Propaganda refinances with Yorkshire Bank

Julian Kynaston, Chairman and founder of Propaganda
Julian Kynaston, Chairman and founder of Propaganda
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A consultancy which helped to turn the upmarket hair products firm ghd into a global brand has secured a £1m refinancing deal to help it keep growing.

Over the last two decades, Leeds-based brand consultancy Propaganda has used its creative flair to create powerful brand identities for companies such as logistics firm Clipper and Ann Summers.

Julian Kynaston, the chairman and founder of Propaganda, also revealed that he planned to launch a fragrance line for the bath, body and home.

In 2007, Mr Kynaston founded the make up brand Illamasqua, which has grown rapidly in a fiercely competitive market, using social media to win supporters.

It’s a far cry from the early 1990s, when Mr Kynaston had to deal with a very different fragrance.

He recalled: “I was a screen printer in Huddersfield with that kind of “eau de screen printing ink” that goes with the job. The only upside was you got a seat on the bus because no one would sit near you.”

He was inspired to take up agency work after visiting Neil Foster Design, and over the last 21 years, Mr Kynaston has continued to refine his business model.

According to Mr Kynaston, the refinancing with Yorkshire Bank will create new services and ways of working.

Mr Kynaston said: “One of the things we have started to do, is see opportunities within our client base that they have not spotted.

“So we are beginning to go to them and say, ‘Can we invest? Can we part invest? Can we take shares? Can we have some upside to these opportunities that we have spotted?’

“It’s had a fantastic reaction. We’ve gone into some businesses who hadn’t thought of this idea on the Monday, and by the Tuesday they were realising the potential of it.

“By the Wednesday we were saying we’d part fund it, and by the Thursday we were in a dynamic relationship which has got lots of benefits.

“It demonstrates our absolute proactivity. It means our contracts are a lot deeper and richer.”

Mr Kynaston said he saw the continued growth coming from new, dynamic relationships with clients, and finding new avenues for clients to pursue.

He added: “This also further incentivises us as an agency, as we can often have a stake in their results.. We work best as a close knit consultancy, with staff numbers up to about 50. Beyond this, we feel there can be a loss of focus and service.”

This year, Propaganda’s turnover is expected to be around £3m, which is consistent with previous years. It has around 40 staff. The company has switched to an almost all fee consultative model, so its gross profit is equivalent to 90 per cent of revenue.

A spokesman added: “Typical agencies, who channel third party costs such as print and media spend, could be experiencing much higher turnover, but wouldn’t be as profitable.”

Propaganda’s management owns 60 per cent of the businesses, with the remainder owned by Mr Kynaston.

Over the years, Propaganda has also worked with brands such as energy drinks company Boost, bakery firm Greggs and ghd, the hairstyling brand. Mr Kynaston places the emphasis on board level relationships, so Propaganda can influence the company’s direction.

Pete Sumner, the business development manager from Yorkshire Bank, said: “Propaganda is a successful business with impressive commercial initiative. They’ve demonstrated consistently strong finances and have an outstanding reputation.”