slot at the UBS Media Week conference in New York, Flynn noted that anywhere from 35 percent to 40 percent of Aegis' revenues now come from research vs. media services. In fact, Synovate, the Aegis unit that oversees the company's disparate research offerings, now ranks No. 8 in revenues among the marketing world's research suppliers. And on the basis of pure "survey-based" research, Synovate now ranks No. 4, just behind TNS/INFO, WPP's Kantar unit and IPSOS, and well ahead of companies like VNU or Information Resources Inc.

And while Aegis doesn't have any imminent plans to make another major acquisition, Flynn said it is considering smaller acquisitions to beef up Synovate, as well as Europe-based media network Vizeum and interactive media unit Isobar, as well as "some communications services attributed to Carat." One thing the company has no foreseeable plans to acquire is a creative services shop. "There are no current plans to do 30-second advertising spots and compete with McCann," Flynn told the Riff, adding that if Aegis were to make a move into creative services it wouldn't necessarily be by acquiring a traditional agency. "If we are ever going to do creative we would do it quite differently from the way the other giants do," he said.

Of course, he pointed out that Isobar already provides creative services as part of its management of interactive media accounts, and Aegis operations have already gotten into the branded entertainment business, especially in China, where he said it is a requisite for getting an advertiser's messages on the state-controlled airwaves.

And just because the moment struck him, Flynn felt compelled to share an anecdote he had while dealing with a Chinese TV industry delegate. When he inquired about the type of programs that are popular in China, he was told, "They're about love and economics." Do which Flynn replied, "Do you mean sex and money?" To which the Chinese official sheepishly acknowledged, "Yes."

While Flynn didn't shed any insights about love, he was a font about economic developments impacting media agencies, especially the subject of compensation. He confirmed the North American trend toward "fixed fee" or "cost-plus" arrangements for compensating media shops, but said Europe has become much more "performance based." And of course, all markets are being influenced by what he described as "ferocious bidding" among shops competing for media accounts, though he implied that Aegis' units have so far been resisting the temptation to undercut their competition on the basis of price.

Asked by one Wall Street-er what the impact of corporate procurement departments has been on compensation and agency relations, Flynn suddenly turned circumspect, mumbling that it "certainly is a great deal more." While Flynn demurred on the topic, Jeremy Hicks, CFO of Aegis, who had been sitting quietly at his side suddenly piped in with an anecdote about the corporate procurement executive Aegis recently invited to speak at a conference the company was holding. The executive said he was far less concerned about the compensation he was paying his media shops than on the rates his media shops were negotiating with the media they buy. "I don't care about your 2.5 percent. What I Care about is the other 97.5 percent," Hicks recalled.