Our strategy

Closer than ever to clients

Clients are the most important consideration in almost everything we do in our businesses. Our strategic focus is on winning and retaining their business, and applying all our resources to help solve their business problems.

We work hard to make our client relationships as productive and efficient as they can be for both parties. That means offering clients more services, and extending the geographies where we carry out work for them. It also means having the flexibility to mould our own internal teams and structures to mirror their own, and to answer their needs.

Investing for organic growth

Our aim is to have organic revenue growth that is faster than our competitors’. We achieve this through investment in our business to drive innovation and new solutions.

That investment can take many forms: hiring new talent; acquiring companies that will fit well within Aegis Media or Synovate’s existing network; and developing our own tools, models, platforms and technologies in-house.

Transformation of our business

With the world around us transforming, we are determined to remain ahead of the curve. Digital is everywhere today, and we see emerging business models on all fronts: in the consumer’s own home; with our media partners; in our clients’ worlds; and in our own business. And emerging markets and new technologies are letting us develop new ways of carrying out our client work and our back-office functions alike.

In both businesses, we are constantly evolving our own ways of working: making behind-the-scenes investment across all our businesses in new software and systems to improve our service to clients while constantly increasing our own efficiency.

Our primary business objective as a group is to win and retain client mandates and to service our clients to the very highest levels of satisfaction.

Ours is a very competitive industry, where successful businesses have to perform on a number of fronts to grow and prosper.

These include:

• delivery of high service levels;
• continuous improvements in client value-added and productivity;
• constant innovation, with new products, services and ways of doing business.

Many of our client contracts are structured to incentivise us to deliver to specific targets on productivity levels and client service.

We also use a number of non-financial KPIs across our businesses. These differ by type of business and geographic region. In many cases we consider them to be commercially sensitive and it would not be appropriate to publish them externally.

For these reasons, we consider our overall financial performance to be the best measure of the value we can create for our clients, and hence for our shareholders. In addition, last year, we highlighted the four specific KPIs set out below and on the facing page as further measures of our business progress.

Having reviewed these KPIs, we continue to believe they are a useful guide to the successful execution of our strategy. Where possible, we will generally look to broadly maintain or improve on each of these KPIs year-on-year, and where that is not the case, to explain why not.

1. Group organic revenue growth versus our markets

We calculate organic growth by adjusting for acquisitions and currency movements. We treat all acquisitions as if they had been in the Group for the comparable period in the prior year.

Group organic revenue growth in 2007 was 9.8%, up from 7.7% in 2006. This was well above growth in the global advertising market at 4.6%, and in market research at 5.2%. It was also higher than every one of our major competitors.

2. Underlying operating margins

We calculate operating margin as a percentage of operating profit before associates over revenue.

Our underlying operating margin eased 30bps in Aegis Media, to 20.0% (2006: 20.3%), largely as a result of planned investment to position Aegis Media for future growth. Synovate’ operating margin improved by 40bps to 8.1% (2006: 7. 7%), reflecting excellent cost control and measures to reduce our underlying cost base through more efficient ways of working.

As a result of these two movements, Group operating margin was slightly down year-on-year at 13.2% (2006: 13.3%).

3. TSR relative to our sector

Total shareholder return (TSR) measures appreciation or decline in the share price, and assumes all net dividends paid are reinvested. All figures are calculated in Sterling.

In 2007 concerns about the global economic outlook impacted the performance of agency groups. As a result, Aegis’ TSR was disappointing. We delivered a TSR of –14% against a FTSE Media sector TSR of +1%. An international agency group (consisting of GfK, Havas, Interpublic Group, Ipsos, Omnicom, Publicis, TNS and WPP) delivered TSR broadly in line with our own, at –10%.

4. International relationships with our largest clients

In 2007 we worked for our 20 largest Aegis Media clients in an average of 23 countries: up from 22 for the same client universe in 2006. We worked with them in an average of eight product areas, up from seven in 2006. And, we worked for Synovate’s 16 largest clients – making up the Tier 1 and 2 Global Client Relationship accounts – in an average of 23 countries, and up from 19 in 2006.

In 2008, we will continue to deliver on our strategic framework, through a number of initiatives, including those set out here:

Closer to clients

• Investment in global client-facing resource to deliver account management benefits for major clients;

Investing in organic growth

• Further roll-out of network specialisms, including search, sponsorship and experiential and mobile;
• Further development of tools and solutions;

Business transformation

• Monitoring and assessment of a number of agency ‘integration’ pilots;
• Continued development in digital through acquisitions and network innovation.

Closer to clients

• Optimising our existing Global Client Relationships programme;
• Global roll-out of new local client relationships initiative;

Investing in organic growth

• Active programme of tool development including re-purposing of existing solutions;
• Further roll-out of network specialisms, including industry practices and specialist solutions;

Business transformation

• Aggressive targets for offshoring data-processing from 14 highest cost markets;
• New outsourcing partnerships in CATI for highest cost markets.