Remaking an Agency to Help Marketers Bust Through Silos

Lipman Advertising's Michael Mendenhall Also Talks About Why Specialized Agencies Are Out

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Michael Mendenhall is intent on remaking Lipman Advertising as a one-stop agency solution for marketers stymied by internal silos and the fragmented agency support that has led to. And the former chief marketer of Hewlett-Packard and 17-year veteran of Walt Disney certainly knows something about the challenges facing large marketers peddling various products and services.

"I saw the behavior of the consumer change. I understand the consumer ecosystem and how the digital ecosystem is married into that. I understand the multichannel, integrated approach that needs to take place globally," Mr. Mendenhall said. "I'm bringing that to building an agency."

Andrew Spellman, who previously co-founded Fireman Capital, a private equity firm, led the buyout of the independent agency, which was founded in 1927. He will take on the role of CEO. David Lipman, son of agency founder Bob Lipman, is staying on as chairman-chief creative officer, while Mr. Mendenhall becomes president-chief operating officer.

The agency had primarily worked with fashion and luxury brands, but now Mr. Mendenhall said Lipman will expand its repertoire to include destinations, technology, retail, electronics and beverages, as well as private-equity investment. Mr. Mendenhall said the agency will be looking to invest in "innovative, disruptive" ideas.

Michael Mendenhall
Michael Mendenhall

Mr. Mendenhall talked with Ad Age about the silos that exist in large companies; why specialized agencies are out; and why major marketers are likely to consolidate their rosters.

Ad Age: HP is a big, complicated company with lots of silos. What did you learn from that experience and how will you apply it at Lipman?

Mr. Mendenhall: What I learned is that most large public companies are matrixed and siloed. Marketing organizations have siloed themselves to match the fragmentation of the communication across channels. And it's become incredibly hard to build an integrated approach that has brand consistency and message consistency. I learned the importance of disciplines that have specific functions and working against a central strategy, so that you actually act as one company in the way you present yourself to the consumer. The consumer expects, when they interface with the brand, one company with one position but with multiple products and services. ... Where Lipman can help is to provide a level of service end-to-end that starts with that strategy, and builds a multichannel, integrated approach that helps these marketers and advertisers across their matrixed organization and their silos.

Ad Age: What need do you plan to fill and how will Lipman be different from other agencies out there?

Mr. Mendenhall: Ad agencies have lost a bit as they've become specialists in a given area. It's become fragmented in how they support [marketers who want to] have multiple agencies working against specific products. What's happened in this fragmented approach is you get bits and pieces of this through the multiple agencies you work with, and you're forever trying to integrate an idea. Whether it's a big organizing idea or principle or whether it's a campaign or specific product launch, it's become completely fragmented and frustrating for marketers. The roles and disciplines have changed for advertising agencies. We live in a very information-rich age. We not only should have people that understand how to design and produce great user interfaces but also who have a deep understanding of statistics and analytics and how to manage information and how to manage the consumer insights to benefit a brand. ... And if you think about account staff, they need to be far more strategic than they are today. They should not be about trafficking and calendaring. They need to have a strategic understanding of the business. I would say they need to have some of those similar capabilities that you would see at a Bain, McKinsey or Deloitte.

Ad Age: Some would argue that the reason for that fragmentation is that marketers have expressed a desire for specialists rather than generalists.

Mr. Mendenhall: But there's not a strategic arm that pulls it together. They have specialists in customer relationship management that aren't looking at the entire ecosystem. It's up to the marketer to piece all of these specialists together. It's a lot more work and it costs companies a lot more to pull that fragmented approach together.

Ad Age: Is that a challenge you faced at HP or Disney?

Mr. Mendenhall: Every marketer has faced that. The multi-agency approach produces inefficiencies that leave effectiveness on the table.

Ad Age: It does seem to be somewhat of a trend, though, marketers working with multiple agencies, wanting to bring different ideas and different people to the table.

Mr. Mendenhall: If you're in a global company operating in multiple cultures and languages trying to build consistencies, think about how that becomes fragmented and the dilution that happens to your brand and your effort. What people are now starting to understand is that we don't need a lot of different, smaller specialty agencies. We need to integrate and have capabilities in a smaller set of agencies that go deep. Big multinational companies are going to probably move into a consolidation period because they realize they're being inefficient.

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