NO LONGER THE OWNER BUT STILL VERY MUCH THE LEADER: PAT MCGRATH TALKS ABOUT HIS LONG COURTSHIP WITH PROCTER & GAMBLE, HIS DECISION TO JOIN WITH EURO RSCG, AND HIS THREE DECADES WITH THE AGAENCY THAT BEARS HIS INDELIBLE STAMP

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Pat McGrath, who joined what was then Case and Krone within a week of its founding in 1969, doesn't believe that advertising is only a young person's game. Mr. McGrath, 64, works out daily, rollorblades, plays a mean game of golf, follows basketball, sees a movie a week and discusses his future role in advertising in blocks of 10 and 20 years, even though he sold his agency to Euro RSCG last January. After a nearly 40-year association with Procter & Gamble Co. through two agencies, he feels a deep personal and sentimental connection with that client. He discussed that and other topics in his office overlooking Fifth Avenue and 16th Street in Manhattan. The interview was conducted by Advertising Age special contributor John McDonough.

Advertising Age: How have you made the transition from owner to employee after 30 years?

Mr. McGrath: Very easily. I don't feel any different at all. The chemistry is very good.

Ad Age: Was it a difficult decision to sell?

Mr. McGrath: Not really. The decision was mine. We had two classes of stock, equity and voting. I was the largest single holder of equity stock, with maybe 30% -- well under half. The other 70% was divided among about 40 other people here. But I had control of the voting stock, which meant that if I wanted to sell the business or blow it up, I could do either.

There were mutual attractions [between us and Euro RSCG] from the get-go. Euro provided us with a global reach, particularly in new business and media buying capabilities, because they own SFM, a large media company in the states and a big operation outside the U.S. as well. Finally, they provided us with access to an enhanced ability in the healthcare area because they own two pharmaceutical agencies -- Lally, McFarland & Pantello and Robert A. Becker.

There was also the overall ability to better reward our people long term and better enhance our prospects for growing the business, which is another way of insuring that the people who work here are going to be happy and healthy.

Ad Age: Any likelihood that Euro may one day combine your two pharmaceutical agencies [Toltzis and the Medical Education Group] with its own to form one super agency for the sake of critical mass?

Mr. McGrath: I would say no. Euro has what they call Euro RSCG Healthcare, composed of the agencies in their network that are fundamentally healthcare agencies. The agencies, like us, are sort of half-and-half. Robert A. Becker, for example, and Lally, McFarland address mostly the profession: doctors and hospitals. Our healthcare business is mostly consumer oriented, although we're sliding over and hoping to get more involved in the some of the professional areas.

At this point I don't see Euro creating a single pharmaceutical and healthcare agency. It would be tantamount to Omnicom merging BBDO, DDB Needham and Goodby. They operate separately and successfully. So why muck it up by mushing it all together?

Ad Age: What are your views of taking on what are called "alternative," New Age or non-Western folk remedies that have become popular through the power of western packaging? Would you have any ethical reservations about making medical claims for healthcare products that fell outside the rules of the FDA and were not legally obliged to meet their standards of testing and science?

Mr. McGrath: Of course, it depends on what you mean. Pharmaceutical generally means prescription drugs. OTC is strictly consumer. They're all under the huge umbrella of what we might call healthcare. As for the alternative products you describe, we're ready and willing, though I think each case would have to be judged on its merits.

There's a trade organization made up of makers of OTC products like Tums and Anacin. It was called the Proprietary Association. Three or four years ago they changed the name to the Non-Prescription Drug Manufacturers Association. Finally, last January, they voted to change the name again to the Consumer Healthcare Product Association. And they did that so they could embrace the companies that market the kinds of products you're talking about.

So for us it would be a no-brainer. If a company came to us and said they made a product like ginkgo biloba [an herbal treatment said to retard memory loss] and they want to advertise, we'd see what kind of company it was, what kind of reputation it had, how long it had been around, just as we would do with any other prospective client. If it seemed like a good business proposition, we would have no problem. As for claims, there are all kinds of checks other than the FDA. You can't get claims on network television, for example, without supporting data. Then there's the competition.

We've been involved in lawsuits where SmithKline Beecham and Johnson & Johnson are arguing over claims that we're making for Tums. It happens all the time. The company that is probably the biggest producer of ginkgo biloba is Boehringer Ingelheim Pharmaceuticals. So it's not like these are some will-of-the-wisp companies run by hippies. You'll find that these are huge businesses in Europe. It's all new here because essentially we in the U.S. are not as open to the idea that some healthcare products with more of a natural strain can be good for you.

Now that's getting to be something of a trend. That's why the trade association for OTC proprietary drugs has replaced the word "drugs" in its name with the words "consumer healthcare." It wants to embrace these new companies. But they will still have to pass whatever standards the association might set. So the answer again is, yes, we should take such business, as long as the company can pay its bills.

Ad Age: You put in nearly nine years working on Procter & Gamble when you were at Benton & Bowles. When this agency was formed, did you ever expect to work on P&G again? If so, how did you keep the contact alive as you were building this agency?

Mr. McGrath: In 1969, I knew we didn't have a chance of being involved with Procter & Gamble. But I had this vision that down the road, when we were a substantially larger agency, we would have a shot at it. So I kept in touch with people I knew from my nine years at B&B.

Bob Goldstein was one of those contacts. When I was at B&B working on Crest, he was my counterpart at P&G. About 15 years later he became the VP in charge of advertising for the company. By the time he reached that point, this agency was also much closer to being a serious candidate for their business. And I would send him our work and say that I thought we were moving along well. We'd trade notes. And, once in a while, I'd get a call from him asking what did I think of this or that. So we had ongoing dialogue.

When we merged with Jim [Jordan], he added both bulk and expertise to our agency. He had worked on Wisk, which most of America hated but which Procter & Gamble admired for its success. It all came to a head sometime in 1983 or '84. At that time, [P&G] decided that its 12-year relationship with Doyle Dane Bernbach wasn't working and dismissed the agency. And then Y&R, with whom they had a long relationship, dismissed Procter to make a deal with Colgate-Palmolive to become their global agency.

At that point P&G decided to add an agency, and we were one of three in contention. They never asked for an opinion on any product or for any spec work. They just kept asking to see the reels. There were also general discussions about approach and things. It was on that basis that they chose us in 1985 and gave us Zest.

It was a joyous day for me. I felt a very personal connection to that business. It meant we had also achieved a certain milestone, because P&G is viewed as a high-quality pillar account. If you have P&G business, everybody else assumes there must be something good about you. They're viewed as one of the most-substantial clients an agency can have, because they have a high appreciation of what you do as an agency.

Ad Age: When your long-term goal is to acquire a client like P&G, which is well known for a particular style and discipline in its advertising, couldn't that create a kind of hidden agenda in your other work -- that is, a temptation to do advertising for your existing clients calculated to appeal to P&G?

Mr. McGrath: No, it never dawned on me that might happen. The critical thing is simply that our appeal to P&G was a by-product of what we normally did.

In other words, we always had a lot of package goods accounts, and that focused our attention on doing advertising that really worked in terms of selling. And Procter appreciated that.

Let's put it this way: The philosophies that P&G believes in are not that far removed from the philosophies this agency has about advertising. That doesn't mean you have to sell something the moment the commercial runs. But you have to build an image and equity that will give the brand strength and keep it selling in the long term.

Ad Age: Your second generation of management is now in place. How do you convert the personal connection you feel toward your Procter & Gamble business into an institutional relationship that the next generation can carry on? Not only for P&G, but for your other clients, too?

Mr. McGrath: You're right the first time. The biggest challenge in the long-term relationship area is P&G, because my association goes back so many years. It's different from, say, SmithKline Beecham, which Stephen [Badenhop, agency president] has been running for 15 years. He's got more of a relationship with them than I do, even though I was there at the beginning. And that would hold for most of our other clients, too. The only way to deal with that is to get our key people to develop their own relationships, something that takes time and work and is an ongoing process.

But there's one thing that's very special about Procter & Gamble that makes this process possible. P&G management is comprised of people who started at the company. They do not bring people in from the outside. There's nobody from Lever or Colgate. So each generation on the agency side has that opportunity over time to build relationships of confidence, trust and admiration with their counterparts at P&G. I can help by introducing people like Stephen to the people who are at the top of Procter now. But they are my contemporaries, not his. In five years they'll be retired.

And it's not just Stephen. It's Angela Pasqualucci, who runs our Procter business. She's doing the same thing 10 years behind Stephen. That doesn't mean they don't interface with people older or younger than they are. But they have a primary connection to a group who are their opposite numbers today and who one day are going to be the management of the company. You know that because that's how Procter works.

So in the end, our younger management has to do what I did. The people they are dealing with now are the people who will be running P&G in the future. That's how it works with P&G and every agency they have. My job is to evolve out of here gracefully in 10 or 20 years [laughter] without disturbing the pillars of that relationship.

When I was at B&B, Jack Bowen was the head agency guy on the Procter business. Jack went on to become chairman of B&B [later D'Arcy Masius Benton & Bowles] and retired. The guy who replaced him is Roy Bostock, who will soon be retiring himself. The person who replaces him will be someone who has built his own relationships with the client.

Ad Age: The prestige P&G business can bring to an agency does not always carry over into its creative reputation. Do you believe that P&G and other major package goods advertisers have a tendency to favor advertising that might be called, shall we say, old-fashioned?

Mr. McGrath: I'm not happy with the question. I think effective advertising is effective advertising, regardless of how you characterize it. What do you mean by old-fashioned?

Ad Age: A classic P&G Tide demonstration commercial, for example.

Mr. McGrath: You just used the word "classic." There's a difference between classic and old-fashioned. Classic suggests something that has an ongoing validity. Classic is what those women who always look so beautiful in black always wear. If old-fashioned means that it sells something, I don't think that's a meaningful definition.

You've probably kept abreast of the Miller beer thing. All the guys on the client side are out, and the advertising has changed twice. And everybody concluded that the advertising, which was certainly not viewed as old-fashioned, was nevertheless totally ineffective. So it doesn't do much good to be cutting edge if the message isn't doing something positive -- building equity, changing image, attracting a new audience or whatever the goal might be.

Rance Crain [Advertising Age editor in chief and columnist] became an influential industry spokesperson on the whole Miller beer business. He went on about how bad that advertising was. I think to some degree he made those who feel avant garde is "in" rather unhappy. But, in the end, it looks like he might have had a point.

You have to be very careful with these descriptions. There's nothing wrong with cutting-edge advertising. There's some beer advertising that seems to be doing the job. I think the frogs and lizards in the Budweiser commercials are somewhat cutting edge and unexpected, and they apparently have helped the Bud business. On the other side, the Miller stuff with the mouse under the girl's armpit didn't seem to cut it. There was too much energy put against trying to be different for difference's sake. It's a tricky business. Everything depends on context.

Believe me, Procter & Gamble is not looking to do old-fashioned advertising, to use your phrase. Their whole renewal effort is geared toward the opposite of old-fashioned. The whole company's posture right now is: Let's reach out, stretch ourselves, innovate and take a risk. They may make a mistake once in while. But they're smart people and a lot more likely to ring the bell more often than not. And that will pay off in the long term.

Ad Age: In the final analysis, are great advertising people more showmen or salesmen? Which side holds the balance?

Mr. McGrath: I would call myself a good salesman with a modest amount of showmanship. If you're asking me for a success criteria for being in this business, that's where it would be. Salesmanship is listening to what the customer is asking for and understanding it in some depth. Showmanship is presenting the answers in some dramatic or interesting fashion. If you're trying to make a prospect feel he will get some value out of having a relationship with your company, it seems to me the smart thing to do is to understand what they're

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