Hotshop regroups: Chrysler loss spurs cutbacks at Fusion 5

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After years of flying high, WPP Group's Fusion 5 is regrouping amid the departure of its founders and other top executives, the defection of its largest client and a massive staff reduction.

DaimlerChrysler, Fusion 5's top client, ends its three-year contract this month, according to people familiar with the situation, and will not renew. The marketing consultant's relationship with the auto giant has been on shaky ground since the spring exit of Jim Schroer, Chrysler's exec VP, and the arrival of Joe Eberhardt, the automaker's exec VP-sales, service and marketing, who is whittling his agency roster and agency compensation.

Though Fusion 5's other top clients-SABMiller, Coca-Cola Co., Gillette Co., Campbell Soup Co. and Timberland Co.-look secure, the agency is halving its staff from a peak of about 60 through layoffs and attrition.


Patrick Meyer, CEO and co-founder of the Westport, Conn., shop, formally departs Dec. 31, following the expiration of his three-year contract. A rainmaker for the agency, he will serve on corporate boards and develop new beverages and other products, according to people familiar with his exit. His non-compete agreement expires in the spring. Mr. Meyer could not be reached for comment.

Robin Austin, Fusion 5's co-founder and chief creative officer, will leave in April. He and Mr. Meyer are writing a book about marketing and are expected to run seminars for CEOs and chief marketing officers come summer. He could not be reached at press time.

Along with Messrs. Austin and Meyer, other top executives have departed since summer, including Andrew Benett, senior VP, who left to become executive director-marketing and business development at Interpublic Group of Cos.'s FutureBrand; VP Michael Guth, who joined Time Warner, where he will help integrate marketing across its clients; and Randy Herbertson, senior VP, now with Omnicom Group's Arnell Worldwide as senior VP. Those executives either declined to comment or could not be reached at press time.

Founded in 1994, Fusion 5 handles just about everything but storyboards-research, idea pow-wows, strategy, events and urban know-how-as a means to help brands connect with buyers. It was sold in 2000 to London's Tempus, which in turn sold to WPP in 2001.

Fusion 5 posted annual growth levels of 40% for almost a decade but likely will see only half that this year, according to people familiar with the situation. It's a far cry from earlier this year, when Fusion executives were promising to boost staff 10%, increase revenue 35%, and branch into the retail, high-tech and financial-services categories (AA, May 12).

In September, Tamara Ingram, a former CEO of Saatchi & Saatchi and McCann-Erickson Worldwide in the U.K., was named president of Kantar Group, the WPP unit to which Fusion 5 reports. In August, Dave Moran, then Fusion's president, was named CEO, replacing Mr. Meyer, and Katia Facchetti, then senior VP, was named chief operating officer.


Ms. Facchetti said Fusion 5 would target pharmaceuticals, telecom and automotive and expand its retail attention but reduce its regional marketing efforts in light of the Daimler loss.

"We've gotten over bumps multiple times in the past 10 years. ... We are all about change. This is an opportunity for us to make sure we are changing in line with the direction of our clients," she said.

One executive whose company is a large Fusion 5 client said he would look carefully to see where Messrs. Meyer and Austin would end up. He said their departure does diminish some of Fusion 5's capabilities, but it does not merit an automatic review. "You're always looking at the talent of an organization-especially an organization that I would consider niche," he said. "You're always looking to make sure the people working on your business can deliver."

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