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BoF Exclusive | Karla Otto Merges with Asia-Based K2

The agencies are forming a new entity called The Independents, but will continue to serve clients under their respective brand names.
Isabelle Chouvet and Karla Otto | Source: Courtesy
By
  • Chantal Fernandez

MILAN, Italy — In today's fast-changing, hyper-competitive and increasingly globalised communications landscape, many independent fashion PR agencies are struggling to keep pace and deliver the breadth and depth of services their clients now demand across geographies. Often, consolidation is the answer.

"Everything now is immediate, everything is super-fast, everything is global — so you really need expertise in all that, and that's why the whole business model has changed through this technology," says Karla Otto. The powerful German public relations guru started her namesake luxury fashion-focused agency in Milan 35 years ago and now commands eight international offices serving brands such as Valentino, Marni and Givenchy. "You need to be a big player… I almost don't have clients anymore [just] for one market."

To that end, Otto is partnering with Paris- and Shanghai-based entrepreneur Isabelle Chouvet, founder of K2. The Asian experiential marketing and events agency has offices in Shanghai and Tokyo and clients have included the likes of Bvlgari, Louis Vuitton, Kering, Cartier and L’Oréal.

Together, K2 and Karla Otto will merge to form a new umbrella entity called The Independents with over 400 people on its staff, though both agencies will continue to serve clients under their respective brand names. Chouvet will be chief executive of The Independents, while Otto will be co-chair. Both will remain at the helm of their respective agencies. Chouvet and Otto are the largest shareholders in The Independents. Additional shareholders include Otto’s longtime partner Alexander Werz and the Paris-based private equity firm Cathay Capital. The Independents plans to add more agencies to its portfolio in the coming year.

“This is the right moment to create a strong group because you really need as many resources as you can, and to exchange ideas and knowledge,” adds Otto, citing the strength of K2’s production expertise and network in Asia. “I know I’m the only fashion and luxury agency which has so many big offices in so many territories and works with so many clients in a global way; this is a big plus I’m offering.”

Clients don't have time to brief ten agencies around the world...things are moving too fast.

“[Clients] don’t have time to brief ten agencies around the world and make sure they have the same level of execution — things are moving too fast," says Chouvet. “All the talented agencies, they are all fragmented and specialised, there is not a real global and integrated luxury agency that could offer that service to our clients."

Chouvet started K2 in Japan in 2002 to serve European luxury brands looking for Asian expertise from an internationally-minded agency. It has since expanded to Mainland China, Hong Kong, South Korea and other key Asian markets. Even though Otto has also opened offices in Hong Kong, Shanghai and Beijing in the last six years, Europe and the US remain her most significant geographies and she sees K2’s deep relationships throughout Asia as a major boon for her business.

The two agencies also complement each other when it comes to capabilities: while Karla Otto does manage events, experiential marketing and production is K2’s specialty. The agency now plans to expand throughout Europe and the US. (While K2 formed a joint venture with Paris-based creative agency Fred & Farid Group in 2015, the resulting digital agency is a small operation that only serves China.)

These days, fashion clients are demanding more integrated offerings from their communications agencies, including digital strategies, consulting, marketing and event production. To meet those demands, The Independents has turned to financing from European Capital and Tikehau to acquire additional agencies offering services like digital media production, influencer marketing and data analytics. Chouvet and Otto declined to reveal what specific areas they are targeting, but said they were looking at sector leaders with loyal client bases and that additional acquisitions would begin next year.

The loosely integrated approach is key to both Otto and Chouvet. "Karla Otto is a very important brand," notes Chouvet. And by retaining the autonomy of the agencies within The Independents portfolio, Otto and Chouvet believe the group will be more agile and better positioned to react to further changes in the industry. “Things are moving so fast and we need to continue each of our fields as artisans, as we say in French,” says Chouvet. “[Clients] want to be able to talk to people that have an expertise in communication or events or e-commerce or in data or influencer marketing. They want to talk to specialists.”

“In business, either you go forward or go backward,” says Otto. “You cannot stay still, you need to address new market needs of your clients and you have to be able to deliver… Having this joint network [and an] exchanging of possible synergies, that’s really what it comes down to.”

The terms of the deal were not disclosed.

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