As reported by CampaignLive last week, SapientNitro, the integrated agency born out of a merger between the business and technology consultancy Sapient and the global creative network Nitro, has had some bad press of late. Talk began when Chris Clarke, the founder of Nitro, left the company at the start of the year. Then in June, it was reported that SapientNitro had lost the last remaining chunk of its global creative Mars business: the Dove (Galaxy in the UK) chocolate account that is worth $30 million in the US alone. That same week, the network’s North American chief creative officer, Kathy Delaney, also quit. Cue a headline in Adweek, “Sapient’s $50 million Nitro deal goes bad”, which picks apart the failings of the two-year-old merged company.
Ever since Sapient bought Nitro, the industry has been doubtful as to what these contrasting bedfellows would create. The reason was twofold: first, it was unheard of for a digital shop to take over an above-the-line agency, when everyone else was doing the opposite; second, Sapient was not your average digital shop. It was a business consultancy that once topped IBM in the e-business charts. At the time, the deal had the appeal of a botched Frankenstein job.
A year later, however, the company showed promise when it made a couple of key hires, including the former Ogilvy executive creative director Malcolm Poynton, now its chief creative officer across Europe, and the company convinced many of Nitro’s clients to do through-the-line work. But now, with the recent departure of people and business from its creative waters, it begs the question: is Sapient back to square one?
Sapient’s executive director and worldwide chief creative officer, Gaston Legorburu, dismisses the headlines. It’s only fair, then, to give him right of reply to all the talk surrounding the company, so Campaign fires him a list of criticisms doing the industry rounds:
1. SapientNitro is known for its technological capabilities, not its creative flair. “I think that’s our legacy, yes,” he admits. “But I think if you look at new wins and awards that we’re bringing in, we’re clearly very focused on creativity.” Legorburu is referring to recent work such as Sneakerpedia, an online sneaker community for its client Foot Locker, which won a gold Cyber Lion at Cannes this year and is credited to Poynton’s leadership.
2. Clarke’s departure has left a big hole in Sapient. “Nitro was less than 5 per cent of the business,” Legorburu says. “And Chris wasn’t very active.” Ouch! Later, the global chief marketing officer clarifies that, of the company’s total revenue, 15 per cent has a television component – showing that Nitro contributes more than 5 per cent.
3. The loss of the Dove account is a sign the merger hasn’t worked for Mars. “That had nothing to do with us and Nitro not working, it was due to Mars consolidating its roster. Our relationship with Mars is still strong. We do all of its digital production,” he says, before adding: “The back end of it is bigger than what the front end of it was in the first place.”
4. But what about the news that Coca-Cola moved its brief for its sponsorship of the 2012 Olympics from Sapient to LBi in July? “SapientNitro was responsible for the Coke Olympics Future Flames work and delivered it. It was a project. All agencies on the Coca-Cola roster pitch for individual projects,” he explains. “The work we lost in the UK to another agency on the roster was to rebuild a platform we had already built.”
5. There aren’t many of Nitro’s original clients left and this is why Delaney left. “Outside of Dove, the whole thing is still intact: ConAgra, Foot Locker, Volvo etc,” he stresses. “There are some folks that believe traditional advertising is the centre of the universe, and the digital-savvy folks are second-class citizens. Kathy didn’t embrace integration like others did.”
6. SapientNitro is an IT company that has struggled to become a marketing company. “That’s just plain untrue. The amount of transformation is crazy,” he replies.
7. Before buying an above-the-line agency, Sapient should have brought in the more granular digital services first: the CRM, the social, the search. “I think that is very true to London – it was one of the reasons we acquired DAD (the digital and direct marketing agency) in September,” he says. “When we acquired Nitro, we had really great web chops, but we missed that middle step.” Legorburu also refers to the recent folding of the social specialist Kinship Networking into the company. “We’ve closed that gap now,” he adds.
8. What drives most of Sapient Nitro’s growth is a lot of e-commerce and a lot of Indian outsourcing. “Yes, we have a phenomenal e-commerce business,” he remarks. (No-one would deny that SapientNitro is brilliant at e-commerce. Marks & Spencer clearly knows this: it appointed the company at the end of the summer with the view to boost e-commerce revenue to £1 billion by 2014.) He continues: “But the Indian outsourcing thing is a silly idea. We are not in the outsourcing business; never have been. We have a big presence in India, but we don’t go to Ladbrokes and say, ‘We’ll sell you 20 programmers in India.’”
Legorburu says that Sapient’s move to acquire Nitro gave the Sapient network “credibility” in the marketing space. Acquiring Nitro may have boosted its marketing credibility, but what about its advertising credentials?
Our view
Sapient appeared to have made a very bold move a couple of years ago in acquiring Chris Clarke’s creative micro above-the-line network and fusing it with Sapient’s heavy lifting technology to create SapientNitro.
Was it madness, stretching the elastic band of credibility or a carefully thought through long term strategy?
Let’s not get ahead of ourselves and damn them too quickly.
Their original offering is still in place for Fortune 500 companies, government services & the financial community offering back end technology, consultancy and marketing services through Sapient Global & Sapient Government Services.Their thinking clearly was to move into the ‘branded’ arena by this acquisition creating a third arm, SapientNitro. Was it ego driven to ‘own’ a classy brand portfolio?
If you look carefully there is however evidence of longer term strategic thinking in the acquisition in 2006 of Planning Group International, a small integrated marketing agency which clearly whet their appetite for the ‘branded’ market opportunity.
Acquiring Nitro in 2009 was a brave move not so much in the strategic thinking but they choose the wrong creative shop to do it with. A marriage too far too fast. The brands & culture were too alien to each other and the inevitable fall out has not stopped with Chris Clarke himself leaving very recently. The idea was right. The partner was wrong.
However, there are clearly some brave and smart thinkers at the top of Sapient because their recent acquisition of DAD – the digital & direct agency in the UK – is exactly the type of agency they should have bought before Nitro. DAD easily bridges the gap, inevitably has a high component of digital understanding and a culture far more like Sapient’s.
A classic & costly mistake but in the long term a statement of intent and a brave one.