DraftWorldwide Builds European NetworkBRUSSELS, Belgium -- DraftWorldwide, the Chicago-based integrated marketing giant, plans to complete its Western European network by the middle of next year with new acquisitions or start-ups in Italy and Germany.
It is present in both countries but needs to add sales promotion and digital agencies to round out its client offering, said Jean-Paul Dupuy, president of Draft Europe, who was in Brussels for last month's Federation of European Direct Marketing forum.
Germany is especially important because it accounts for 30 percent of all European direct marketing spending. Draft already has four agencies and a small database operation there but lacks a strong digital presence.
"Our agencies in Germany are mainly DM shops with a bit of digital work thrown in, but not the major digital activity you need to have on the German market today," Dupuy said. "Acquisition is an option for us. It would give us immediate credibility and the critical mass you need to be a serious player. But we could also develop a digital division from our existing agencies. Certainly developing organically is a route we may explore."
The same holds true for Italy, where Draft has had a DM agency in Milan for the past 12 years but is not as broadly established as it is in Germany.
Overall, the agency's European network has grown rapidly since 1998. It then had six agencies employing 80 people, mostly in France, Italy, Spain and the United Kingdom, with the British operation on the weak side. In the past two-and-a-half years, Draft has grown into a network of 30 agencies covering a dozen countries and with a staff of 700.
"We developed a clear strategy back then: We wanted to become the European leader in integrated marketing," Dupuy said. "Clearly, direct marketing was our heritage and where we had strong roots. Sales promotion was a logical fit, and with the new technology available today, so was digital.
"In Europe every market is different. You can't compare Germany, Spain and France, but you can follow the same overall guidelines. We put the same strategy in place in every country."
In France, Draft moved out from a base position of 10 years in direct marketing to integrate database marketing and the new technology. At the end of last year it bought Topaze, a medium-sized sales promotion agency.
"We have 160 people in France today and are capable of offering all the services a client expects," Dupuy said. "We followed the same strategy in the UK, where we offer traditional DM, sales promotion and new technology."
The company has offices in London; Oxford, England; and Edinburgh, Scotland.
In the Netherlands Draft bought Bormans & Ruseller, a leading sales promotion, DM and digital agency, while last February it established a beachhead in Scandinavia through the purchase of Trampolin, a group of DM agencies in Stockholm, Sweden, which Dupuy described as "the hub for Scandinavia."
Germany is too fragmented to make decisions from one location, so Draft has multiple offices there.
Dupuy said European business was concentrated in the key triangle of France, Germany and the UK, which accounts for 60 percent of total European advertising spending.
Other markets are important, but "clients don't care if you are weak in Portugal," he said, provided you are strong in key markets.
As for expansion beyond Western Europe, Dupuy said Draft "sees opportunities in Eastern Europe, especially in Poland, which is going through the roof right now." Hungary, too, he said, is "beginning to move."
But the company will only consider investments in the region after the Western European network is fully integrated. Eastern Europe, Dupuy said, remains a risky place.