Thursday 18 July 2019

'The days of the client being the only one with something at risk are gone'

In person: Patrick Hickey

The big buy-out: ‘For the first 15 years of the business we didn’t even have a partnership agreement,’ says Rothco CEO Patrick Hickey. The self styled advertising punks are now part of globe spanning Accenture Interactive. Photo: Kyran O'Brien
The big buy-out: ‘For the first 15 years of the business we didn’t even have a partnership agreement,’ says Rothco CEO Patrick Hickey. The self styled advertising punks are now part of globe spanning Accenture Interactive. Photo: Kyran O'Brien
Donal O'Donovan

Donal O'Donovan

Last year's sale of Irish creative advertising agency Rothco, to Accenture, a global giant best known to many here for managing nuts and bolts IT contracts for the likes of the Gardaí and Department of Finance, was a shot out of the blue for the Irish media sector.

Rothco CEO Patrick Hickey is enthusiatic about the corporate access and global footprint the deal brings the Dublin firm, but he also sees the tie-up as a hedge against a media market undergoing intense change.

Hickey brings me on a tour of the agency's offices in Dublin's hip Smithfield area; "designed to give Google building envy", Hickey chuckles, though he's absolutely serious.

The offices are slick, with break- out areas, sweeping collaborative spaces, cool meeting rooms and tiny privacy pods.

The fit-out is top of the line and bang up to date, a blend of industrial and 1960s Scandinavia. There are deep blacks and oranges and surprising amount of rich green foliage.

Among the staff, the vibe is more hip young tech worker than Saatchi yuppy.

Hickey is a smooth-talking Dublin ad man to his finger tips, selling the firm and the office hard as we do the walk-through, sprinkling his conversation with buzzy jargon and at the same time lacing the delivery with humour that offers a vaguely subversive assurance that he's alive to the ironies of the industry.

Rothco's story has included some sharp changes of directions - the sale to Accenture is only the latest.

It's a strange mix, I suggest, a global IT consulting behemoth comes with access into boardrooms worldwide, but on the face of it is a strange fit for an Irish partnership with a self consciously punk energy. "We were never going to end up in an expected place," Mr Hickey smiles.

Rothco has been through transformative change before. After launching in 1995, Hickey and partners Paul Hughes, Patrick Ronaldson and Richard Carr built up the business in the sales promotions area. But they have always wanted more.

A strategic decision in 2001 to exit the segment meant walking away from €3.5m per year of work - to refocus on higher value-added brand work.

In hindsight it paid off, but it must have been a leap of faith?

"We knew if we didn't do it we'd always be also-rans," Hickey says frankly.

They doubled back into sales promotions later and its still part of the overall business.

But the break worked. They won national scale in the creative ad market, with clients like AIB and Aer Lingus, and were really starting to motor by the mid-2000s.

"And then the wave hit," is Patrick Hickey's ironic summary of how the financial crisis almost overwhelmed Rothco. Ironic, because Rothco and AIB had waited a full year to film an epic advertisement for the bank, featuring surfer John McCarthy riding a massive wave off the Clare coast at Lahinch.

Then the financial crisis hit, sweeping ad budgets - and very nearly ad agencies and banks - before it.

"We'd waited a full year to make that ad and then literally within months the crash had happened ...so lots of people didn't see that ad for very long," Mr Hickey says.

Rothco did ride it out - with a mix of luck, quick thinking and hard work.

A saving grace was that the partners had avoided the big pitfall of tying the business to investment property.

"We thought there was something wrong with us because we were concentrating on our own business and here were all these people who were in a position to go and buy a building and suddenly have life-changing money a year later," Mr Hickey recalls.

Rothco had looked at buying a building near the top of the market, but stopped short partly because AIB, the bank they knew best, didn't go for it.

"I remember, again it was another seminal moment, saying that we should not do this, this just doesn't feel right because we'd been with them for a year (AIB) and we trusted them and we knew the inside of them. I know that sounds controversial because of what happened, we had a lot of good people from a client point of view and for our own client to say no kind of resonated with us, so we didn't go ahead." He adds: "Decisions that we took, in hindsight to be fair it wasn't all luck, we were very focused on what we were trying to do."

It meant the firm was faster in the water after the crisis hit, but with the financial tide out for its clients, that was only so much help. The answer was to get into a bigger pond. "I have a story, where I pulled up outside the building and just got this overwhelming sense of responsibility for the people who worked with us, and I went in and said: 'the recession is over and we're going to internationalise the business'," Hickey says.

That's easily said, hard and expensive to do, I suggest? Hickey laughs: "The boss gets to say this stuff and other people figure out how it works."

It did work though, and now 46pc of Rothco's business is international - that's international work for international clients, Hickey points out, not overseas work for Irish business or firms with a connection here.

He heaps praise on Enterprise Ireland for helping that to happen. "They have been phenomenal supporters of ours along the way, and in turn I'm very proud to say we delivered for them. Every single grant that they gave us for recruitment we delivered on. We delivered all the numbers, all the jobs."

Rothco's big international break was winning creative ad work for Heineken, They'd previously done work for Murphy's but working with the parent brand gave Rothco a global shop window.

"That (Heineken) work was seen at an international brewing conference, in Malaysia I think, and the team at Tiger Beer globally asked us to pitch, we won that pitch, which again was an absolute revelation from Dublin - how can you do that?"

Success bred new challenges - did they need international offices, did they have the right mix of skills and services?

But there was also a dawning realisation that the traditional advertising market was disappearing.

"A bit like 2001 when we had stopped the sales promotion, it was not so much that we could see that the ice berg is melting, it's that it's gone.

Cheap and effective technology has shifted the skills balance within the industry, Hickey explains.

"I'm not even going to say low barriers to entry - there are no barriers to entry - for clients themselves to be able to deliver on things," he says.

Hickey cites his own kids, who can turn around film at a pace and standard that would have been unimaginable a few years ago.

For Rothco the answer has once again been to shift up the food chain. "There are clients looking for tactical but it's disposable work that will live and die very quickly, and a lot of traditional advertising delivery will struggle with that," Hickey says.

The better place to be, as he sees it is alongside those bigger organisations that place a value on strategic thinking - both from a communications point of view and from a creative perspective.

That's where Rothco, within the bosom of Accenture Interactive, is pinning its future.

"We could see this coming and the only thing that we've ever wanted for ourselves and the people in this business is to have a bigger stage. To be working in bigger projects that are trying to have a meaningful - make a meaningful - difference."

"Its easy to say 'we do interactive creativity through technology but if that isn't based on a very well founded strategic creative platform you are going to waste money and possibly do your brand damage," he says.

As Hickey sees Rothco's role now, it is taking the creative disciplines from the ad space and using them to work with organisations to solve problems and create value.

"The healthcare sector, the public transport sector, financing and housing, and we don't want to be involved in only advertising mortgages, we want to be involved in the creative construction of the experience; delivery of new and innovative products that are going to help people - genuinely help people," he explains.

"We want to create stuff like that for our clients. Somebody in a hospital waiting room being there for half the length of time because a bunch of creative people have helped figure stuff out to make it more efficient, that's worth a lot, to be able to assist in things like that and, as I said, the beauty about this organisation (Accenture) is that they have so many diverse functions around the world. It makes a massive difference."

In fact, Hickey first approached the firm well over a decade before it ultimately bought Rothco.

He wrote to Accenture in 2005 to proposed a joint venture, he says. "We were never going to really, really deliver what we could potentially unless we were in the (client) board room. We understood that Accenture had solid gold boardroom access globally and we also - I got a sneaky suspicion - and we'd heard that sometimes when they were presenting projects they would present them very creatively.

"Anyway we never got any response to that letter, but we always had that intention. We always wanted to do proper business, to be judged for the commercial impact." When Hickey and his partners did start to look seriously again at a sale, in 2017, Accenture was one of three businesses they spoke to. The Rothco side saw themselves as a good fit in the Accenture Interaction.

"The business is evolving into much more of an experience delivery business, by intention because we do want to be in at the start of when somebody spots that there is a problem or an opportunity and we want to be all the way to.

"That's the intention - it's to move from what you'd classically call advertising creative into the delivery of experience - for the same group of clients.

"There are a lot of wonderful and creative advertising agencies in Dublin, London and New York but very few organisations have the ability to plug that sort of strategic and creative thinking into the delivery that they have, so why did Accenture buy us - for that reason," he says.

A changed industry means a changed charging model. It's already starting to happen, Hickey says - shifting to a profit-sharing, rather than a pure invoice model, for work.

"We operate all the traditional models of charging but we also operate, and have done for some years, a value pricing model which is output based; so if the thing delivers, you get x. If it doesn't deliver, you get x minus. The days of the client being the only one with something at risk are gone, but equally the days of the client capitalising on what could seem like a really simple idea but actually generates a huge amount of revenue for them from a creative agency, they are also gone too."

The awareness of those changes within the core Rothco team was the big prompt to go looking for an outside buyer.

"The time to be considering that is not when you are at the top of the mountain, it's when you can see that you might crest in the next year or two. So you start there, start getting yourself ready for these conversations."

Getting sale-ready started years ahead of the deal, he says, including carving out distinct roles for Richard Carr as MD and himself as CEO, with Hickey's fellow founders, Patrick Ronaldson and Paul Hughes, as directors of strategy.

It left Hickey free to handle the sale.

"Throughout the transaction it was me in the room on my own. That wasn't anything other than that we had our own plan and we wanted our business to continue to grow and be stable, so we couldn't afford distractions."

Hickey was front-of-house, but kept the others in a close loop with detailed feedback.

"I still have the WhatsApp group. Every now and again I throw them open to make myself laugh. They are more like theses - because I would come out and sit somewhere quiet and literally try to verbatim recount everything. Because, from an ego point of view for equal shareholders in the business ... I know I would struggle not being in the room in spite of me knowing it was the right thing to do. That was whole new learning which I enjoyed."

My mind strays briefly to the thought that the Civil War might never have happened of Dev and Collins had been on WhatsApp.

Anyway, the Rothco-Accenture deal was done without bloodshed. Hickey says the four-way relationship has always been strong. "For the first 15 years of the business we didn't even have a partnership agreement," he says.

There was an inevitable disruption afterwards, he reveals. Rothco's own clients were keen to ensure that the slightly edgy firm they were used to dealing with wasn't going to change. "The obvious fear factor for anybody is that if Accenture Interactive buys Rothco then Rothco is expected to behave like Accenture Interactive.

"Again we - anybody who knows us knows we are very different people - are united by values and principles but in terms of our behaviour we are very different.

"So, I personally struggled hugely with that and a lot of us in here - our culture is relentless, obsessed, but also punk, we do have that and that is what the organisation wants us to be, at the most senior level. I know it's a line but they are trying to live up to it to be fair, a culture of cultures."

Within that, it's a good fit he says. "Accenture Interactive, its entire mission is to elevate experiences for humans around the world through their clients. I personally buy into that. I think it's a brilliant thing to be able to do."

The reality of collaboration can be trickier - but a strong idea can cut through he challenges, Hickey reckons. "We can have all the theory we want, we can have scrum masters, agile thinkers, project manager - whatever you want - but until you put an unbelievable idea in the middle of the table, that everybody says 'I want to be part of that', it's hard."

"(But) you get a bunch of people who are very committed to realising something - because it's a great thing - then all of those seeming barriers, they melt away because everybody wants the same thing regardless of their discipline or the entity, to be honest."

Meanwhile, for Rothco, being part of Accenture has helped open doors. "As you'd expect, you've got to earn your stripes but we've had some lovely introductions - particularly internationally - and we are certainly working with other people who we wouldn't have been previously. You go through different hoops, but for example you might go through three different workshops. There's a lot of investment involved in that - so it's as good as a pitch, just a different version of it."

"It is very different - I think that's my favourite bit - if somebody here thinks of something we are in a position to send an email or make a call and nine times out of 10 someone is going to respond with 'Yes, but it's going to take me a couple of weeks to set it up', whereas (before) we could have had this dream for three years and not been able to realise it."

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