Raymond Rubicam felt a good CEO should be a teacher as well as a leader. He also believed in the power of advertising but was committed to using that power responsibly. David Ogilvy said, "He taught me that advertising can sell without being dishonest."
The agency's inaugural announcement in 1923 gave early expression to another of Rubicam's principles. The agency was formed "to render to a limited number of businesses" the same outstanding advertising services that he and co-founder John Orr Young had provided to previous clients.
In an interview, Rubicam expounded on this principle by saying "an agency, to be successful, should be as careful in selecting its clients as an advertiser … in selecting his agency." This was a novel view at the time, one that could have been overlooked as Y&R grew to become the largest in the country by the mid-1930s.
One of Rubicam's major challenges was the Pall Mall cigarette business -- a marquee account and Y&R's largest, spending $3 million dollars annually.
The account's watchdog was the notorious George Washington Hill, who owned the American Tobacco Co. and paid himself $2 million dollars a year, an unheard-of salary in the depths of the Depression. Hill was imperious in appearance and manner, with dark bushy eyebrows and a permanent scowl etched across his face.
Hill believed the purpose of advertising was to draw attention to a product. He reminded the Y&R team on many occasions that effective ads should irritate people into buying, so the more noise the better.
By contrast, Y&R's approach was to woo consumers by appealing to their self-image and their desires. Even though Pall Mall had robust sales, Hill was unhappy with the senior creative team and demanded a meeting with Rubicam.
"I want you to change my creative team," Hill declared, pounding his fist on the desk. "I want them off my account -- now." Rubicam was taken aback by Hill's rudeness but wasn't surprised by the criticism. The Pall Mall account had been a problem from the start.
Hill was the type of client who thinks he knows better and constantly badgers the people working on his business. He wanted to rewrite the headlines, make the type bigger or change the illustrations. During presentations he would throw layouts on the floor or tear them up.
Pall Mall was a grist mill, chewing up some of Y&R's most talented staffers and leaving them discouraged and exhausted. It threatened to sap the agency's spirit.
That night, Rubicam spoke on the telephone about Pall Mall with Chet LaRoche, his No. 2 at the agency. Rubicam phoned Hill the next morning and did what few ad agencies have ever done.
"Mr. Hill," he started, trying to keep his voice steady, "American Tobacco is a fine company, and I am sure it will continue to be when it no longer has the services of Young & Rubicam ... which is effective today, as I'm resigning your account."
After a long pause, Hill shouted, "You can't do this," and slammed down the phone.
The news swept through the agency. The staff was elated. Spontaneous celebrations broke on the eighth floor at 285 Madison Ave. Everyone vowed to replace the account with a more suitable prospect. No one was let go, and new-business wins over the next six months made up for the loss of Pall Mall.