Young & Rubicam Inc. has formally joined Y&R Advertising and direct marketing agency Wunderman Cato Johnson where it counts--on the bottom line.
Fifteen years after it first mentioned combining different disciplines under one roof, Y&R informed clients and stockholders Friday that it had created a new operating entity called Y&R/Wunderman Partnership.
The company will operate Y&R Advertising and Wunderman as distinct agencies but with only one financial stream. Employees of both agencies will share the same incentive pool and one profit goal.
The formation creates the most advanced integration of direct marketing and advertising among the ad industry's major companies.
"This is about taking all of the impediments between us and our clients away," said Peter Georgescu, chairman-CEO, Y&R Inc.
Chief among those impediments: separate profit responsibilities for separate functions.
"We don't want to be encumbered by one person having to say, `This really ought to be our dollar, not yours' " to another person in the agency, Mr. Georgescu said.
"There should be a huge productivity gain here," added Mitch Kurz, who moved from worldwide CEO of Wunderman to president-chief operating officer of the partnership and Y&R Advertising.
Clients have driven Y&R to take such a "logical next step," Mr. Georgescu said. Of Y&R's 40 top clients, about 80% use both agencies, a spokesman estimated.
AT&T Corp. is one of the biggest of those. AT&T last week said it will reorganize to integrate all its marketing efforts around a common set of brand values.
"How can we possibly deal with an agency that doesn't approach the business in the same way?" asked Marilyn Laurie, exec VP-brand strategy & marketing communications for AT&T.
Other Y&R holdings, including public relations agency Burson Marsteller, aren't affected by the move. No layoffs are anticipated.
Several senior managers besides Mr. Kurz have new responsibilities because of the internal merger. Ed Vick, chairman-CEO of Y&R Advertising, added a second responsibility as chairman-CEO of the Partnership. Barbara Jack moved from New York CEO to worldwide CEO for Wunderman.
Eleven managing partners already had dual-agency responsibilities overseeing major integrated accounts and will keep them, Mr. Kurz said.
Y&R Advertising and Wunderman account for about 65% of Y&R Inc.'s total revenue. In '96, Wunderman had about $1.75 billion in worldwide billings, while Y&R had nearly $6 billion.
Contributing: Jane Hodges.
Copyright March 1997, Crain Communications Inc.