By David Ingham
O2 advocates an agency model that charges fees for consultancy, rather than ad placements, and outsources creative work. The end result is lower marketing costs, says O2's Riaan Muller.
South Africa’s O2 Communications has arrived in the Middle East with the aim of helping companies slash their marketing communications spending. O2 aims to do it by maintaining a minimal in-house staff, farming out most creative work to freelancers and charging clients a management fee rather than commission. Riaan Muller, who is now establishing the company in the Middle East, says the approach has worked spectacularly in South Africa. “[O2] ended up halving one client’s marketing spend and increasing their brand awareness by 300% after two months,” reckons Muller.Here’s how it works. 02 (named after founders Tomas and Anton Oosthuizen) sits down with a client and listens to what its overall marketing communications goals are. O2 then tries to put together a complete marketing programme that can cover elements as diverse as advertising (all media), public relations, events, sponsorship, in-store promotions and so on.When a plan has been agreed upon, O2 will then farm out all of the creative work involved in putting together the plan to a network of freelancers. This differs from the traditional advertising or PR agency approach, which is to keep most creative resources in-house.O2 charges fees for creative work, but where it differs from most agencies is that it doesn’t take the approximate 15% commission that most agencies charge for advert placements. Instead, it charges a consulting fee.“Whereas others make money from advertising, we look at all marketing communications, analyse what is best needed for your brand and through that we charge a fee,” explains Muller. “We are strategic advisers.”Muller says that farming out creative work to freelancers works out way cheaper in the long run than maintaining a design team in-house. “An in-house team carries a monthly overhead, and very much so in Dubai,” says Muller. Another possible benefit of using freelancers is that you can call on them when you need them. Having an in-house team has its advantages though. Account managers can be in the face of their creative people and there’s no loss of control. Muller believes that moving to Dubai Media City, which promises to have a state of the art communications system, will get round the problem of account manager and designer being in different places. He says the company will also aim to build up a team of local freelancers over time. In the meantime, he says any creative work will be closely monitored by O2 in Dubai to ensure its suitability for the local market.Muller says he sees events and packaging as two areas of the marketing mix that have a lot of potential for development in Dubai. O2 won’t be offering public relations services initially in the Middle East.Right now, it’s early days for the company, and the ultimate proof of the pudding will, of course, be in the eating. Muller is confident, though, that the company will be able to help regional clients realise significant cost savings on their marketing budgets. “We do believe our philosophy works,” says Muller. “It’s not only worked in South Africa, it’s worked elsewhere in the world and we believe it’s going to work here.”