The Media Maestro

Saturday, October 1, 2011 - 08:13

The foremost ad space buyer in the country may not be a Sinatra fan, but he has definitely done it his way. Tom Skotnicki reports

At 69, Harold Mitchell has never looked fitter. He has lost 70kg over the past three years and sold the business he spent 35 years developing.

Mitchell remains chairman of Mitchell & Partners and the second largest shareholder in its international parent, Aegis Media.

He built the media buying giant up from three employees to the point when it was generating almost $1.1 billion a year in revenue with more than 600 staff.

A former chairman of the National Gallery of Australia and the Melbourne Festival, he is chair of Care Australia and the newly established Melbourne Rebels super rugby team and is heading a Federal Government inquiry into the arts and philanthropy. The trust he established a decade ago to help causes related to health and the arts, the Harold Mitchell Foundation, has provided more than $10 million to a range of causes.

The thing that stands out most about Harold Mitchell is his work ethic. During a 20-minute photo shoot for our cover, Mitchell took several urgent calls. Mt suspects this drive is a trait he inherited from his father. A sawmiller, he cared for his four children alone after he was abandoned by his wife. "He was always there for us," Mitchell says.

Asked about his success, Mitchell finds it difficult to explain. There is no doubt his difficult background was a spur. His work ethic, intelligence and interest in learning helped and less obviously he had always been highly strategic.

Mitchell still gets up at 5.15am every day after having had four or five hours sleep. At one time he would take care of his personal interests and investments early in the morning, but he now describes it as his "thinking time".

The rest of the day is a frenzy of activity, with Mitchell not only still actively involved in the media buying business, but appearing regularly on radio and writing a column on media for The Age and The Sydney Morning Herald.

One of the first issues Harold Mitchell discusses with Mt is the personal debt he owes Kerry Packer. In 1990, Mitchell was perilously close to going bust, owing $32 million as a result of some poor outside investments. He was contemplating the loss of the family home and business when he received a phone call. "It was Kerry ringing out of the blue and he said he had heard I might be having a problem and he invited me to meet him in Sydney."

Mitchell explained his circumstances and Packer offered him an interest-free loan of $1.9 million. This was a few days before Packer had a life-threatening heart attack. But a week later Packer rang from his country property where he was recuperating and the loan was arranged.

"It reinforced for me the importance in life of loyalty," Mitchell told Mt. But the reality is that personal loyalty has, according to associates and competitors, always been a hallmark of Mitchell's operating style.

A strategic vision

Mitchell has always believed in business plans, whether they are over five or 10 years. He attributes much of his success to a focus on the future as well as a capacity to react flexibly to changing circumstances.

In the mid 1970s, when he left his career as a media director with one of Australia's top advertising agencies to establish the media buying business, it was a virtually unheard of phenomenon here or overseas. The job of media placement was exclusively handled by advertising agencies, which received a commission from the media and also the client. The system was set up so only advertising agencies could receive the media commission in exchange for a guarantee of payment of any client debts, a system that persisted well into the 1990s. There was relatively little incentive for agencies with established clients to minimise the cost to clients and maximise the value.

The role of the newly created media agency was to deliver a better and more cost-effective solution using all the modern tools of research and opportunities provided by the changing media landscape. It was a great idea and it took some time for advertising agencies to recognise the extent of the threat. However, it was a long haul for Mitchell and his then partner Dennis Merchant as most established clients were closely aligned with their agencies. Mitchell initially focused on smaller start-up companies such as those run by friends and acquaintances including Bob Jane and Craig Kimberley (Just Jeans). Eventually the success of some of these then small companies and their media strategies led to larger clients. It may have taken a decade but eventually Mitchell (who by this stage was on his own) had media billings to rival George Patterson, which in the late 1970s and 1980s was an advertising behemoth.

His next great idea came in 2000 when he recognised that the internet would become a huge factor in advertising. "It all seems straightforward now. It was always going to be difficult for sites to generate subscriptions so there would be a reliance on paid advertising," he says, relaxing over a cup of coffee. He formed eMitch, which became the largest player in the emerging and burgeoning area of internet advertising in Australia.

"In 2000 when we started eMitch, Google was one year old and Murdoch was saying the internet would not work. But in my experience if you give something away and no one has to pay for it, there has to be a business case."

Mitchell says digital media has increased the opportunities for niche media. "The success of the internet is that it caters to the desire people have for more choice. There was a time when a Mercedes car came in black or white – there are now more than 150 different choices of models and colours. There are thousands of different mobile phones. People want to express their individuality and the digital world is part of that process."

The move into digital media helped the Mitchell Group maintain its dynamism as traditional media struggled. It is worth mentioning that Mitchell started eMitch about the time that Lachlan Murdoch as chief executive of News Ltd was questioning why a journalist required access to the internet.

Eventually eMitch became the vehicle for a reverse takeover of Mitchell's traditional media management business and the formation of the Mitchell Communications Group paved the way for the eventual sale to Aegis.

In 2007, Mitchell rolled the private companies into the public company to take advantage of the high multiples on which eMitch was trading. The company was within a few months hit by the global financial crisis. "However, as a one-stop shop we were well positioned to ride out the downturn," he says. In fact, in the years after the GFC the company's revenues grew by 21 per cent. "We were as solid as a rock and in difficult times people turn to the rock," Mitchell says.

In 2010, he recognised the significance of growth in Asia.

"It is a six-hour time difference, by 2050 it will represent 50 per cent of the world's economy and within 10 years China will overtake the US as the largest economy in the world.

"The middle class of Asia want branded goods and that is our world [the advertising world] and what did we do about it? In mid 2010 we knew we had to commit our future to the region."
Mitchell says Aegis was a great fit because it was huge in Europe but had a smaller presence in Asia where it was the fifth largest media agency.

"I sold the company for $364 million but kept most of it in the group as shares in Aegis. It made me the second biggest shareholder in the company," he says.

Management philosophy

Mitchell is unusual for employing a surprising number of older employees in an industry where many are considered over the hill at 35. Perhaps it is a sense of loyalty but it also makes good business sense. Older employees are by definition experienced, less likely to be poached, usually recognise the value of their jobs, often have fewer personal distractions and not all clients want to deal with people with limited life experience.

Phone calls made by Mt to competitors and former colleagues failed to reveal anything particularly negative about Mitchell.

"What you see is what you get," one said. "He is an incredibly busy man but always makes time for his old friends and colleagues. He is amazingly loyal," another remarked.

In the office he admits he has been described as dictatorial. The workplace seems akin to Animal Farm, where all the animals are equal except for the one called Harold. "I try not to be angry, I remain polite but at times you have to be direct."

Mitchell told Mt that he was in a people business and that making his employees happy was important. I suspect that Mitchell can be difficult and that this is closer to the truth than the claim he is a dictator.

On a personal level, he is generally more of a listener than a talker, particularly when discussing shop. I suspect it is a useful trait given he is never under the influence, even on social occasions (he is a reformed alcoholic who has not had a drink for 46 years).

Mitchell believes in sharing the credit for good ideas and achievements. It is a humility that is foreign to many senior executives. For example, he credits the original idea for an internet company to Liberal powerbroker and corporate adviser Michael Kroger. He initially pitched the idea of a public float of the entire group which was rejected but Mitchell was intrigued by the follow-up idea of an internet float at a time when the whole world was focused on the dotcom boom. It turned out to be a winning move as despite the dotcom collapse, eMitch was left sitting on a bucket of money and was able to slowly develop its internet advertising business.

Mitchell also enjoys his feuds, despite his apparently amicable persona. There is, beneath his bonhomie, a streak of mischief. He does not necessarily hold a grudge but he does not forget a slight.

It would be trivial were it not for the fact that his feuds often involve hundreds of millions of dollars. He is reminiscent of a boxer needing to go a few rounds with an opponent in order  to develop mutual respect. He has had run-ins with most of Australia's senior media and advertising figures over the years.

Being an entrepreneur

Harold Mitchell's toolkit for young high-flyers

  • Stick to your knitting
  • Be realistic about your strengths and weaknesses and seek help where you need it
  • Be prepared to do your apprenticeship
  • A little experience is a dangerous thing – remember a career can last 40 years
  • Be prepared to work on your listening skills as you learn a lot more from listening than you do from talking
  • Pick your battles and don't fight those you can't win
  • Ego may not be a dirty word but it has no place in business
  • Stay on top of your finances
  • Make short and long-term plans
  • Build a team and commit everyone to the journey
  • Employ the best and smartest people
  • Be decisive and confident in your decision-making
  • Work harder than your staff and competitors
  • Always focus on your point of difference and how it delivers a competitive advantage
  • Have a settled private life
  • Keep your staff happy

Adapted from Mitchell's autobiography Living Large (Melbourne University Press, 2009).

Guide for meetings

One of the qualities that Mitchell prides himself on is his time management and in his view one of the biggest time wasters can be meetings. It has resulted in some public criticism of him from former board members of the National Gallery of Australia who accused him as chairman of cutting short debate.

  • The best role is chairman
  • Make sure there is an agenda, desired outcomes and a time limit (that way everyone can be prepared)
  • Being too polite will prolong meetings
  • Choose a busy business executive as chairman because they will keep meetings short
  • If meetings are taking too long implement sub-committees to deal with specific issues
  • Nominate a single person to speak on each subject and only allow further discussion on points of substantive disagreement
  • Focus on the large issues and leave the detail to responsible individuals
  • Keep people on their toes by asking them to speak without notice on particular topics which keep attention levels high
  • Don't be afraid to end discussion on a topic and assume agreement or consensus rather than call for a vote
  • Make sure people who are shy or less forthcoming are not overwhelmed by those who like the sound of their own voice

Adapted from Mitchell's autobiography Living Large (Melbourne University Press, 2009).

Biography

Harold Mitchell began his working life in a sawmill at 16. The prospect that the lad from a broken home would become one of Australia's richest men and a media icon would have seemed preposterous.

As the oldest of four siblings he grew up early after his mother left the family for the fourth and final time. At the same time he was restless. When he saw an advertisement for a job at an advertising agency in Melbourne, he hopped a late-night train from Stawell and was there for an interview in the morning. He was later told he got the job because he travelled farther than anyone else.

He quickly distinguished himself with his work ethic and rapidly moved up the rung of agencies. A decade later he was a successful executive, having run the gamut of account executive, creative and production. But media buying was his niche. By 33 he was national media director of the then third biggest agency in Australia – Masius Wynne Williams – and ready to branch out on his own.

It was 1975 and Mitchell was starting out with $2000, an office sublet from a friend and a car borrowed from tyre merchant mate Bob Jane.

It took six years to grow from three to 12 staff, but a decade later it was a highly successful business and Mitchell began diversifying his business interests, buying assets on the NSW north coast including the Big Banana at Coffs Harbour. In 1990, he found himself owing $32 million and was rescued by a loan from Kerry Packer.

In 2000 Mitchell decided to jump into the digital revolution with eMitch, which emerged as the most significant full-service internet advertising agency in Australia. In 1997 it became the vehicle for a reverse takeover of the traditional media buying operation.

Aegis Media's takeover of Mitchell Communications last year meant the family emerged with about $150 million, which was largely reinvested into the international marketing and communications group.