CHICAGO (AdAge.com) -- After 118 years, JWT is walking away from the Windy City.
The 50 remaining employees of what was once the largest office of the world's largest advertising agency network were given the news this afternoon at a staff meeting by JWT North America President Rosemarie Ryan.
Ms. Ryan traveled to the Chicago office to personally inform staff that the WPP-owned, New York-based network had decided to invest its resources in more-successful offices in Atlanta and Toronto, rather than rebuilding a long-declining Chicago outpost that was devastated by the loss of its largest and most important client, Kraft Foods, in 2007.
'Not an affordable proposition'
"The Chicago office has been struggling for six or seven years. It hasn't been growing," Ms. Ryan said in an interview. "We thought the right management team could restore it to its former glory ... but to do that in Chicago is just not an affordable proposition," particularly amid a recession.
"There are only so many places where you can spend your energy and time," she added.
Speculation that JWT could shut its doors here has been rampant since June 2007, when Kraft Foods pulled all its business. The shop cut 25% of its staff after the loss, and its president, Ros King, and chief creative officer, Graham Woodall, departed. Despite a brief attempt to replace them with new local managers, the agency has been run out of New York since and has been unable to win any new business.
The agency's largest remaining account is the Illinois Bureau of Tourism, which is in review. If JWT's team triumphs in that pitch, the agency may maintain a small service office to run the account, Ms. Ryan said. Presumably, the agency might also explore moving the account to a WPP sibling in the Windy City, such as Ogilvy & Mather, although Ms. Ryan declined to address that possibility.
The Chicago office also handles Nestle ice cream brands and Kimberly-Clark's feminine-care business, both of which will shift to JWT's New York headquarters. It's possible that a few Chicago staffers will accompany the brands to New York, but the vast majority likely will be let go.
The speed at which JWT went from stable to shuttered is striking, particularly given the agency's former prominence. JWT formerly boasted the city's second-highest billings, and one of the country's top creative departments. In 2007 it was still the primary global ad agency for Kraft Foods, the world's largest food marketer, and also for Federated Stores, one of the top U.S. retailers.
Opened in 1891
JWT, Chicago, began as a one-man operation in 1891. Charles E. Raymond was dispatched to Chicago by J. Walter Thompson's management to see if the 1893 World's Fair might create some business opportunities. In his first eight months, Mr. Raymond and his fledgling the shop netted $1,600, and in the next decade, the office grew with the help of banner accounts such as Swift & Co., Pabst Brewing, Cream of Wheat, Holick's Malted Milk and Aunt Jemima pancake flour.
From its early days, JWT, Chicago, was an innovative place. In 1917 it set up what is believed to be the first test kitchen in an agency. Its 1919 comic-strip ads for Aunt Jemima were the first of their kind. And it was the first agency to produce variety programs for radio (for Fleischmann's in 1929) and TV (for Libby's in 1930).
Some of its campaigns and slogans were classics. Its World War II-era effort for Ford Motor Co., under the tagline "There's a Ford in your future," helped keep the brand alive during a period when the war buildup had stopped most car production. The shop wrote classic jingles for Oscar Mayer, including "My bologna has a first name," and it sold Kellogg's Rice Krispies with "Snap, Crackle and Pop."
In the 1970s, it famously dubbed 7UP "The Uncola." In the 1970s and '80s, the office was raking in estimated billings in the range of $500 million to $1 billion.
Breeding ground for talent
JWT, Chicago, was also known as a breeding ground for management and creative talent. Burt Manning, for example, joined as a copywriter in Chicago and went on to be the network's chairman-CEO. The agency also boasted a proud legacy of aggressively promoting women in the industry's "Mad Men" days and since. In 1964, Ad Age reported that the shop had four women in VP roles.
Charlotte Beers, who went on to become CEO of Tatham Laird & Kudner, managed accounts such as Kraft, Sears and Gillette as a senior VP at JWT during the 1970s. Nina Disesa, who became chairman of McCann Erickson, New York, was JWT's chief creative officer in the early 1990s. Dana Anderson led global planning on JWT's Kraft business, and later became CEO of both FCB and DDB in Chicago. (Last year Ms. Anderson became senior VP-marketing at Kraft.)
Yet, despite that legacy, JWT is alone among the four agencies that have long dominated Chicago advertising -- Leo Burnett, DDB and FCB are the others -- to not remain viable today.
Asked why JWT failed, Ms. Ryan said she didn't know.
But former JWT, Chicago, executives said one key difference between JWT and its rivals was its often contentious relationship with its New York headquarters. Burnett was, of course, Chicago-based, and both New York-based DDB and FCB (before it merged with Chicago-based Draft in 2006) tended to have fairly autonomous Chicago offices.
A taste of that tension was on display in Ms. Disesa's 2008 book, "Seducing the Boys Club." "At one point, Chicago had more billings than the New York office, and it was widely believed that this was the basis for the friction between the two offices," she wrote. "Deep-seated jealousy."
Crisis of confidence
But she also described a crisis of confidence that gripped the Chicago agency even in the late 1980s and early 1990s, as its billings declined from their 1970s peak.
"No one gave the people in that office the confidence they needed to be winners again, and no one offered a blueprint for success. With each new 'agent of change' more business was lost, morale plummeted, the good people left and the hangers-on clung even tighter for dear life."
While there have been occasional surges since, the executive turnstile and business losses continued into this decade. The shop lost Miller Brewing in 2003, an account it had worked on for more than a decade. In 2007, Federated Stores shifted its account to JWT's New York office.
Then Kraft dropped the bomb, pulling Nabisco, Grey Poupon, Kraft Singles, Miracle Whip, Philadelphia and every other brand it had at JWT out of the agency, putting them up for grabs for competitors including DraftFCB, McGarryBowen and DDB.
By December, the agency -- which once employed 800 people -- was down to 50 employees and four accounts, prompting management to initiate serious discussions about shuttering the office, Ms. Ryan said.
JWT has typically maintained fewer far-flung offices than its peers, and it has been generally retrenching further of late. In addition to shuttering Chicago, the network has also downsized its Detroit operation, which handles much of Ford's advertising, folding it into a cooperative office with other WPP shops dubbed Team Detroit. That operation is now struggling to diversify beyond its embattled, anchor auto client.
Ms. Ryan said she saw little reason to undergo a costly rebuilding in Chicago simply for the sake of maintaining a presence in a market that "does not seem to have had the kind of momentum you see in some other places" and isn't exactly "setting the world on fire."
Success in Windy City
Of course, a handful of Chicago offices have managed strong growth in recent years. Independent Cramer-Krasselt, for example, has used a highly integrated offering of creative, media, public relations and digital expertise to lure the likes of Porsche, Edward Jones and the Kentucky Derby to Chicago, while Euro RSCG -- itself the subject of closure rumors a few years ago -- has returned to vitality by focusing largely on below-the-line and digital work for the likes of Kraft, Citigroup and Sprint.
Ms. Ryan praised JWT's Illinois Tourism work for its integrated approach, even calling it her favorite campaign in the office's illustrious history, but she said resurrecting the office would involve creating a broad digital offering that would simply be too costly to invest in during the current economic slump.
"It's with a heavy, heavy heart that we've decided to focus on New York, Atlanta and Toronto," said Ms. Ryan, who has been reaching out to clients in recent days to let them know about the closure. "The clients are just like us: They're sad. They love the people like we do. It's a difficult thing for all of us, but they understand that we all need to do what we need to do to run successful businesses."
New York has long served as JWT's headquarters, but in the past 120 years the Big Apple and Windy City have often traded off as the jewel in the JWT network's crown. But on the eve of the ailing Chicago office's closing -- a decision made by North American management Rosemarie Ryan and Ty Montague and announced today to staffers -- New York has undoubtedly become the powerhouse, while other regional offices such as Atlanta and Toronto having also gained momentum.
|New York||Harvey Marco, Peter Grossman||
Diageo (Smirnoff, Bailey's, Jose Cuervo)
Microsoft (People Ready, Kumo)
Cadbury Adams (Stride, Trident, Swedish Fish)
Johnson & Johnson
Schick (Wilkinson Sword)
Kimberly-Clark (Huggies, Scott)*
|Atlanta||Carl Warner, Tony Accurso||
U.S. Marine Corps
Federal Emergency Management Agency (FEMA)
Blue Cross Blue Shield of Tenn.
U.S. Virgin Islands
|Toronto||Tony Pigott||Walmart Canada
|*Clients that will shift business from JWT Chicago to JWT New York|