Initiative was hit late last month by the loss of one of its marquee accounts: the $500 million Walt Disney Co. business, largely because it was outgunned by the strategic-planning capabilities of winner Bcom3 Group's Starcom Worldwide (AA, Dec. 31). Before that loss, Initiative had 2001 billings of $12.7 billion in the U.S. and $22.7 billion worldwide, according to figures from Initiative parent Interpublic Group of Cos.
Others trace the pressure on Mr. Schultz, 58, back to summer 2000, when his shop lost out in the biggest media-planning review in history, the $2.9 billion consolidated General Motors Corp. business. Starcom MediaVest Group bested Aegis Group's Carat and Interpublic Group of Cos.' Initiative in that encounter, even though Initiative appeared to enjoy a clear advantage. Interpublic's GM Mediaworks and Local Communications already handled all media buying for the automaker, and many people felt it made sense to put buying and planning under one roof. Mr. Schultz also enjoyed close ties to Michael Browner, GM's executive media director.
"That was the beginning of the losing streak," said an Interpublic insider.
In November 1999, Mr. Schultz moved from Interpublic's Campbell-Ewald to what was then Western Initiative Media North America, West Hollywood, Calif., as CEO North America, brought in as a rainmaker.
He came in just as Western lost its Unilever account, and he was never able to win any new business large enough to replace that loss.
However, executives at Interpublic also say failure to win new business and hold onto existing accounts weren't all that hurt Mr. Schultz. His business style apparently came into conflict with Interpublic Chairman-CEO John J. Dooner Jr.
"They never got along, from the start," said one Interpublic insider. "Dooner is smooth and polished and Lou is rough around the edges. As stupid as it sounds, that's what it came down to. The real question is, `How did Lou last so long?"' Mr. Schultz did not return phone calls at press time. Mr. Dooner refused to comment.
Interpublic did not name a successor. Instead a new Office of the CEO was created, which will be headed by Marie-Jose Forissier, president-chief operating officer of Initiative Media Worldwide, and Carolyn Bivens, president-chief operating officer of Initiative Media North America.
The office appears to be a temporary solution; neither Ms. Bivens, who was just hired last year from Gannett Co.'s USA Today where she was publisher, nor Ms. Forissier, based in Paris, are likely successors, executives believe.
"Essentially, no one is running the shop right now," said another Interpublic insider. "For the time being it is kind of running itself. And there will be a lot of poaching. Especially with Horizon [Media] on the horizon and Carat being so strong. Initiative is circling the wagons around the Home Depot account right now." Neither Tim Spengler, Initiative senior VP-general manager, who heads the Home Depot account, nor a Home Depot spokeswoman returned calls by press time.
Media executives said Steve Farella, former CEO of Havas Advertising's Media Planning Group, has met with Initiative about the post. Mr. Schultz' successor is more likely to come from inside Interpublic, such as George Hayes, chief operating officer of Local Communications, Interpublic's local buying unit. Originally dedicated to its largest client, GM, Local Communications has since expanded to include other accounts.
"George is a superior manager running a profitable part of the organization," said a former Interpublic executive. "He's a very likely option." Mr. Hayes is in charge of the pitch for the $500 million Sony Corp. business by Interpublic's other media-buying agency, Universal McCann. Mr. Hayes did not return phone calls. Mr. Farella refused to comment.
As for Mr. Schultz, he will linger on as a media consultant to Interpublic, which means he might have more time to write a book he once told Advertising Age he was at work on. According to Mr. Schultz, the title will be "Why Make it Rain When You Can Make It Pour?" and will be about how to succeed at winning new business.