Monday, June 7, 2010

WPP Reading Room: Why Life Is Looking Up In Brazil. Y&R CEO says the time has come for Brazil to fulfill its potential

He's a TV star, socialite and published author - as well as being boss of his country's biggest ad agency. Y&R CEO Roberto Justus tells Andrew Downie that the time has come at last for Brazil to fulfill its potential

CEO Roberto Justus, Y&R, ACAO, Wunderman, Energy THE STORY of how Roberto Justus created one of Brazil's biggest ad agencies and rose to become a TV personality, author and one of the country's best-known faces, began in Paris in 1949.

Justus's father, a Jewish Hungarian who had survived World War II and was now fleeing Communism, was on the Champs Elysees waiting to go to the US when he heard someone shouting for engineers. The construction worker fought his way through the crowd and found himself at the gates of the Brazilian embassy. A few days later, with little more than the shirt on his back, he was on a ship to Rio de Janeiro to start a new life.

Fast forward 61 years and the engineer's son is now one of Brazil's biggest personalities, and a giant in the country's advertising industry. Justus is CEO of Y&R Brazil, but through his Newcomm Group also jointly controls - with partner WPP - Wunderman, Energy and Ação Premedia e Tecnologia. What's more, for six seasons now he has been the Brazilian impresario fronting The Apprentice TV show, and his success is such that he's about to host local versions of The Rebel Billionaire and Deal or No Deal. He has written two best-selling books, sang on a duets CD with one of Brazil's bestknown crooners and was recently voted the second most trusted youth leader in the world after Barack Obama.

And yet, Justus, a good-looking, fast talking, born salesman, does not take his success for granted. He is aware that hard work and luck are every bit as important as potential, an observation that applies to countries as well as individuals. Right now, Justus is convinced that not only is life good for him, it is good for Brazil as well. For Brazil, famous for being the country of the future, and the joke went, always would be, has at last started living up to its potential.

"For a long time we talked about Brazil's potential," Justus says, reeling off the fertile soil, the climate, and the creativity that are among the country's hallmarks. "When you looked at Brazil you saw a country that had all these factors in its favour. The day had to come when everything would fall into place. And that day has arrived. Brazil is now a world player and one that is respected."

With 191 million people Brazil boasts around half the population and GDP of South America. But for years it seemed unwilling or unable to fulfill its promise. It was hamstrung by military dictators, then laughably corrupt politicians, and ground down by hyperinflation and an economy that seemed to go from boom to bust according to a regular timetable.

Today, though, the world's fifth biggest country is also one of the most dynamic and interesting. It has tamed inflation and grown at an average annual rate of almost 5 per cent over the last decade, a feat rare outside China and India, two of the other members of the so-called BRIC countries of increasingly important developing nations.

President Luiz Inácio Lula da Silva's economic guidance helped it avoided the worst of the recession and unlike many G20 nations, it is already growing again. Brazil is rich in the commodities sought by the developed world and the Asian giants, and it is now the world's biggest producer or exporter of beef, chicken, sugar, coffee, soy beans, orange juice, ethanol and iron ore. Recent deep water oil discoveries off the Atlantic coast, meanwhile, were the second biggest anywhere in the world this century and their exploration, along with the country's aggressive endorsement of bio-fuels, promises to make Brazil into one of the 21st century's energy powers.

Brazil is also undergoing a consumer revolution: President Lula's social aid programs have helped more than 20 million people move from poverty into the consuming classes, benefiting everyone from the corner shop selling rice and beans, to the manufacturers of domestic appliances, to the government who rake in extra taxes.

As if to crown the magic moment, the country will host the 2014 World Cup and the 2016 Olympics, guaranteeing long overdue structural reforms. The federal government has promised to finance the World Cup to the tune of US $11.3 billion, and Rio de Janeiro will shell out a further US $14 billion in preparing for the Olympics.

That overwhelmingly rosy picture delights Justus, both as a proud Brazilian and as a businessman. The two events will have a profound effect on Brazil's $16 billion a year ad industry, he explains, and already, WPP is planning its sporting strategies for the years to come.
"Y&R has topped the industry's ranking for the last eight years. It counts many of Brazil's biggest firms among its clients"

"A big sporting event like the World Cup is a huge event for the advertising market," Justus says in an interview at his Y&R office in São Paulo, Brazil's biggest city. "Clients that are involved in sponsoring the events are already investing more than they would in a normal year. And the ones that didn't manage to get direct sponsorship of the events invest more so they don't lose out to those that do. All that generates investments and jobs and extra work for the agencies."

"WPP is holding a conference here in Rio in May to deal with the World Cup and Olympic Games. So we are already looking into what can be done in terms of business, and many others are doing the same thing. The opportunities are endless."

Justus should know. Under his tutelage, Y&R has topped the industry's ranking for the last eight years. It counts many of Brazil's biggest firms among its clients, companies such as American Express, Bradesco, Colgate-Palmolive, Danone, Goodyear, the Estado de S. Paulo newspaper, Telefonica and Vivo. With retailer Casas Bahia, it became the first Brazilian company to put an advertising team inside the client's office, and today around a third of the Y&R workforce is based on site at the Casas Bahia HQ.

The Brazilian advertising market remains an unusual one in that agencies are full service with media still onboard. That makes running the business easier and helps the bottom line, Justus says. "Thank God that we still maintain this service in our hands. I think it is better for agencies and in my opinion for clients if we don't have media bureaus. When the media buying and planning is inside the agency together with the creative and all the other services, the respect of the agency in the marketplace and the financial results are completely different. We still have a market that is very attractive for this reason." Justus has vast experience in how to run an agency, having started in 1981 when he shunned the chance to take over the family construction business and instead took a half stake in a small ad agency run by his brother-in-law's cousin.

They named the company Fischer & Justus Comunicações and it did well but Justus was never entirely happy and in 1998 he left to start Newcomm. It was an immediate success and in 2000 Bates Worldwide, the English firm owned by Cordiant, bought a stake and created NewcommBates. When WPP bought out Cordiant in 2004, the firm was renamed Grupo Newcomm and a merger with Y&R was effected.

Justus admits there are constraints working for a multinational group such as WPP, and he believes Brazilians are more agile in dealing with problems, a skill learnt during years of dictatorships and hyperinflation. However, he accepts those Anglo-Saxon constraints as the price to pay for the backing and infrastructure WPP provides.

"They are not as flexible as I am," he says with a slight sigh. "I have to act the same way they act in London and New York and that ties me down a bit but I understand it. It's is a big public company and, as long as my partners are comfortable, I am comfortable too. The advantages of being partner of a group like this are much greater than the disadvantages."

That might be because Justus no longer plays as hands-on a role as he did in the past. Now 54, and with a young child - Justus is married to Ticiane Pinheiro, the daughter of the original Girl from Ipanema - he delegates more and micromanages less, giving him more time to devote to other projects, especially television. Charismatic and telegenic, he is a natural for the small screen and his willingness to tell it as it is has made him a big hit. Such was his impact on The Apprentice that he has been invited to front two new quiz shows this year, Brazilian versions of The Rebel Billionaire and Deal or No Deal.

"I really enjoy doing it. It revitalizes me for my day to day routine," he says of his television exposure. "If it wasn't for this then I might be thinking it's time to retire. Over the last six years, I was able to get lots of ideas across and people took them on board and incorporated them into their lives. Lots of people have come up to me and said, 'I decided to open my own business because of the ideas and stimulus and examples you gave me on the show'. That was the best part of doing the program.

Another important point is the synergy between the advertising and entertainment world, which brings very good exposure for my clients in my programs." What the future holds is unclear, but it will certainly be in the spotlight. Justus shows no desire to give up his newfound media roles and he still enjoys the rush of doing deals. With Brazil growing, there has never been a better time to be involved, he says.

"Obviously my vision today is very different from 30 years ago," he says. "You can't do advertising without entertainment and you can't do advertising and entertainment without interactivity. I am very optimistic, if I had to start an advertising agency in Brazil at any time during the last 30 years, I'd start it now, given a choice."
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