Management buyout of Droga 5 NZ

Droga 5, the New York advertising agency that helped propel US President Barack Obama to the White House, has pulled out of New Zealand.

A management buyout has seen Droga 5 New Zealand relaunch with a new name, The Collective.

Its owner is Mike O’Sullivan, former principal and “ideas partner” of Droga 5, who previously owned half of a 40% stake in the New Zealand business with former business partner Andrew “Rocky” Stone.

“We decided to negotiate an ownership,” he told NBR ONLINE, saying he bought out former US majority shareholder David Droga.

Mr O’Sullivan says Droga5’s eight staff have been kept on and will be supplemented by a team of 12-15 contractors.

“I had a good look at the market. The industry has become more project focused, with clients chopping and changing from job to job. We started to restructure around that. We decided to fit the market,” he says.

The Collective will still work with Droga 5 in the USA and Australia. It has also formed an “affiliation” with Ben Nott of World Wide Mind in Los Angeles, a Droga 5 US co-founder and former director.

“I have known Ben for years and admire his model of an agency, which features more senior people who contract for different skillsets. We are affiliated with them and potentially have stuff happening together. It’s more of a philosophical thing. Those guys have something we are keen to emulate,” Mr O’Sullivan says.

The Collective keeps former Droga 5 New Zealand digital partner Jose Alomajan, who will also provide digital consultancy for other agencies and clients.

It will also continue serving clients like Qantas, AA Travel, Phoenix and Telecom, as well as “work with other agencies”.

“I’m just excited. I am the boss, I am currently the owner of The Collective but I feel there will be others involved in the future. Others are keen to be a part of it. We live in interesting times. It’s great to be small and different,” Mr O’Sullivan says.

The developments mean Droga 5, which was launched in Manhattan in 2006 with major clients such as Puma, only lasted two years in New Zealand. It was the agency’s third global office, along with Sydney and Manhattan.

Droga 5 New Zealand was launched in Auckland in 2010 with Mr O’Sullivan and Mr Stone, who had previously worked together at Saatchi & Saatchi. They owned 40% of Droga New Zealand and David Droga 60%.

After initial success with anchor clients such as ASB Bank, the agency seemed to hit troubled times earlier this year. It lost ASB Bank to Saatch & Saatchi in April, which it has originally gained from TBWA.

Droga 5 also recently suffered the loss of joint creative directors Corey Chalmers and Guy Roberts to Saatchi & Saatchi. They were replaced in February by Anomoly London creative director Nathan Cooper.

And in July, Mr Stone left the company "to go fishing and recharge his batteries". He sold his company shares when he left and now works as a consultant for Telecom New Zealand.

He told NBR ONLINE he knew nothing of the changes. “I haven’t had anything to do with Droga 5 for three or four months. Best of luck to them.”