Cossette is crying all the way to the bank
Passed up for award, agency reports record revenues, profits

Liberace once claimed to be very distressed when critics panned his series of six sold-out shows at New York's Radio City Music Hall: "I was soooooo saaaaad," said the late glam-pianist, "I cried all the way to the bank."

In the advertising world, Quebec City-based Cossette Communication Group Inc. is also crying all the way to the bank. Last month, the same week the agency was passed up by prestigious industry trade journal Marketing Magazine as Agency of the Decade, the company announced record sales and profits.

Cossette, already largest agency in Canada for the past two years, according to the magazine's annual rankings, saw its gross revenues jump 14.2 per cent to $94.1 million for the fiscal year ended September 30, 1999. Net income was up 17 per cent to $8.3million, ($0.52 per share) for the same period.

In an editorial explaining its choice of Toronto-based Roche Macaulay and Partners Advertising Inc. as Agency of the Decade, Marketing Magazine's editor Stan Sutter said the creative boutique proved "a Canadian-based agency could do world-beating, cutting-edge work for clients, at home and abroad, with the talent and resources here."

The choice of Roche Macaulay as Agency of the Decade was a gutsy one for the publication, since the agency does not appear among the top largest companies in its 1999 industry rankings, and did not even exist, when the decade began.

But that hasn't stopped Roche Macaulay, which is affiliated with the huge London-based Lowe Group, from winning a bucket full of creative awards including recognition from Advertising Age magazine as International Agency of the Year in 1998.

While acknowledging Cossette as "a wonderful homegrown Canadian/Québécois success story," Sutter said the agency was "in many ways an anomaly on the Canadian ad scene," because of its independent status in an environment where much of the industry has become intertwined with larger American players.

Maybe it's just a Quebec/Ontario thing, but in Montreal, where a good chunk of Cossette's employees are based, and where this column is being written, the scales tip differently than in Toronto, where Roche Macaulay and Marketing Magazine are headquartered.

Roche Macaulay is a solid, innovative shop. But Cossette Communication Group's qualifications as Canada's Agency of the Decade: its size, its decade-long steady revenue and profit growth, the quality of its work and the loyalty of its client base, cannot be ignored.

Size, in terms of revenues or jobs created can be misleading statistics in business. Few people go into business just to say they created jobs, or generated revenue ­ most go into business to make profits. But size it is a good indication of a company's prominence and impact in a given industry.

Cossette, with its more than a thousand employees, has been among the ten largest Canadian agencies for the last ten years, and its lead is increasing. Here in Quebec it is more than twice the size of its nearest competitor Publicis Canada.

Profits, are often underestimated as a source of agency strength. New agencies tend to be founded by creative personnel, many of whom have little administrative experience. Startup shops are always running into cash crunches. That is one of the main reasons for both the high failure rate among new agencies, and the large amount of mergers, acquisitions and re-structurings in the industry.

Long-term profits are crucial to effective customer service. There is a strong temptation for agencies in a cash-crunch to recommend solutions to their clients based on how large a commission they will earn, as opposed to how effective the advertising will be. This decreases the effectiveness of the advice given and the relationship inevitably suffers.

It's impossible to get solid profit statistics on Canada's agencies since most are privately held. But when it went public earlier this year, Cossette released long-term data indicating double-digit, compounded, EBITDA growth dating back to at least 1993.

Cossette's long-term profitability is a big reason it has maintained such loyalty from its blue-chip customer list, which includes Bell Canada, McDonald's Restaurants of Canada and Coca-Cola Ltd. The agency's five largest clients, have been clients for an average of 12 years, an impressive statistic, in an industry where executives change ad agencies as calmly as they change underwear.

Cossette cannot seem to escape the knock that it does not win the creative awards it should, relative to its size. This, in spite of the fact it collected two-dozen prizes at Quebec's Coq D'Or awards this spring.

But creative awards are vastly overstated as a measure of agency effectiveness. A commercial has to be good, but much more importantly, it has to reflect the advertiser's overall marketing strategy and identity.

For example Roche Macaulay produced two of the best creative campaigns of the decade, but with vastly different results. A print campaign for Harry Rosen Inc. featuring celebrities attired in the men's wear retailer's clothes, featuring the tagline "Here's what such-and-such will be wearing today," was especially effective. It tied in well-dressed personalities with a retailer targeting that market.

On the other hand Roche Macaulay's beautifully executed Eaton's commercials created a huge disconnect, between what viewers saw on the television screen, and the products they got in the stores. If you accept that agencies can take credit for their client's successes, you have to also conclude that Roche played a role in Eaton's demise.

When asked, like all advertising people, those at Cossette will tell you that good creative is the key to their success. But Cossette's ads are generally not of the in-your-face kind that attract industry attention. The agency tends to produce lower-key advertising that solidifies relationships and builds brands.

Cossette has also distinguished itself by effectively exporting creativity. Through building alliances, the company, founded by a group of francophone Quebecers has managed to generate a huge market share in English Canada.

This shows both an internal organizational ability to develop diverse teams and the wherewithal to deal with cross-cultural marketing issues ­ skills crucial for any Canadian agency looking to generate business south-of-the border, as many are.

Agency of the Year? Here in Montreal, the scales tip in favour of Cossette.

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  © 1998 Peter Diekmeyer Communications Inc.