The agency went through a rough initiation into the Interpublic fold, with account losses, legal trouble and management defections after Interpublic bought FCB and parent True North Communications last June. But management said most of the client defections were due to conflicts and that the agency, which dates to 1873, is back on course.
FCB has lost so much business that "it is a shadow of its former self," said Lauren Rich Fine, advertising analyst for Merrill Lynch & Co. Yet "it's not a management issue, but the natural fallout of an acquisition. ... It may not be an issue of changing anything. It's an issue of everybody regrouping."
Not counting accounts won, FCB has lost about $1.7 billion in billings since November 2000, when DaimlerChrysler consolidated Chrysler Group at Omnicom Group, taking $800 million in billings from FCB.
At the time, FCB's billings topped $9.5 billion; they now stand at about $8.2 billion. Among high-profile client defections since the June acquisition are $350 million from PepsiCo and newly acquired Quaker Oats Co. (Interpublic is aligned with rival Coca-Cola Co.); Clairol's $100 million global account (new owner Procter & Gamble Co. moved it to P&G-aligned Grey Global Group); and the $400 million AT&T Wireless account (after a spinoff from AT&T Corp.).
"Foote Cone management has to be under the gun," said an executive close to Interpublic. The executive said he believes the deal hasn't worked out as either Interpublic or Wall Street hoped, but that FCB is still recognized as a good brand.
John J. Dooner Jr., Interpublic's chairman-CEO, strongly denied management was under pressure and said he was happy with the acquisition of "a great agency."
"With the exception maybe of AT&T Wireless, these losses were the result of events that were largely out of FCB's control," he said. "The agency's situation would be totally different today if other buyers had acquired Clairol or Quaker Oats."
Speaking in general of dealing with fallout from client mergers, Mr. Dooner added, "These are difficult circumstances and negative momentum is a difficult thing to manage."
FCB Chairman-CEO Brendan Ryan noted FCB met 2001 financial targets. The agency has regrouped after the distractions of the merger and lawsuits surrounding PepsiCo's move to Omnicom, he said.
FCB has built management strength and resources to go after new accounts, starting with Chicago under President-CEO Dana Anderson and Worldwide Creative Director Jonathan Harries, Mr. Ryan said. At the top of the wish list: an automotive client, followed closely by telecom.
FCB also has hired Bozell Group veteran Gene Bartley as FCB Worldwide president.
FCB prevailed in a pitch to keep Boeing Co.'s $70 million account. Iberia moved its $35 million airline account to Tapsa/FCB, Madrid, Spain, and British cereal maker Weetabix shifted its $22 million account to Banks Hoggins O'Shea FCB, London.
Some accounts that had seemed shaky appear to have stabilized, including Tricon Global Restaurants' Taco Bell. Coors Brewing Co. gave more work to its promotional shop, but FCB's hold on the $100 million account isn't thought to be in peril.
FCB recently reopened a one-person Michigan office, which some close to the company say is a move to target Interpublic client General Motors Corp. FCB has close ties to Bob Lutz, GM chairman-North America.
"The phrase `the jury is out' is the easiest to go to," said Michael Russell, ad analyst at Morgan Stanley & Co. The True North deal was complicated by the start of the recession. "In a time like this," Mr. Russell said, "to be a struggling agency is a double helping of difficulties."
contributing: hillary chura, alice z. cuneo, jean halliday and lisa sanders