Johnny Hornby has dismissed the idea of The & Partnership selling out completely to minority shareholder WPP any time soon as he focuses on doubling the agency group in the next four years.
Hornby was speaking as he unveiled preliminary figures that showed fee income, known as gross profit, rose 12.4% to £95.7m in 2019 from £85.1m a year earlier.
Earnings before interest, tax, depreciation and amortisation climbed 35% to £19m from £14m.
Hornby credited the performance to expanded briefs from Centrica and the Royal Bank of Scotland, which moved NatWest’s creative account from M&C Saatchi.
The & Partnership’s fee income has almost doubled from £50m since 2016 and Ebitda has nearly trebled over the period.
Hornby, who is chairman and chief executive, told ±±¾©Èü³µpk10 that he is not considering stepping back: "I’m only 53 – my aim is to do the same again [and double the business] over the next four years."
Staying independent
Hornby co-founded the independent agency in 2001 as CHI & Partners, before selling a 49.9% stake to WPP in 2007 and later repositioning it as The & Partnership as it expanded into media buying, data, content and PR.
The & Partnership and WPP collaborated successfully on Centrica’s global pitch last year and the companies have been working closely with other clients, including News Corp, but Hornby said there are no plans for management to give up majority control any time soon.
"I’m still enjoying the best of both worlds," Hornby said in response to a question about whether WPP might take full control.
He added that he gets on "very well" with Mark Read, WPP's chief executive since 2018, who is much more "collegiate" than his predecessor, Sir Martin Sorrell, and is presiding over "a completely changing culture" at WPP.
Retaining a degree of independence, rather than selling out, also works for long-serving senior staff such as Sarah Golding, Jessica Burley and Nick Howarth, who benefit from having stakes in the business and collecting a share of profits through dividends, according to Hornby.
Hornby's decision to release preliminary 2019 financial numbers comes ahead of the annual earnings season when the big six agency groups publish their results over the next month – with several expected to report declining revenues.
The & Partnership’s audited accounts will not be published until much later in the year at Companies House.
Marketing newsrooms
Hornby was early to spot the trend for advertisers to bring some digital services in-house and it now runs a number of what he calls "marketing newsrooms" that operate "on site" inside clients’ offices and offer a "full service" of capabilities.
The group’s original thinking six or seven years ago was to bring its creative, media and data people closer together and closer to the client, and the logic has become more compelling because of the rise of data-driven "addressable communications", Hornby said.
"Within seconds, you can see what’s happening" with a marketing message and the agency team can "adapt it and change it", he explained, outlining the virtues of this newsroom-type approach that speeds up work.
Hornby said "fewer people" are needed and likened it to ordering a meal from a menu: "The client walks straight into the kitchen, without needing a waiter to take the order."
Around 950 of The & Partnership’s 1,600 staff now work "on site" – a strategy dubbed "The & model" by the company.
Embedding staff in a client’s office is also cheaper, Hornby said, using Toyota’s base in Epsom, about 20 miles from central London, and TalkTalk’s new home in Manchester as examples because they are cheaper than prime agency space in the capital that he said might cost £85 per square foot.
He added that the agency is "transparent" about any savings on property during fee negotiations with a client.
Staying relevant
M/SIX, the group’s media buying agency, has helped to drive The & Partnership’s expansion in Europe and North America, but Hornby played down the suggestion that media was the main source of recent growth.
None of The & Partnership’s top five clients – Toyota, Best Buy, RBS, Telus and News Corp – is "media only", he said.
However, Hornby reiterated his long-standing view that the "traditional" creative agency model is "heavily challenged".
He warned: "If you’re not connected to the deployment of the message or the data, you’ll be marooned."
Ad agencies that fail to diversify are likely to be reduced mainly to smaller project work, according to Hornby.
The & Partnership will need to "stay ahead of the curve" and be "super-relevant" as it is coming up against "credible" new competitors, he said, citing Accenture Interactive and its purchase of Droga5.
Upwards of 150 staff have been doing training courses for the Adobe and Salesforce platforms at considerable expense, as The & Partnership looks to help clients on marketing technology and digital transformation.
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