When Cossette Communication Group Inc. reaffirmed its global growth strategy last year, some observers could be forgiven for viewing the company's international prospects with a dash of skepticism.
A leading Canadian advertising and communications agency, Cossette had faltered in the key U.S. market and was still far from building a high profile for itself in London. New York City and London were supposed to be two key markets from which to build Quebec City-based Cossette into a world player.
Cossette's U.S. revenue fell 29 per cent last year, largely due to the loss of a major client – TD Waterhouse Group Inc. – after its merger with Ameritrade.
Agencies like Cossette rely on the business of a few top customers for a big chunk of their revenue, and the TD Waterhouse loss hurt.
On the London front, Cossette still lacked the critical mass and the brand-name recognition to be considered a player with clout.
These days, Cossette's global strategy looks like it is shaping up to be a little more credible.
The company that scored a huge hit domestically with its Bell Canada campaign featuring talking beavers Frank and Gordon has just acquired one of London's top online ad agencies, Dare Digital Ltd.
The purchase – expected to cost about $42-million once the third and final stage is completed in six years – is one of Cossette's biggest deals and now gives it the necessary critical mass in Britain, said chairman, president and chief executive officer Claude Lessard.
With that piece of the puzzle in place, Cossette is turning its undivided attention to the U.S., said Mr. Lessard, who with five partners scooped up a struggling Quebec City graphic arts firm in 1972 and turned it into a Canadian giant that went public in 1999.
Big names on the client list include Bank of Montreal, Cirque du Soleil, McDonald's Restaurants of Canada Ltd. and General Motors of Canada Ltd.
The ultimate goal is to become a truly global midsize firm that capitalizes on its reputation for providing a full range of services, including advertising, public relations, media buying and direct marketing.
“Having about 400 people [in London, including Digital's 130 or so employees] gives us a certain credibility, a visibility” and the potential to make inroads elsewhere in Europe, Mr. Lessard said in an interview.
“But we still have work to do building the Cossette name into a brand,” he said about the Dare deal, Cossette's fourth acquisition in Britain.
With the British platform now well in place, the big challenge over the next two years is to win over clients and bulk up the business in the United States, where Cossette currently only derives about 8 per cent of its annual revenue, Mr. Lessard said.
“We'll never be in the top five in the U.S. [Cossette ranks 15th in North America and 25th internationally],” he conceded. “But we want to be much more aggressive winning new clients and making acquisitions.”
The loss of the TD Waterhouse account led to much soul-searching about the U.S. business.
There has been a shakeup at the New York office and a new management team will be announced in the next two weeks, he said.
Part of the risk of a growth-by-acquisition strategy is that not all the purchases work out. For Cossette, the 2004 purchase of Paine PR – with principal offices in New York and Los Angeles – has been a big success, Mr. Lessard said.
The 2001 acquisition of Madison Avenue shop Post & Partners, on the other hand, has proven more problematic.
“That was a bit of a disappointment” in terms of the business it has generated but that's being addressed, he said.
One of Cossette's important strengths at home has been its ability to provide so-called “one-stop shopping” to clients; the international expansion sets out to replicate that, Mr. Lessard said.
“It's definitely what distinguished us in Canada, and still does. To go global you really need something different and we're convinced it's that difference that will ensure our success in the U.S. and Europe.”
Cossette now derives about 38 or 39 per cent of its revenue from outside Canada and it wants to boost that to about 50 per cent over the next few years, said Mr. Lessard, who is fiercely proud of his agency's track record.
From its Quebec base it grew into a significant Canadian player and he says he intends to be around once it has made its reputation on the global stage, too.
