David Morgan: Making money in medical advertising

After ten years working for large London advertising agencies, David Morgan wanted to leave London and start his own. He built his Devon based firm up, and eventually sold for £24m.

After ten years working for "large London advertising agencies", David Morgan wanted to quit London and start his own. So when one of his clients medical manufacturer Kimberly-Clark said it wanted to use a smaller advertising agency to promote its products to healthcare professionals, he took his chance. "Clients sometimes want a smaller agency, where they can speak to the top people if they need to." The contract was big enough to allow Morgan and a partner to set up shop in Exmouth, Devon. The pair combined the maiden names of their wives to form a new firm Bray Leino.

"Not many people knew much about medical advertising, so very soon we became the experts." The duo capitalised on their expertise and started approaching other medical firms. Being based in Exmouth was a challenge. "We were always a long way from our customers. But I think it made us try harder to give a good service." New technology also helped. The spread of the fax machine in the late 1970s was "the greatest event of my working life".

To begin with, the firm's main work was managing advertising campaigns in trade magazines. But in Devon "we didn't have a lot of neighbouring firms we could partner or recommend. So we developed new packaging and leaflet services." Going the extra mile helped win more clients and by 1979 the firm had 20 staff and annual sales of £1m. However, the real breakthrough was yet to come.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

In the mid-1980s Bray Leino began to manage consumer-focused campaigns. "It was a natural progression. We proved our abilities by handling the unglamorous side of advertising and eventually our clients gave us their bigger brands." Successful national campaigns for well-known products, such as painkiller Ibuleve, gave Bray Leino valuable experience. It helped the firm to take "the next step up" and won them work with non-medical brands, such as US chewing-gum manufacturer Wrigley.

Over the next 15 years the firm continued to grow. It was one of the first to offer to manage entire online advertising campaigns "larger agencies tried to ignore the internet at first, but we were always trying to offer more services". By the mid-2000s the firm had around 200 staff and annual sales of more than £20m.

By now Morgan was ready to cash in. In 2006 he accepted an offer that valued Bray Leino at £24m. The buyer was Mission Group, a new company that had been floated on the stockmarket with the sole aim of snapping up advertising firms. Still owed some of the deal price, Morgan became a non-executive director at Bray Leino. He watched nervously as Mission Group bought more advertising firms. "In hindsight they bought too much too quickly as the market began to drop off." By 2010 Mission Group was drowning in debt and the banks stepped in. "They asked me to come back as CEO."

Founders of the other companies that Mission Group had bought were also owed money. "I got them together and persuaded them to convert their outstanding debt into shares." They also invested more money in the business. The strategy paid off with debt halved, profits rose. Morgan was 65 this year, but with plenty of skin left in the game' he is not planning on retiring just yet.

James McKeigue

James graduated from Keele University with a BA (Hons) in English literature and history, and has a certificate in journalism from the NCTJ. James has worked as a freelance journalist in various Latin American countries.He also had a spell at ITV, as welll as wring for Television Business International and covering the European equity markets for the Forbes.com London bureau. James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.