Impiric looks back to its future for strategy

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One year after Impiric took legendary direct-marketing pioneer Lester Wunderman's name off the door, Young & Rubicam's marketing-services arm is returning to its roots. The name change from Wunderman Cato Johnson was the most visible part of an overhaul that began in 1998 under former CEO Jay Bingle to reinvent the 43-year-old organization with a focus on customer-relationship marketing. Now, Impiric is positioning CRM as just one piece of the broader direct-marketing heritage at the world's largest marketing-services company. In January, the firm installed Daniel Morel as Impiric's CEO to fulfill the vision of Y&R and its parent, WPP Group.

Impiric's future is crucial to WPP. Holding-company CEO Martin Sorrell and Y&R Chairman-CEO Mike Dolan have long foreseen a shift toward once-stigmatized, below-the-line activities as clients with increasingly precious ad dollars demand more accountable media and better returns on investment-a trend almost certain to accelerate in the economic downturn. Mr. Sorrell envisions WPP's 50/50 split between advertising and marketing services swaying toward 30/70 in favor of the latter.

What we saw and believed was that the mix of our business would change ... to a mix where non-advertising marketing services would be a larger and larger portion of the pie," said Mr. Dolan. "Martin has gone on the record saying that in the long term for WPP in total, he's looking at something like two-thirds [marketing services], one-third [advertising]. We were in screaming agreement about that from day one."

Mr. Dolan recognized a few years ago that his shop had to change to be a pre-eminent player. He brought in a new team to lead the aging direct agency-started in 1958 by Mr. Wunderman, who still roams the halls as chairman emeritus-into the 21st century. That team was led by Mr. Bingle, an agency rookie from consultancy Capital Consulting & Research, which Y&R acquired. Mr. Bingle took the helm in 1998 with the mind and the mission to morph the agency into a CRM mecca instead of a mere direct-marketing shop. He was a serious force of uncomfortable change at the shop-bringing in other consultants, pushing his CRM and new-technology mantra and, in perhaps his most controversial move, taking Mr. Wunderman's name off the door.

"I think there was skepticism [among the Impiric staff], but there was more fear than skepticism," said one former Impiric employee. "People questioned whether they would have a role. They knew what their roles were in the traditional business, but they didn't know what or whether there was going to be a role in the new business."

Much of the work force was troubled by the shop's transformation. "Jay [Bingle] was a change agent. He was a visionary. ... Change agents can cause some anxiousness among the work force," said Chris Cooney, Impiric's former exec VP-global marketing and communications, whom Mr. Bingle hired in 1999 to lead the shop's global rebranding effort. Mr. Cooney left in 2000 to pursue another opportunity. Mr. Bingle declined to comment on matters relating to Impiric.

Mr. Bingle's regime tried to do too much too fast, another former Impiric staffer said. "Y&R had just gone public. This business was a piece of the story that was being told to analysts about the growth of Y&R. There were a lot of expectations and a lot of pressure."

Insiders agree the strategy of the last few years weighed too heavily on CRM, while broader marketing services were the agency's core. "There was a notion a year ago or two years ago that in order for this company to be successful, we had to change our offering to the market and be more focused on this thing called CRM and consulting," said Impiric New York President David Sable, who came to the shop from Y&R 2.1, the agency's interactive arm. "It's not like [CRM] is a new thing, but it became a buzzword. The truth is, it's a subset of what we do."

What Impiric does-and has always done-is direct marketing. And Y&R knew it needed to part ways with Mr. Bingle and hire someone steeped in that tradition to carry Impiric forward. "At the end of the day, [Mr. Bingle and I] mutually decided that it was best to make the switch in order to take full advantage of the opportunities we saw in the business," Mr. Dolan said. "The commitment to database and interactive and e-mail and various capabilities was exactly right, but we felt that we didn't have enough grounding in the traditional business to be able to operationalize the strategy," he said. "We wanted somebody who was coming out of the practice, coming out of the tradition yet at the same time was committed to the future."

Enter Mr. Morel, a French-born agency veteran who helped build Euro RSCG Worldwide marketing-services arm The Sales Machine into a global network. But he faces a different challenge at Impiric, which already has a decidedly global presence. Mr. Morel now is charged with putting the right people in place around the world to bring all of Impiric's offices up to the level of those in the U.S. and serve multinational clients including Citibank, Ford Motor Co.'s Lincoln and Mercury brands, IBM Corp. and Sony Electronics Corp. "I don't think [last year's redirection] was a failed strategy," Mr. Morel said. "It's very much in line with what the market wanted to hear and what the market wanted to explore. You start exploring venues, but you find that they're not necessarily the ones you want to be in, and you go back and recast those venues into the larger picture," he explained. "It's not about becoming a technology company. For us, it's making sure that we're bringing into the company the right set of talent and the right set of expertise. That's my mission."

Mr. Morel also will play a role in Mr. Sorrell's greater plan for WPP. The holding company plans two acquisitions for this year-a midsize U.S. marketing-services shop and a European market-research firm, according to disclosures in a recent earnings report. Despite these purchases, much of the group's growth will come organically, upping the ante for Mr. Morel, who leads WPP's biggest global marketing-services unit, trailed by its two other U.S. shops, Ogilvy & Mather's OgilvyOne and J. Walter Thompson Co.'s ThompsonConnect.

Impiric, the No. 4 marketing-services agency in the U.S. and No. 1 worldwide, had $401.6 million in 1999 worldwide revenue, close to 30% of Young & Rubicam's total global revenue of $1.4 billion. OgilvyOne had $318.7 million in 1999 global revenue, representing 25% of O&M's total $1.27 billion; ThompsonConnect's $69.3 million accounted for only 5% of JWT's $1.38 billion.

Impiric, moreover, claims average compound revenue growth of 20% from 1997 to 2000, consistent with the uptick of the entire industry. "Marketing services are generally faster growing than advertising," said David McMurry, an analyst at Credit Suisse First Boston, and the potential for growth in the sector is also greater. "The ad industry is probably the most consolidated of all the businesses, but you can grow organically and by acquisitions in marketing services," he said.

Now that Impiric is revisiting its roots, can a shift back to the Wunderman name be far behind?

Some outsiders think the choice is clear. "When you walk away from the brand name Wunderman, I think you're insane. For someone to come in and change the name in the Internet phase absolutely turned out to be the wrong strategy," said Howard Draft, chairman-CEO of Interpublic Group of Cos.' DraftWorldwide, an Impiric rival.

Even Impiric and Y&R execs don't rule out shifting the name back. "If you ask Lester [Wunderman], he's going to tell you [the name change] was a mistake," said Mr. Morel.

"The intent in moving from Wunderman Cato Johnson to Impiric was to signal the change in strategy and the communications to the new technology areas," Mr. Dolan said. "At the same time, I think there's a feeling that the Wunderman name is a very, very valuable brand franchise we should not lose sight of and lose contact with."

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