Cossette still bullish on U.S. move

The economic slump south of the border has not deterred Claude Lessard from his plan to take the Cossette name into the U.S. via the acquisition of a major-market agency. In fact, the state of the U.S. industry makes it an even more attractive time to buy, and he expects to announce a purchase within the next few months.

The economic slump south of the border has not deterred Claude Lessard from his plan to take the Cossette name into the U.S. via the acquisition of a major-market agency. In fact, the state of the U.S. industry makes it an even more attractive time to buy, and he expects to announce a purchase within the next few months.

Cossette, Canada’s largest communications and marketing group evolved from the Quebec City graphics design studio opened by Claude Cossette in 1962. Claude Lessard joined the firm in 1971 and became one of a handful of partners in 1972 when Cossette Communication Group was formed. He has been chairman of the board and CEO since 1980.

Today Cossette is a multi-disciplined company made up of wholly owned subsidiaries specializing in advertising (Cossette Communication-Marketing), sales promotion (Blitz Promotion), graphic design (Grapheme), branding (Geyser Creation), new media (Cossette Interactive) and research (Impact Research).

Cossette went public in the spring of 1999 as a way to maintain its Canadian-owned status and fuel expansion plans. The offering raised more than $40 million, and CCG management continues to hold majority control of the company. For year 2000, the group reported revenues of nearly $110 million. For the six months ended March 31, 2001, gross income stood at $62 million, up 20.9% over the same period last year.

Since its IPO, Cossette has bought Pulse Marketing in Halifax (now Cossette Atlantic), Koo Creative in Vancouver (now Grapheme Koo) and a 40% stake in information technology firm Proximi-T. The company now employs more than 1,000 people and has offices in Vancouver, Edmonton, Winnipeg, Toronto, Montreal, Quebec City and Halifax as well as an office of Optimum Public Relations in Washington, D.C.

Cossette boasts some of the country’s biggest brands on its roster of 400 clients including McDonald’s Restaurants of Canada, Air Canada, Bell Canada, Coca-Cola, General Mills and General Motors of Canada.

In Quebec, Bell Canada has been with Cossette since 1984 and in the summer of 1998, the agency was awarded Bell’s Ontario business following a controversial agency review.

Its relationship with McDonald’s began in Quebec in 1977. Late last year Cossette won a hard-fought battle for the fast food giant’s $50-million national account. The agency cemented the deal and added some much needed horsepower to its Toronto office by bringing in Philip Donne, former president of Kellogg Canada, as agency president and Bill Durnan, award-winning creative director and former president and CEO of Ammirati Puris, as a creative consultant.

Although its creative reputation has slipped a bit in Toronto, Cossette has a heritage of solid, award-winning advertising and long relationships with satisfied clients. Recently Cossette has won kudos for its mixed media campaign for La Presse newspaper, Saturn and Dairy Farmers of Canada.

Strategy: Has your desire to make a purchase in the U.S. been dampened by its economic situation?

Lessard: You can foresee that short term the growth won’t be what it has been in the last two or three years. But on the other side, it’s a better buyer’s market than it was two years ago. It’s a perfect time in fact to make acquisitions. We’re near the completion [of a deal].

Strategy: A lot of Canadian agencies have been interested in doing business in the U.S., but there haven’t been any major inroads as yet. How does Cossette expect to succeed?

Lessard: We want to create a North American Cossette and I don’t remember any Canadian agencies trying to do that in the past. It’s really the toughest route to go rather than buying five or six different groups in different cities and not integrating them.

If we buy something it will become Cossette. It will become part of the same culture, the same product offering, the same management philosophy.

Strategy: The U.S. market is already well served by agencies. How is Cossette going to make a difference?

Lessard: We’ve been promoting what we call convergence for 25 years. We have all the services inside the same building and we’ve developed an expertise in making all those people work together.

Strategy: What is Cossette’s greatest strength as an agency?

Lessard: We don’t have one head office with service offices in Canada. Toronto is its own head office, as is Montreal, Vancouver. We have that management style of decentralization that can be very useful if you want to become a North American company.

Strategy: Does Cossette have any other plans to expand in Canada?

Lessard: Yes, if there’s interesting strategic companies that could add to our existing offer, whether PR, research, database, anything – we have an ongoing process of looking and talking to people.

Strategy: Is there a danger that Cossette is focused on growth at the expense of the creative product?

Lessard: That’s a speech for smaller agencies wanting to position themselves against Cossette. When you hire great people, they want to be in a company that creates opportunities for them to grow. So we’ve used our growth as a very positive impetus to keep and go after the best people in the industry.

Strategy: Cossette has a reputation for customer service and strategic excellence but does Cossette have to devote some time to shoring up its creative product?

Lessard: I disagree with that completely. In Toronto, we’re not where we want to be. In Quebec we’re the creative shop, there’s no other creative shop that can touch us. In Halifax, we’re the best creative shop there. In Vancouver under Dick Hadden there is one of the best creative groups we have.

In Toronto, I think we have a very good creative product. Do we want to go even higher? Yes. That will change in the coming months, you’ll see.

Strategy: Many Canadian agencies have become part of multinational networks. How can Cossette maintain its status as an independent Canadian-owned agency?

Lessard: Independence is part of our culture, part of what we are, part of the dream we have. Can I guarantee our independence for the next 25 years? That I don’t know.

We could stay public and could become a company that is owned by shareholders across Canada, the U.S. and Europe – a real public company. That is certainly an avenue that is open.