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M&C Saatchi’s doubters prove a tough sell for new chief

Moray Maclennan pretended his was a client's son to blag his way into Saatchi & Saatchi - now he is considered as the fifth brother - M&C Saatchi
Moray Maclennan pretended his was a client's son to blag his way into Saatchi & Saatchi - now he is considered as the fifth brother - M&C Saatchi

Moray MacLennan has some convincing to do. The incoming boss of M&C Saatchi has been tasked with pulling the advertising group back from the reputational abyss after the worst period in its 25-year history, which began before the pandemic struck. Covid has merely compounded pain wrought by an accounting scandal.

And while the founders of the Tory Party’s favourite agency have quit to help turn the page on its troubles, questions remain. Can MacLennan – who began as a trainee at the forerunner agency Saatchi & Saatchi and became a board director aged just 26 – make a clean break from the past?

Persuading sceptics is just one of the challenges facing MacLennan when he is promoted from international boss to chief executive on Jan 1. He must tackle the fallout of a Financial Conduct Authority investigation into its accounting crisis, and a potential investor revolt over its accounts and executive payments.

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This while he gets ready to unveil a new strategy designed to tackle the agency’s bloated structure consisting of more than 140 firms part-owned by entrepreneurs.

'Be careful what you wish for'

“It’s the job he has wanted all his life,” a senior industry source says. “But be careful what you wish for.”

MacLennan, 59, will want to return M&C Saatchi to its past glories. He joined Saatchi & Saatchi in 1983 after blagging his way into an interview with co-founder Maurice (now Lord) Saatchi by pretending to be the son of a potential client.

When brothers Charles and Maurice were ousted from the agency amid a boardroom coup in 1995, he followed them. They joined M&C Saatchi, an agency started by David Kershaw, Jeremy Sinclair and Bill Muirhead.

Saatchi & Saatchi had gained a reputation for being Margaret Thatcher’s favourite agency after the “Labour isn’t working” advert depicting a snaking dole queue helped her become prime minister in 1979.

A billboard reading 'Labour Isn't Working', a Conservative Party run advertising campaign designed by the Saatchi & Saatchi advertising agency for the 1979 general election, - Chris Ware/HULTON ARCHIVE 
A billboard reading 'Labour Isn't Working', a Conservative Party run advertising campaign designed by the Saatchi & Saatchi advertising agency for the 1979 general election, - Chris Ware/HULTON ARCHIVE

Yet the ad men behind recent campaigns for the NHS, and the infamous 1969 Health Education Council advert portraying a pregnant man, were plunged into crisis this time last year when a boardroom bust-up erupted over the discovery of accounting errors now stretching to £14m.

Lord Saatchi left in December 2019 alongside non-executives Lord Dobbs, Sir Michael Peat and Lorna Tilbian. That exodus continued in November when Kershaw, the chief executive, Sinclair, executive chairman, and Muirhead, executive director, agreed to step down next year.

MacLennan was pinpointed as the next boss, while Gareth Davis, the non-executive deputy chairman, was anointed the next chairman.

It was a monumental shake-up for a company caught in the eye of the pandemic. Companies slashing their ad budgets to shield their cash from the Covid crisis had forced adland into a deep recession.

That toxic commercial climate hurt M&C Saatchi’s bottom line. Profits sunk 60pc to £2m for the six months to June, as revenues dropped 30pc to £149m. MacLennan must lead the recovery, but was it a missed opportunity not recruiting an outsider?

Breaking from the past

“Culture eats strategy for breakfast,” the source adds. “MacLennan is one of them: he is the fifth brother really.”

It is understood MacLennan was backed amid fears a new broom could cause some of its cherished entrepreneurs to quit.

“The next chapter is going to require a careful balance of retaining the good bits of the culture, with leadership that creates change from the past,” a source close to the company says. “Moray totally understands it. Bringing an outsider in would have led to some significant people saying ‘I’m off’.”

Among the challenges will be tackling is the upshot of a potential shareholder rebellion at its annual meeting on Dec 31. Shareholder advisory groups ISS and Glass Lewis have urged investors to vote against the agency’s 2019 accounts, following points raised by the auditor over its accounting troubles.

ISS has also pushed for opposition to its executive pay plans, claiming a bonus structure for finance boss Mickey Kalifa flouts “accepted standards of corporate governance” because it is not linked to performance targets.

MacLennan will not want investor ire overshadowing his new corporate strategy expected in January.

He plans to wrestle its vast global business into a “much simplified structure”, to deliver “more consistent controls” and “cost reductions”.

With the advertising industry poised to recover as the Covid vaccine rollout progresses, MacLennan can expect a solid base to build on. It remains a huge test, but he has faced challenges before.

When asked two years ago if he felt out of his depth after being promoted to director in his 20s, he pointed to one piece of advice: “There is only one thing that you ever need to know in business – no one has a f------ clue what they are doing.”

This time, investors will be hoping for the contrary.