The first media superpower

Late one Friday afternoon, the no-nonsense Ted Bates ad agency exec explodes: "I don't know what you people do in Europe, but your idea sucks, you can stuff it where the sun don't shine."

It's 1987 and Saatchi & Saatchi Group's worldwide media director John Perriss is in New York pitching the idea of a centralised media buying operation, which would eventually result in the launch of Zenith, to full-service ad agency luminary Steve Leff. "I'll put you down as a 'don't know' then," retorted Perriss, figuring a local bar would be a better place to continue this unpromising conversation.

The response from Saatchi US ad veteran Carl Spielvogel was even more trenchant: "If you think it's such a good idea, then why don't you go and fuck it up in your own back yard."

Back in London, the reaction wasn't much better. Saatchi's chairman Bill Muirhead even leaked the story of his company's new media buying behemoth to the trade press to try and head the idea off at the pass.

The truth was these gentlemen were scared. Advertising was on the verge of a truly groundbreaking moment and the full-service agencies didn't like what they saw. The days of having creative and media under one roof were coming to an end.

While clients would happily trade at 10%-11% margins for full-service work, the traditionalists knew that once creative was split from media they would only pay a 7%-8% premium for creative. When spread across the gigantic accounts these agencies ran, this totted up to significantly less revenue and profit.

The full-service veterans were also worried about the potential client conflicts that would be created by several agencies grouping together for media buying. But inexorable change was coming, and Perriss knew it would be better to be part of it than swept away by the competition.

Twenty years on, and ZenithOptimedia, as it is now known, celebrates its birthday this month.

Its story began in 1986 when Perriss sent a memo to his boss Maurice Saatchi, whose eponymous company had been on an agency buying spree but was struggling to exploit the economies of scale brought by greater size. Perriss was convinced one area where size really could work to clients' benefit was media.

Saatchi's already controlled about 15% of ad spend in the UK market, mainly through its BSB Dorland, KHBB and Ted Bates agency subsidiaries, and Saatchi's own media department. And it took 20% of ad spend on US network TV, bought principally through its nine main full-service agencies over the pond - hence Perriss's trip to the US.

The bulk-buying template had been established in France by Carat, which developed a very profitable business based on group deals, with clients tolerating potential conflicts if they got a good price on their media.

Carat would eventually enter the UK market after Zenith by acquiring TMD, but Perriss was determined his dream would come to fruition first. "If we do it right, we could get a bigger share of the market and a better deal for our clients," he told a convinced Saatchi, who in typical fashion told him to "go away and do it".

In August 1988, Saatchi's bought leading media independent Ray Morgan & Partners, bringing the expertise of Derrick Southon and Christine Walker into the nascent group buying operation. In October, after much umming and aahing about a name, Zenith Media Buying Services was born in a light industrial unit in west London's rundown Paddington area.

"Two hundred of us moved into temporary warehouse space in Paddington," recalls Steve King, Zenith's then media group head. "On the first day, Maurice Saatchi and Bill Muirhead came over with cases of beer and did a welcome drink - and they never came back. That was indicative of what they thought of the place."

Zenith's first regional media director Roy Jeans, who is now chief executive of IPM, says: "The working conditions were crap. There was a film of dust over the desks in the morning from all the building work. Then everyone piled into The Dudley Arms after work. We worked hard and played hard. It was like a university campus, with a 60:40 female to male ratio."

King, who is now ZenithOptimedia's worldwide chief executive, recalls others who were sceptical about the group buying concept. NatMags' managing director Terry Mansfield had already responded to the trade press story with "we will not deal with Saatchi's buying shop", and the Daily Mail's Guy Zitter agreed.

King faced a series of make-or-break meetings with high-profile media owners. "We met LWT's top management: Ron Miller, Craig Pearman and Derek Hemment," he says. "The three of them rarely went anywhere together, but they came here and we explained our position. I wasn't sure whether they were going to trade with us."

King believes that if the three TV buying legends had called it differently, Zenith wouldn't be here today. "They were convinced we had the client support, which we may or may not have had at the time," he adds. "There was a lot of bluff on both sides. Importantly, they thought they could do rather well out of it. Instead of dealing with four buying points they could deal with one and, like any media owner, if they could get a larger slug of it they would go where the money is."

King remembers people being locked together by a "common adversity" in the early days of Zenith, under chief executive and chairman Ray Morgan and head of TV buying Christine Walker. In the first few months, some clients did leave, such as BT and Heinz. "We had a fractured management team," says King. "None of us had ever worked in this cultural aggregation of businesses being pushed together without much pre-thought or plot."

King believes this helped define the careers of the who's who of media that passed through Zenith (see page 24). He says: "It taught us about the benefits of working in a tightly knit team and about having a clear point of differential in the market - even if it was crap."

Zenith's point of difference was its blunt "Nobody Buys Cheaper" mantra, which, in hindsight, was not the best in branding terms. "Even though that positioning only lasted about three months, I still meet people who worked for us 20 years ago who remember the slogan," says King.

Zenith was essentially a media buying factory, typecast as a lowest-common-denominator operation. In retrospect, it became clear that the new-style media agencies had to customise their proposition to the market and evolve their businesses appropriately. "You need people with differing backgrounds," says King. "We all knew how to buy media, but I'd never done a media plan."

Despite this, the agency prospered and Perriss believes the "shedloads" of money it made kept Saatchi's afloat during the '90s. Zenith eventually became the first agency to bring bulk buying to the US and Asia, although America still proved a tough nut to crack, with the group buying concept known as the "European disease".

Graham Duff, chief executive of Zenith in the late '90s, says: "Zenith sent shockwaves around the industry, led directly to the creation of ITV Sales and was fundamental to the model we have now. I didn't realise the magnitude of what I inherited."

Eventually Publicis came calling, Zenith became ZenithOptimedia and the agency evolved into a very different beast from the media buying factory of old, although it only moved out of its famous Paddington home to a brand spanking new Percy Street office in 2006.

Perriss says Zenith's legacy is that "it increased media's profile and made it as important as creative", and there is little doubt Zenith's launch and the unbundling of media from creative changed advertising forever - and provided some of the most high-profile individuals in media with a launching pad for their careers.

THE FOUNDERS

John Perriss
Perriss eventually left ZenithOptimedia four years ago, after falling out with Maurice Levy, chief executive of Publicis Groupe.

Steve King says: "John was an extraordinarily hard taskmaster, but he was always objective and absolutely the best businessperson I've worked for. I used to go into budget meetings with him knowing 10 times more about the market than he did, but within minutes he would rip me to shreds with his ability to analyse a profit and loss account, which was second to none."

Perriss is now largely retired, spending his time tending his farm and horses near Cheltenham.

Christine Walker
Steve King says: "She was clearly a very visible personality and very polarising, but absolutely 100% committed while she was here."

Roy Jeans adds: "Christine was a brilliant salesperson; she would be on the phone all day. She was always selling and her motto was to get out to see people and talk to them."

Walker brought Andy Tilley into Zenith in 1991 as the agency's first planner, realising that the company had to evolve beyond pure media buying if it was to prosper in the long term. She resigned in 1997 to set up Walker Media.

Derrick Southon
Steve King says: "Derrick was legendary; I learnt more from him than anybody else. He had an incredible eye for detail: he would go round every evening looking at people's tear sheets or booking schedules and putting marks on them.

"He used to say: 'Steve, judge people by what you inspect, not by what you expect.' That need for an eye for detail will never be lost in media, and when we screw up it's because we haven't got that."

Roy Jeans adds: "Derrick was the most brilliant person I ever worked with. I learnt to make sure you do what you say you're going to do."

Southon retired from Zenith in 1998.

WHAT ZENITH MEANT TO ME ...

Neil Jones
Joined from Saatchi's and worked at Zenith from 1988 to '91, rising from print buying manager to associate director, print. He is now managing director of Carat

"Zenith launching was an iconic moment in the industry. Until then, full-service had dominated. The independents had some share, but Zenith was the first media dependant. It changed the balance of power. It took a long time to get the agency working well. There were a lot of agendas, egos and politics. But if you were good, you prospered. It was a very challenging culture, but it made creative agencies take media agencies seriously."

Roy Jeans
Former regional media manager at Saatchi's, who joined Zenith in 1988 as regional media director, rising to general manager. He is now chief executive of IPM

"Many people were frightened about what the original Zenith represented. People didn't like the idea of central buying, but it enabled clients to get another 15 points off their media spend. Leaking information on competing clients was a sackable offence and it never happened, which is why Zenith worked, but it took three or four years for us to be accepted. We were doing something new: the agency was very tough and genuinely groundbreaking."

Graham Duff
Joined Zenith from Meridian Broadcasting in 1993 as UK head of broadcast and rose to chief executive before leaving in 2001 to become managing director of ITV Sales. He is now president of IPG Media Brands EMEA

"Working at Zenith was the best thing I ever did. I learnt so much from Christine, John and Derrick. They all had different skills and operated in different ways, but they also all had a certain air of insanity about them. Zenith is a completely different beast now to the agency I worked for, but I'm immensely fond of the people who remain, and proud of what we did."

STEVE KING ON TWO DECADES AT ZENITH

Steve King has worked at Zenith throughout its 20-year history, rising from media group head in 1988 to his present role of worldwide chief executive. The agency has developed from its roots as a media buying factory into the sophisticated global network it is today.

"At first we had no data, no computers, no e-mail, no systems," recalls King. "Myself and Steve Booth (now chief executive of Arena BLM) went into a negotiation with a big media owner carrying a file with all the price data on clients. Of course, there was nothing actually in the file - it was full of press cuttings."

King observes that he could now find out what Zenith is spending on the top three media points in Kazakhstan within 30 seconds.

But it could all have been very different. In 1991, King and director of press Simon Pardon were courted by Nigel Sharrocks, then managing director of Grey Advertising, who wanted to set up a new media department.

The deal was pretty much done when Zenith came back with a counter-offer he couldn't refuse that resulted in King becoming deputy managing 0director, with Pardon, now director of trading at GroupM EMEA, left without a job at either agency. In some quarters, the infamous incident was dubbed "a King's ransom, but no Pardon".

King ended up leading Zenith's expansion into the US in 1994, staying three years to set up the group buying concept Stateside, to considerable opposition from within and without Zenith.

By 2001, with King back in the UK, Zenith was struggling to compete with Carat and the other networks who had invested heavily in their media businesses. "We weren't able to invest," explains King. "Our two holding companies - Saatchi & Saatchi and Cordiant - wanted us for different, financially incompatible things."

Media buying group Optimedia was already owned by Publicis, with Zenith half-owned by the French ad group, which acquired the rest of Zenith in 2001. The brands were kept separate until King was appointed chief executive of the newly merged ZenithOptimedia operation for Europe in 2002.

King says Zenith would have had to do a third-party deal with someone such as Grey or WPP to survive. "It's now almost impossible to compete unless you have scale and global management," says King. "Zenith would not be successful without Optimedia."

King took over as ZenithOptimedia global chief executive in 2004, when John Perriss fell out with Publicis Groupe chief Maurice Levy. He recognised the need for clear positioning, but had learnt from the "Nobody Buys Cheaper" fiasco of the early days.

"We positioned ourselves as the ROI (return on investment) agency," explains King. "I wanted something that had real connectivity and credibility with our clients."

The group now employs 400 people in the UK and 4,700 worldwide - a far cry from the early days. "Paddington was a great classroom," says King. "We learnt in a brutal and brutalising environment. It's no coincidence that so many of our managers have gone on to success elsewhere. You won't find any top media agency that doesn't have some talent that has passed through our doors."

ZENITH HALL OF FAME

Lucy Banks Mindshare
Jenny Biggam The7Stars
Damian Blackden Omnicom Media Group
Steve Booth Arena BLM
Gerry Boyle ZenithOptimedia
Faith Carthy I-Level
Danny Donovan Initiative
Graham Duff IPG Media Brands
Simon Francis Saatchi & Saatchi
Jim Freeman Telegraph Media Group
Tom George Mediaedge:cia
Rosemary Gorman Evening Standard
Tim Greatrex Film 24
Greg Grimmer Hurrell Moseley Dawson & Grimmer
Frank Harrison ZenithOptimedia
Jeff Hyams Mediaedge:cia
Steve Hyde 1700 Group
Roy Jeans IPM
Neil Jones Carat
Ollie Joyce Rise
Steve King ZenithOptimedia
Nick Lockett Arena BLM
Simon Marquis National Readership Survey
Ray Morgan
Derek Morris ZenithOptimedia
Kevin Morton Equinox
Claire Myerscough Times Newspapers
Tim Neligan Zenith Optimedia
Simon Pardon GroupM EMEA
Pru Parkinson ex-Starcom Mediavest
Andy Pearch ex-Billetts
John Perriss
Yvonne Scullion CBS Outdoor
Adam Smith GroupM
Derrick Southon
Andy Tilley Unity
Greg Turzynski Experience
Christine Walker
Peter Williams ZenithOptimedia
Antony Young Optimedia International US.

This article was first published on Media Week