The Jaffe Report: Highlights About Agencies and Brands

May/June 2003 | Archive

A Predictable Dilemma

“General Motors Corp. is angry with Publicis Groupe for hiring away one of its executives to work on a rival’s business—and could punish the holding company as a result.” —Ad Age, May 19, 2003.

Welcome to the new era of stresses and strains as account wins and losses are orchestrated at the agency holding company level. For practical purposes there are only four main holding companies in this space: The Interpublic Group of Companies, Omnicom, WPP and the Publicis Groupe. (Havas wants to be in this league but with only one global network, Euro RSCG, it can’t quite claim membership yet.)

The Big Four were formed to serve global clients – of the likes of Procter & Gamble, Nestle and General Motors – with billions of dollars to spend on multiple brands. Their accounts can be moved on a whim. So for Publicis to get C.J. Fraleigh, executive director of corporate advertising for GM, mad over a hiring decision is a major faux pas.

Fraleigh said he was angry with a Publicis sibling, Saatchi & Saatchi, for luring Kurt Ritter, general marketing manager of GM’s Buick-Pontiac-GMC division, to run Saatchi’s Torrance, California, office, which manages Toyota advertising in the U.S.

Publicis is already straining the conflict rules by managing several General Motors accounts – Pontiac, Oldsmobile and Cadillac – with over $400 million in billings in its Leo Burnett and Publicis divisions, while servicing the $500 million Toyota account from Saatchi/Torrance.

But who put the GM billings at risk? Laying the blame at the doorstep of Maurice Levy, CEO of Publicis, is too easy a call. Levy may have been tangentially informed when Kevin Roberts, CEO of Saatchi Worldwide, hired Ritter – but Levy doesn’t have time these days to get involved at the operating level. He’s struggling with global issues – like how to move people and accounts into his divisions following the dissolution of D’Arcy earlier this year and how to negotiate with failing Cordiant the purchase of the shares he doesn’t own in global media unit, Zenith.

But it shows up the need for Levy--and all the holding company chiefs--to establish a layer of management between him and his divisions who can mediate conflicts and try to keep global competitors like Toyota and GM happy living under one roof. None of the holding companies likes to be accused of adding layers and costs right now. But someone has to mind the store – especially when the boss sits in Paris, several time zones, languages and cultures away from the center of action.

Milestones

Dentsu needs a stronger bench in the U.S. and Europe
Dentsu can’t afford to twiddle its thumbs in expanding its business outside Japan. Ad spending in Japan was down 5.9% in 2002, for the second year in a row, while profits in its current fiscal year are said to drop 3.9% – and the Japanese economy is so sick, there is no reason to believe these numbers are going to improve anytime soon. Dentsu urgently needs to expand away from the yen. It owns various properties in the dollar/Euro markets – including in the U.S. Colby & Partners, The Lord Group, DCA in New York, and the Renegade Marketing Group and in the United Kingdom, Collett Dickerson Pearce. But by far the biggest single play is its $1 billion-plus investment in Publicis. It’s going to take time for Publicis to begin to throw off earnings sufficient to lift Dentsu’s non-yen earnings. So Dentsu needs to make another global play – especially if it wants to start servicing its Japan-based clients as they develop new markets around the world. It doesn’t make sense for this global leader not to have a stronger bench. Stay tuned.

Lori Senecal named McCann’s “top idea arbiter”
I couldn’t have been more intrigued by the headline “Exec becomes top idea arbiter,” over the announcement in Ad Age that Lori Senecal, a former strategic planner and account manager in the middle ranks of McCann/U.S., had suddenly been named director of account management. With experience on blue-chip brands like Coca-Cola, Nestle, Molson and Sprint, Senecal has amassed the credentials to take the helm – but it was the reporter’s interest in Senecal’s ability to drive new ideas, which caught my interest. In my book, I take the position that big advertising companies need a new kind of CIO – a chief ideas officer – to nurture the birth and growth of ideas for its brands from offices all over the world. I had predicted this role might best be taken over by worldwide creative chiefs. But here’s an account person with the inclination and ability to take it on. “I have always been really focused on increasing the quality of our ideas,” Senecal told Ad Age. “In this economy, our clients are facing bigger challenges than ever, that’s why we have to give them bigger ideas.” Amen to that. But how about coming up with a title that expresses this function – rather than the unglamorous “director of account management?” If you’re going to lead the charge for ideas, it ought to say that loud and clear on your business card.