Robert Lerwill, CEO, Aegis Group Plc

One of the biggest things about Aegis is people don't want us to be bought by someone else, just as much as they want to buy us themselves. What really happened was Bollore (Vincent Bollore, Chairman, Havas) bought some stock - Publicis doesn't want Havas to get us, so they start talking to us - that becomes public. Sorrell (Martin Sorrell, CEO, WPP) then has a legitimate excuse to put his finger in it. He can't buy our media business because it's a conflict of interest, competition issues and because he is so bored with it and he has spent so much of money on each acquisition!

Robert Lerwill was appointed to the Aegis Board as a Non-Executive Director in June 2000 and became Chief Executive Officer in February 2005. Until June 2003, Lerwill was an Executive Director of Cable and Wireless Plc, where he served as Finance Director between 1997 and 2002 and Chief Executive of Cable and Wireless Regional between 2000 and 2003. From 1986 to 1996 he was Group Finance Director of WPP Group Plc.

In both companies he has been instrumental in developing and managing major international businesses. Lerwill is also a Non -Executive Director of British American Tobacco Plc and Synergy Healthcare Plc.

Today, as the man in-charge of everything under the Aegis umbrella, Lerwill has quite a role to fill. In this interview with exchange4media's Noor Fathima Warsia, he sheds more light on life at Aegis, talks on acquisitions and mergers and a frank opinion on India, which might make some wince.

Q. Are you thinking of any acquisition in particular right now?

I didn't say that... I'm just saying I wouldn't rule out an acquisition.

But we have had never had an offer from anybody! One of the biggest things about Aegis is people don't want us to be bought by someone else, just as much as they want to buy us themselves. What really happened was Bollore (Vincent Bollore, Chairman, Havas) bought some stock - Publicis doesn't want Havas to get us, so they start talking to us - that becomes public. Sorrell (Martin Sorrell, CEO, WPP) then has a legitimate excuse to put his finger in it. He can't buy our media business because it's a conflict of interest, competition issues and because he is so bored with it and he has spent so much of money on each acquisition! Fine, he can legitimately talk about Synovate, lovely company, but not essential to him, so he can stir the pot.

We had to deal with these things in the Aegis group, but it isn't impacting our business. Our revenue business in the first half of this year was $1.3 billion, we had some huge wins like GM, so we are doing something right.

Our share price now is above the $140-mark which was the takeout premium price that was being talked about by Publicis that never came to an offer. Whatever happens, if anything does happen and it could equally as well not happen, is all dependent on somebody putting down a cash offer for all shares and not just a portion. But that said, people who work each morning in our companies are going to come and service the account like they do even after something happens.

We don't have goldmines, we don't have monopolies, what we do have is classic relationships that makes us do things like communications planning and so on. So, none of these things are impacted by the alternations in the group - people who spent time on such things are me, the board, the legal people and I can tell you that even I didn't get up every morning thinking about Bollore and he didn't get up every morning thinking about us - he has got a million and one other interests! What will be, will be, but its impact on the day-to-day activity is very low.

We really have just one issue with Bollore, and that is complicated interest of the people on the board - now of course he would want to influence us and of course he would want to save his investments, but the corporate governance rules of the Anglo Saxon UK stock market - what he bought into doesn't allow one to direct a business with just a 30 per cent and he is the chairman and a major shareholder in competition. We talk about everything from hiring to pitches, to deals and acquisitions when the board meets. That really is the only disagreement we have with him.

As you know, we have just estranged our relationship with Percept by unravelling that. The relationship served well during the currency of the agreement, but people move on, their objectives are different and we separated our ways mutually. That does give us the flexibility to ensure that we can develop Aegis' strategy in India in a way that is totally consistent with the way we run Aegis elsewhere and we are not incumbent by any agreement. If you like, this is more of a starting point than an ending point of how Aegis would develop in India. You can't ignore India if you are looking to continue to be a global player in media.

What we have done is switch our base to be truly flexible to do what we want to do in terms of acquisitions and organic growth.

In digital, it can be all mixed up. You can have digital integrated with creative, where you are involved in making websites and net content that you know should be engaging. This is what some of our digital units, which we have acquired or created, look like and we have a different brand in different markets. We often retain the brand name of the business that we acquire simply because it already has long standing clients. So, OneDigital in Australia; in Taiwan and China we have WWins; in UK it's Fa Fa; in Boston it is ICrossMate... We don't have anything in India. We can obviously provide resource from someone like WWins and OneDigital, but I think we need something in India. There are two ways of doing that - one is to grow it and one is to acquire it and I wouldn't rule out an acquisition.

The Internet penetration in China is far higher than that in India and then the infrastructure in India for newer mediums isn't just there. As I pointed out earlier, digital terrestrial isn't here and no one has invested in cable television. I think you've also had the history of previously being skewed to print and then television. TV is being monopolised by the state, your magazines have been declining, there may be increase in inserts in newspapers as substitutes for magazines - so the dynamics are really what they are. Also, you have a history here of being democratic, certainly capitalist and the benefits or otherwise of inheriting in many cases, European English systems, which means sometimes in these things, evolution will be slower.

Digital is a subset in media. The other marketing services group are bigger than us, but many of them have chosen to be disciplines that we aren't in and we don't want to be in. So, they are in full service, PR, graphics and so on. In the two that we are in, we have the global reach and the critical mass to compete very effectively. In market research we are there with the top three or four guys. In media, we are out there with them - I mean Carat is the biggest branded agency in Europe and in the UK. In India, we are No. 6, but we would like to get bigger by organic growth and whatever way we can come up with it. We don't feel under-represented, except that we don't have a set Isobar unit in India, but as we are saying, we can import that capability in India even right now from the other Isobar units and we are looking one way or another to either internally grow or acquire a facility in that area.

-I said that we are always looking for things like that, I was not specific that we had found one. For an acquisition, more than what is available and on what terms, there always are other parameters. In our case, for instance, we would never buy something that we don't have confidence in. The people or the business we would be acquiring would be like minded. In other words, we wouldn't buy Bolton's, we buy business that could be integrated and leveraged. Like we bought a business in Australia in market research and then used it with Synovate in Thailand and so on.

Grow capability in digital, ensure that we can get communications planning for clients, we can grow local clients, get local wins and also get global wins that we can then deliver new business to India as well. We can be consistent with our overall philosophy without having to take cognizance of a partner's willingness to be or not to be involved in a certain area or shareholdings or any of the other things that are meant to protect a JV, which may actually hold us back.

That would be driven by marketers. If the capability is there for people to consume non-traditional media - I've said in the past that we have to quickly stop speaking like this - media is media! But the point is, and I'm not an expert on the way things will develop in India, that advertisers would follow the consumers even in India in the same way that the advertisers got very worried when so many individuals started spending time on YouTube - Murdoch buying My Space, Google guaranteeing him money for that - all that these people are doing is they are chasing the consumer.

People need to push their brand, develop relationship between the brands and consumers. It's really like the chicken and egg - if you can create a place that would attract consumers and then chase consumers - that is where the advertiser would spend his money on. Content has to be that much more engaging - what all this means is that clients need more and more advise and that is what we specialise in doing, and clients pay us for just that, not for buying!

And that is why we have uncluttered ourselves by getting out of Percept. We have always looked at organic growth, growth from the global network and acquisitions. And I spent time here and we do these things because that is what we want to do - get better than being the No. 6.

I think it's the speed of the trends, if you like. We expected digital to become important, but it is becoming important much faster and that's because consumers are consuming more digital media quickly than we predicted. When we look at the amount of time that consumers spend on My Space and YouTube, and because they are spending that kind of time, advertisers are saying, 'My Goodness, we cannot not be involved in these experiences and ignore these mediums'. It has all happened so quickly.

Every country is different, on a worldwide basis, in 2005 over 5 per cent of advertising spends went in the Internet, 20 per cent of our advertising revenues comes from digital, so we are way ahead of the times. India, on the other hand, has only 2-3 per cent spends in the digital space. But this does mean that there is a huge growth potential there. You don't have digital terrestrial television in India, you don't have a very sophisticated cable infrastructure, and there is very little incentive for people to create that in India, mainly because people don't like paying subscription! Although you could have more development in broadband capabilities and fixed lines, which I know the government is trying to encourage. What I think will probably happen as a way of accelerating the use of Internet activities, you may bypass the broadband and the fixed lines, which would be there of course, but you may move to mobile phones being used as Internet devices faster. 130 million mobile subscribers in India is a significant audience to look at. Digital is not just the Internet, it also mobiles, gaming and so on, so it's going to be fast growing and cannot be ignored, and the consuming classes would be the first adopters of each of these propositions. In a funny sort of way, we would be able to learn from other markets here. Big marketers would be able to bring in expertise quickly and make it as efficient as possible.

It's about three tiers up the board table! I've been on the board as a non-exec, having previously had the experience of being Executive Director of WPP, I was there for 10 years. I left WPP and held executive positions at Cable and Wireless and worked across regions in these roles. So, when the CEO of Aegis Group left, the board asked me if I could step up to the role, and since I had made no commitments elsewhere then, I was delighted to take the role and I've been doing it for two years now.

Aegis had a lot to offer in terms of experiences in the international footprint that the group has and it was the kind of role that worked for me. I benefited a lot from the strategic decisions that the board made and I was a member of that board. Going back to previous years, the biggest was the market research business that is Synovate. We confirmed our commitment to market research about four years ago when we created the Synovate brand, where we put all our research capabilities and agreed to acquire more geographically and at the same time grow more internally in depth of practices. What we've got now is global reach and best practices in areas of healthcare, automotive, retail analytics, and we are developing practices in travel and leisure. We are within market research a formidable competitor to others like TNS and Kantar.

The other thing, which I think has really come to fruition in the last two years in the media is digital media. Again three years ago we made a decision at the Aegis board to invest in the Isobar network, which is the umbrella name that we have given to our businesses internally, which has digital capability. We have now got 1,600 people around the world, knitted together in a network that is unique. In India, big market associate groups claim to have pockets that have digital capability, but they aren't knitted together to give global service in the way we believe Isobar is, which is truly instrumental in making moves at the global level - like we won the Adidas Reebok business or the Tourism Australia business globally.

These are the two things that I'm most pleased about in the last two years as CEO. I haven't found it particularly difficult to make the transition to a CEO - have been one before and I knew the people and I knew what the strategy was. It was not difficult for me to push forward with it and work with the team. I brought Mainardo de Nardis, (CEO of Aegis Media) from WPP. He finally joined us in August this year and he is running all our media businesses. Market research is run by Adrian Chedore (Executive Director, Aegis), who is on the main board who came in as a result of our buying Asia Market Intelligence a number of years ago.

It has been quite exciting and I hope to continue to bring our shareholders outstanding returns through growing faster than the market and thus, getting above average growth.