The Real Reason Why Wieden Quit Starbucks

Agency Kept Bumping Up Against a Marketer That Wasn't Receptive to Its Ideas, Executives Say

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CHICAGO (AdAge.com) -- Dan Wieden and Howard Schultz have mended a few broken bridges between their organizations. But last week, reacting to what it saw as Starbucks' micromanagement, waffling and shift to a jump-ball approach for future ad assignments, Wieden & Kennedy took the unusual step of quitting the business.
Howard Schultz: Does coffee czar really want to advertise?
Howard Schultz: Does coffee czar really want to advertise? Credit: Sharkpix

During the four years that Wieden & Kennedy, known for creative and effective ads for marketers such as Nike and P&G, toiled for Starbucks, a coffee chain built on word-of-mouth and grass-roots marketing, there were a lot of disagreements. Enough friction, in fact, that insiders from both companies lobbied continually to dissolve the partnership. But inevitably, Starbucks' CEO Mr. Schultz and agency founder Mr. Wieden, who are longtime friends, always smoothed things over -- until last week.

"Wieden always felt like it was a one-way relationship," said an executive familiar with the matter. "They felt like they presented a way to drive the brand forward, and Starbucks wasn't receptive." The agency wouldn't comment beyond its statement from Mr. Wieden in announcing the resignation: "There are times when it just makes sense to part ways with a client," he said. "In this case, this seems to be the best decision for both parties."

Executives with knowledge of the situation said Starbucks was simply a very frustrating client for Wieden, an agency that other marketers have described as unusually honest in its communication with clients. Other agencies that have worked with Starbucks have felt frustration with the marketer too. Rich Silverstein, co-founder of Omnicom Group's Goodby, Silverstein & Partners, which did two stints representing Starbucks, said much of the fault lies with the mercurial Mr. Schultz. "He does not appreciate advertising," he said. "Any agency that comes in has one foot out the door already."

Starbucks spokeswoman Lara Wyss said that such a view of Mr. Schultz's marketing philosophy had no merit. "Howard understands the value of the marketing mix to support the brand," she said.

Taking reigns
Mr. Schultz returned to the troubled company's helm in January and quickly assembled a team of advisers, many of whom he had worked with for more than a decade. One such executive is Harry Roberts, chief creative officer, who has known Mr. Schultz for decades.

By a number of accounts, Mr. Roberts has taken on wide-ranging responsibilities during the past year. Under his reign, it has become commonplace for the same project to be assigned to multiple agencies on a competitive basis, according to several people familiar with the matter. "I don't just swim in one lane," Mr. Roberts said in a meeting last week.

There have also been deep cuts in the marketing department, as part of a plan to eliminate 1,000 nonstore jobs, and a few high-level marketers that were contacts with the agency have left Starbucks in recent months. The company declined to comment on what role, if any, Mr. Roberts has played in the recent departures.

Unrest at Starbucks is hardly new. The company has been described as a difficult client for many years. It's infamous for greenlighting projects and later withdrawing approval. For instance, the chain made its TV-advertising debut during the last holiday season, but a broadcast campaign had been under way at least once before.

Case-by-case
Moving forward, it's expected that Starbucks will work with a handful of agencies on a project basis rather than designating another agency of record.

"It's not like we're starting from a dead stop," Starbucks CMO Terry Davenport said last week, noting that the chain has been impressed by work done for its ancillary businesses.

A spokeswoman wouldn't say which agencies are on the roaster's roster. But the list is known to include DraftFCB, which handles Starbucks' grocery brands -- a collaboration with Kraft Foods -- and BBDO and TracyLocke, which have worked with Starbucks via its various partnerships with Pepsi. (BBDO also handled the launch of Starbucks Coffee Liqueur, which was marketed by Beam Global Wine and Spirits.) TracyLocke has another in with Starbucks by way of client Hershey Co.

Absent a traditional marketing strategy, the company's plethora of licensed products plays a crucial role in bootstrapping the brand, although all products, including bottled Frappuccino, may compose only a single-digit percentage of revenue.

Agencies that walked away

It's far more common for a marketer to call a review than for an agency to publicly quit a business (unless, of course, it is on the brink of being fired). Here are some examples of agencies walking out on plum accounts.

2007: Cramer-Krasselt quits CareerBuilder rather than defend the business in a review it said was inspired by the client's poor showing in the USA Today Super Bowl Ad Meter. "There are a few times in your life when you have to tell someone to fuck off and mean it," said agency CEO Peter Krivkovich.

2007: Crispin, Porter & Bogusky CEO Jeff Hicks calls Miller Brewing CMO Randy Ransom to tell him the agency is quitting the Miller Lite account after a largely unsuccessful year as agency of record. When Mr. Ransom asks if he'd reconsider, Mr. Hicks informs Mr. Ransom a press release has already gone out.

2005: Goodby, Silverstein & Partners walks away from Discover Card's $80 million account in an attempt to pitch for Visa's $300 million business. Goodby paid to discover its poor judgment when Omnicom sibling TBWA/Chiat/Day beat it in a review for Visa.

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