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Scholz & Friends (Germany)

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Scholz & Friends is a leading marketing services network headquartered in Germany, with offices throughout Central & Eastern Europe. Parent company Commarco was acquired in 2011 by WPP, but retains its own identity within the parent group, operating separately from sister networks. WPP is the latest in a string of different owners. Scholz was originally founded in the early 1980s, but was subsequently acquired by Bates Worldwide and groomed to become a second advertising network within the Cordiant portfolio. In 2001, it merged with UVE, a publicly quoted production company specialising in live entertainment programming for television and the internet. The resulting business, then still controlled by Cordiant, was Germany's first publicly quoted advertising and marketing communications group. However, financial problems within Cordiant led Scholz to regain its independence in 2003 with backing from private equity fund Cognetas. It remained independent until the WPP takeover eight years later.

Clients

Click here for a Scholz client listing from Adbrands Account Assignments

Competitors

see Leading Agency Rankings in Germany

Brands & Activities

As Germany's only homegrown multinational advertising group, Commarco was an impressive achievement, but it lacked any significant multi-market clients to match the footprint of its network. Most non-German offices remained dependent on work from just two clients: Tchibo and what is now Imperial Tobacco, although they also handled local assignments for larger clients as well. A buyout was always likely as a result.

In 2007, parent company Scholz & Friends Holding adopted the new name Commarco, jointly owned by private equity fund Cognetas and Scholz management. In 2010, the group reported revenues of €133m. There were reports in 2008 and 2009 that the group was preparing for an IPO, but no such event materialised. Instead the business was sold in April 2011 to WPP for a figure rumoured to be €140m.

Despite ownership by WPP, Scholz & Friends remains a standalone integrated communications group with offices of its own in 13 cities across Europe. There are three offices in Germany, in Hamburg, Duesseldorf and Berlin; and also outposts in lesser travelled markets such as Bulgaria, Macedonia, Slovakia and Serbia as well as Switzerland, Italy and Belgium.

Although it has lost a little of its sparkle since acquisition by WPP, Scholz remains one of Germany's most admired agencies, the only one to be named among the country's top three most creative agencies every year for a decade in the 2000s. It was named as Agency of the Year in 2006 by all three local trade publications for its handling of the country's national branding campaign to coincide with the FIFA World Cup. Just prior to its purchase by WPP, Scholz secured the advertising account for GM's Opel business in Germany. A year later, in a stunning coup, it added oversight of the brand in all of the rest of mainland Europe as well, working in some countries with other WPP agencies (such as Y&R in France).

In 2014, a separate sister unit was established to manage the Opel account, and baptised Andre after its newly recruited creative chief Andre Kemper. However, that unit was subsequently merged back into the main agency following Kemper's subsequent decision to jump ship in 2015 and set up a different agency to take on the Mercedes-Benz account.

The WPP deal took the place of several other alliances whereby Scholz had attempted to expand its influence. The group was involved in 2005 and 2006 in negotiations to acquire troubled German advertising agency Springer & Jacoby, but those talks ended without agreement. Instead, Scholz agreed a significant strategic alliance in 2007 with Interpublic's shrinking Lowe network. The German group agreed to establish a new agency in Germany under the Lowe Deutschland name, and also represent Lowe's interests in other central European markets. However, Lowe's continuing weakness in Germany encouraged Commarco to seek another strong secondary brand, and it was reported in 2009 to be reconsidering a buyout of now-struggling Springer & Jacoby. Those negotiations ended without agreement at the end of the year. The subsequent purchase of Commarco by WPP brought the Lowe contract to an end.

The group had also established or acquired a number of satellite businesses in recent years including PR agency Scholz & Friends Agenda, branding and promotions shop Scholz Brand Affairs, integrated agency Deep Blue, and TV and film production company United Visions. The group acquired a controlling stake in TV production company Couch Potatoes in 2003. In 2005, Scholz merged its direct marketing unit into a joint venture with rival gkk DialogGroup, already Germany's #5 direct marketing agency. It acquired gkk two years later, and that agency continues to operate as a separately branded business. There are also units specialising in design, corporate social responsibility and interactive. In 2012, Scholz expanded its footprint in Germany, absorbing another WPP subsidiary, Red Cell in Duesseldorf and acquiring local digital agency KKLD. In 2015, the group acquired noted German PR agency Nicole Weber Communications. All these units still operate under the overall umbrella of Commarco.

Cognetas later changed its name to Motion Equity Partners. For several years it continued to own the Fullsix Group digital network, but agreed in 2015 to sell that business to Havas.

Management

Frank-Michael Schmidt is CEO of Scholz & Friends, with Kai Wolfas CFO. They head an executive board which also includes Klaus Dittko (CEO, PR), Matthias Spaetgens & Niels Alzen (co-chief creative officers) and Constantin Dudzik (strategy).

In 2015, WPP agreed to sell 25% of the equity in Scholz to a committee of 20 local managing partners.

Background

The agency was founded in Hamburg in 1981 by Juergen Scholz, previously the much-admired creative chief of BBDO Germany, and often described as one of the godfathers of the German ad industry. It was almost immediately hailed as one of the country's best agencies, and later described by trade journal HorizonT as the German agency of the decade. Further offices followed, including a design agency spin-off. In 1986, Ted Bates & Co acquired a majority stake in the business, and then took full control of the agency in 1993 following the retirement of founder Juergen Scholz.

At the time Scholz handled the German business for several Mars petfood brands, managed elsewhere in Europe by Bates. However, the boardroom dramas which led to the ousting of the Saatchi brothers in 1995 also led to Mars' decision to move its business from both Bates and Scholz. The German agency's new chairman Peter Schoening responded by mounting a major expansion drive, establishing outposts in Brussels, Budapest, Madrid, Warsaw and Vienna, primarily to service another major client, tobacco company Reemtsma. In most cases, each new office started small, often consisting of just one executive assigned to handle the local business. However as Reemtsma and other business grew, Bates parent Cordiant agreed in 1996 to spin the fledgling out as a separate network under its own banner instead of as an arm of the Bates system. Offices in Singapore, the Czech Republic, the UK and Russia followed in 1997 and 1998. The London office was to experience the most dramatic growth, expanding rapidly as a result of local new business wins, as well as acquisition. In 2000, the agency acquired two other UK independents, healthcare agency Herman Beasley and creative shop CKMP in 2000. The Russia office was a joint venture with local creative shop RAVI.

Scholz lost two substantial accounts in 2000, Deutsche Telekom and Postbank. However the merger with UVE created the first integrated communications agency in Germany that combined advertising expertise with extensive knowledge of the entertainment industry. The agency argued that the ability to deliver programming content across traditional and interactive media would provide a unique point of difference. UVE was formed in the mid-1990s, and produces a number of top-rating local TV shows including "Wetten dass” (Bet That). It floated on the smaller German Neuer Markt in 1999, but was delisted following takeover by Scholz. Following the merger of Scholz and UVE, Cordiant held a majority shareholding, in excess of 80%, in the combined business. The business floated a 20% stake towards the end of 2001 on the Frankfurt Stock Exchange.

In June 2003, as a result of financial problems within the Bates network, Cordiant agreed to sell its remaining shares for around €22.4m to a new company jointly owned by Electra European Fund (now Cognetas) and Scholz management, now led by Thomas Heilmann and Sebastian Turner. The public shares were mostly reacquired and the group went private once again at the end of 2005. In 2004, its last full year as a public company, Scholz generated revenues of €79.9m on billings of €513m. Net profit after tax was €2.8m. Around 58% of revenues were from traditional advertising, with contributions from television production, PR, technical services and other services. The group generated just over 80% of revenues in Germany.

Last full revision 22nd February 2017

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