JONES MOVES TO TRANSFORM JWT CHAIRMAN-CEO NAMES EXECUTIVES TO BOLSTER SHOP'S CREATIVE REPUTATION

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It was a Kodak moment Chris Jones would rather forget.

On June 16, 1997, the CEO of J. Walter Thompson Co. got a call the agency had been expecting for years. Eastman Kodak Co., a JWT client for nearly seven decades, was firing JWT.

While not a surprise, the move was abrupt. In many overseas markets, JWT staffers broke the news to local Kodak executives that their new agency was Ogilvy & Mather Worldwide.

The loss was a low point in 1997, but -- unfortunately for JWT -- not the only one.

LOW MORALE

Morale plunged when in July, as part of a larger $850 million consolidation, JWT was terminated by Citicorp. And after spending heavily to bring in free-lance creative firepower for a PepsiCo International pitch, JWT lost out to Goodby, Silverstein & Partners, San Francisco and BBDO Worldwide, New York.

Like Kodak, JWT is now trying to reinvent itself as an innovator in a business it practically invented.

Mr. Jones, now chairman-CEO, has been reorganizing the U.S. offices and installing new management, growing below-the-line businesses and encouraging integration through new units such as J. Walter Thompson Total Solutions Group.

"[JWT] is a big battleship -- you can't steer it as quickly," said Abe Jones, managing director of investment banking firm AdMedia Partners.

CUTTING COSTS

Critics claim parent WPP Group, London, is looking to cut costs at all subsidiaries to improve operating margins, sometimes at the expense of creativity and morale. That suggestion rankles WPP CEO Martin Sorrell. While it isn't any secret he wants WPP's operating margins -- 11.8% in 1997 -- to equal the higher levels of other holding companies, he maintains there's no pressure on WPP agencies to cut budgets.

JWT's contribution to its parent's revenue base is estimated to have grown to $1.3 billion in 1997, from $1.1 billion in 1996. JWT's worldwide billings last year rose to $8 billion, from $7.62 billion in 1996; net new billings for the year were $315 million, trailing sister shop Ogilvy's $535 million in net new billings.

JWT picked up business from clients such as Ford Motor Co., Sprint Corp. and Dell Computer Corp., but also came up short in some reviews, including Red Lobster and MasterCard International.

Some say JWT must shatter its reputation as an old-boys club to compete with creative hot shops -- a transformation JWT's Mr. Jones considers doable.

"There are huge distinctions between being a company with a gray past -- which is what Thompson is -- and a company in the past," said Mr. Jones.

JWT doesn't need to worry about adding global presence, he said, so it can focus more on the quality of its work. He said the players are mostly in place to do that, although more creatives may be add-ed around the network. JWT is also considering adding business development staff and strengthening its direct marketing resources -- possibly through acquisitions.

Since taking over from Burt Manning, a longtime JWT executive, as CEO in January 1997, Mr. Jones, 42, has been replacing more traditional managers with executives who see the world his way.

EXECUTIVE APPOINTMENTS

The Chicago office picked up a plum global branding assignment from Kraft Foods and scored -- with the New York office -- a $70 million global branding initiative for Dell after Dennis Ryan, formerly senior VP-group creative director at DDB Needham Worldwide, Chicago, was named exec VP-executive creative director.

In Detroit, Bruce Rooke replaced Dick Howting in June 1997 as executive creative director on the U.S. Ford business, while Mr. Howting became the first global creative director for Ford.

On the West Coast, which insiders had considered a neglected backwater, Larry Tolpin, recruited from BBDO South, Atlanta, replaced Jonathan J. Hyde as the top creative in San Francisco. Mr. Hyde left after a May 1997 management realignment in which David Reimer became president of JWT West, San Francisco, and John Geoghegan, 39, became general manager of the San Francisco office. Peter Stranger, a well-regarded West Coast advertising vet, was later named president of JWT, Los Angeles.

JWT is still a powerhouse overseas. In Argentina, its local offices are known as El Ministerio de Publicidad -- The Ministry of Advertising. It has 233 offices in 78 countries and -- despite absorbing the Kodak and Citicorp losses last year -- has brought in new business from multinational clients including the former International Distillers & Vintners unit of Grand Metropolitan, now part of Diageo; Siemens AG; and Kellogg Co.

The New York operation remains the biggest problem, although with the recent addition of former Lowe & Partners/SMS executive Robert Jeffrey as president of the office, Mr. Jones is hoping to turn the corner there, too.

New York's net billings in 1997 were actually up, due, insiders said, to Unilever giving JWT the nod on the $82 million Thermasilk haircare launch from its Helene Curtis unit. The office's other significant win was $20 million from Sprint's college/young adult business.

WOES POST-BREAKUP

New York ran into trouble after the breakup of the team of Jim Heekin, Jim Patterson and Peter Kim in 1993. Since the three stepped down, the office hasn't had the same combined strength in creative, new business and account management leadership, said one former JWT executive.

The spot filled by Mr. Jeffrey -- who has a reputation as an effective account exec and strong manager -- had been vacant since Susan Giannino resigned last fall after clashing with Mr. Jones.

The question now is how Messrs. Jeffrey and Jones will handle creative. Executive Creative Director J.J. Jordan still hasn't proved his creative leadership, said another former JWT executive, and there has been speculation -- denied by Mr. Jones -- that Mr. Jeffrey might try to lure former partner Gary Goldsmith from Lowe.

Mr. Jones champions the idea that certain North American offices have the expertise to be "centers of excellence," helping others win new accounts or service existing ones, said Steve Brown, exec VP-general manager of JWT's Detroit office.

SERVICE-SPECIFIC UNITS

Part of this philosophy involves branding service-specific units. Detroit, for instance, recently formed J. Walter Thompson Retail Group to woo retail accounts and break down JWT's image as a large, package-goods agency.

JWT also branded its integrated marketing as Total Solutions Group, combining direct, ethnic marketing, promotions and new media.

Despite the reshuffling of local offices, Mr. Jones rejects the idea they are separate shops. While each still has new-business staff, coordination of new-business pitches has been centralized with Bryan Heffernan, Chicago-based exec VP-global new-business director.

"The average client doesn't care about geographical issues. They care about being cared for well," Mr. Jones said.

Though it will take time to turn around JWT, observers agree Mr. Jones must quickly show progress.

"Chris Jones has probably not had enough time on the job to be judged," said AdMedia's Mr. Jones, "but the clock runs fast in the agency business these days."

Contributing: Laura Petrecca, Jean Halliday, Alice Z. Cuneo, Laurel Wentz.

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