Leo Burnett &Target Romania Strategic Management Study Case

1. Presentation and development

Local representative of the worldwide communications group Leo Burnett, Leo Burnett & Target Romania is a full-service advertising agency which offers superior advertising services to build icon brands on the east-european market. With 78 employees, Leo Burnett was founded in 1994 and is now the second advertising player in the region in terms of turnover (13 million Euro) and third in terms of profit (700.000 Euro). It has been enjoying a period of sustained growth since 2001.

Identical to the global network's vision, the Romanian company's vision is to 'create ideas that inspire enduring belief'. This means 'transforming customers from buyers into believers'. The brand believing attitude goes beyond mere liking or preference for a brand. It means kinship and commitment. The company's purpose is to build confidence amongst the general public in its clients' brands and its mission is to improve the sales effectiveness of its clients through ideas.

The Board of Directors consists of three people: CEO - Ioana Iordache (12.8% of shares), Managing Partner - Stefan Iordache (12.8% of shares) and Creative Director - Bogdan Naumovici (5.5% of shares). Ioana and Stefan are the managers and the strategic minds of the company and Bogdan Naumovici is the informal leader and masterful communicator. Naumovici is renowned in the advertising industry for his very flamboyant personality and competitive spirit. Brash, outspoken and efficient, he is the most visible face in the Romanian media landscape. However, because of his difficult personality, Leo Burnett has lost some valuable clients and employees.

The brothers Ioana and Stefan Iordache were the entrepreneurs, the ones who founded the business in 1994 and affiliated it to the Leo Burnett international group in 1995. In an advertising industry still in its infant phase, without know-how, the first years of the company were spent trying to develop real competencies with help from the international group through trainings, workshops and even coaches sent to Romania for several months. These were years of struggle, when the number of clients was low and all major pitches were lost, but the level of professionalism was constantly increasing.

Then, in 2001, the management team decided it was time for a major change. In October, the first Leo Burnett conference took place under the name of 'The Leo Burnett revolution'. It was then communicated to the employees and press that Leo Burnett is positioning itself as the most creative and strategic advertising company in Romania and that it will no longer produce safe advertising. It will strive to sell its clients' brands and in the meanwhile, win advertising awards. It will also constantly compare the quality of its creative products with other agencies within the Leo Burnett Worldwide Group, using the 7+ System (a grading system used quarterly to evaluate the creative works of the agencies within the group and in which grades over 7 reflect products of superior quality). Within the company, the flag-bearer and inspirer of this vision was Bogdan Naumovici. He pushed the people in the company towards excellence and the results quickly showed.

Since 2001, business has been growing constantly and the agency has managed to rise to the challenge of the positioning. In just 5 years, it has won over 58 awards at local and international advertising festivals (Ad'Or, Epica, Clio, Portoroz, Golden Drum) and is the first Romanian ad agency ever to be nominated for the Grand Prize at the Cannes Ad Festival, the most important advertising festival in the world. Because of the increased recognition of its top-level creativity, Leo Burnett Romania was declared this year the Rising Star of the east-european region by Leo Burnett International, which seems like a great opportunity to take control over operations in the region, position currently filled by Leo Burnett Hungary.

Also, for the past few years, it has won a growing number of Effie awards, including the Grand Effie award in 2006. This reflects that Leo Burnett's products and services are not only highly creative, but also efficient, which translates into increased demand, sales and brand awareness for clients' brands and image. The 2006 Ad Market Research Report - the yearly survey of the advertising industry - has shown that Leo Burnett is recognized by international and local companies operating in the Romanian market as the most creative and strategic advertising agency in the communications industry.

2. Current situation

Leo Burnett & Target Group has other 5 divisions, apart from Leo Burnett advetsing: Starcom Media (media agency), Starlink Media (full-service advertising agency) and the recently introduced (in November 2006) three new entitities - 'iLeo' (interactive communications agency), 'The PRactice' (PR agency) and '23' (idea shop).

Active on the east-European market in the marketing & media communications sector and the second largest advertising agency in Romania, Leo Burnett advertising agency offers high-quality full-service advertising (account handling/planning, creative services, direct marketing services, BTL services, advertising production) to important clients, usually top-players/dominant in their market, who are multinational corporations (Philip Morris, P&G, Quadrant Amroq Beverages, GM, Interbrew, Nestle, Aviva Life Insurance, KLM, Western Union), but also local large clients. Because Leo Burnett Romania is a full-service advertising agency, it is able to produce creative work and advise clients for a full range of media and for virtually any type of account, or company. All current clients of Leo Burnett require that the agency builds a structure that supports their marketing efforts and is in tune with these companies' global strategies. All demand that Leo Burnett understands their business, the market they activate in and have successful marketing communication strategies that create awareness to/promote/keep stabile their brands.

The Romanian market, in general, has been characterised by a high growth in the past few years. Due to new international corporations investing heavily in the attractive Romanian market and also due to the expansion of local business, the number of potential clients has increased considerably. However, because of its size (78 employees, bigger than most agencies on the market but smaller than McCann Erickson), Leo Burnett has a shortage of competences and is not able to take care of very large accounts (no telecom, no pharmaceutical company). It has some important clients, leaders or challengers of their industry, but who not invest as much in advertising as the big corporate