After MillerCoors Blow, Can DraftFCB Right Its Chicago Flagship?

Weakened Creative, Exec Departures and Mixed Mission Get Most of the Blame

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At noon sharp on May 1, all 800 employees of DraftFCB's Chicago flagship office filed into a meeting that many of them would never forget. The agency had lost the entire MillerCoors account. The brewer's chief marketing officer, Andy England, had decided to move digital and creative to a new multiagency group within WPP.

Some staffers became visibly emotional about losing a client that in many ways was one of the firm's cultural touchstones. Predecessor agency FCB had been affiliated with Coors since the Carter administration and created famed campaigns such as "Tap the Rockies" and "The Right Beer Now." DraftFCB, an Interpublic Group of Cos. shop, had won Miller Lite in 2009. The team helped achieve a rare industry milestone: Coors Light passed Budweiser last year to become the country's No. 2 beer.

While the departure of a high-profile client is painful for any agency, it is magnified at DraftFCB. MillerCoors is just the latest out the door. Last year, 58-year client SC Johnson, a legacy FCB relationship, left, as did the TV portion of State Farm. That was in addition to the incremental loss of much of Kraft's U.S. business.

The exodus raised the volume on once-whispered questions in adland: What's wrong at DraftFCB's Chicago flagship, and can it be fixed?

A mix of current and former staffers report that a mixed mission is at the heart of the problem. The push to become an integrated shop with expertise throughout the marketing mix has been made at the expense of creative.

Coors through the years

Click to see Coors through the years; (Source: MillerCoors).

While DraftFCB has robust below-the-line business (with solid offerings in customer-relationship management, consumer intelligence, and shopper and direct marketing) its above-the-line creative and advertising abilities -- the parts of the shop for which predecessor Foote Cone & Belding was renowned -- are no longer as vigorous.

CEO-President Laurence Boschetto, who came from New York last week to assess the situation, told Ad Age in an interview at DraftFCB's office that he disagreed with that view. He maintains that its strength has always been integration and that the legacy agencies have always understood the consumer.

"The idea and the consumer insight have always been the centerpiece" of Draft and of FCB, he said. "It's not legacy FCB, and it's not legacy Draft. It's DraftFCB. Our model is about integration," he said.

On the new-business front, the agency has succeeded in reeling in accounts from Discover Card and Cox Communications, but hasn't landed lead creative duties for a blue-chip marketer in some time.

As one insider put it: "Can the creative reputation of the agency be raised? Hell, yeah."

Much of the pressure to do so in North America will be on Chicago Chief Creative Officer Todd Tilford, brought in less than a year ago from Grey , New York. Michael Fassnacht, who was installed as Chicago president almost two years ago, will also be responsible for reinvigorating the office.

DraftFCB has long been said to preach creativity and accountability, but the focus has become more on the latter, along with analytics and metrics, said several employees. Some trace this to the agency's genesis -- the 2006 merger of ad agency FCB and direct-marketing titan Draft.

"Every client has a lifespan with an agency," Mr. Boschetto said when asked about the loss of clients such as MillerCoors and SC Johnson. "I think what has taken place when you look at DraftFCB coming together, some of the brands that have left that were part of the legacy FCB ... made other choices.

"But it wasn't because we didn't help build the brands, it's not because there wasn't solid performance, and it's not because there wasn't good work," Mr. Boschetto said. "It was because [for them] it was time to move on." Clients acquired more recently are opting into DraftFCB's integrated model, he added.

Chicago has always been the flagship but is also among the organization's "best in class" and among the first to adopt the integrated offering, Mr. Boschetto said.

DraftFCB employees said they were not totally surprised by Miller Lite's defection, as rumors had been circulating for some time. Market share and shipments had fallen, and the agency began splitting duties with Saatchi & Saatchi on Miller Lite in January.

Other insiders say that , despite seeing the writing on the wall, DraftFCB was not entirely prepared for the loss of the entire account -- which is said to be among the largest in Chicago, along with Yum Brands, for which it handles Taco Bell and KFC.

Agency management is trying to determine the effect on revenue and staff, and layoffs are said to be a strong possibility.

DraftFCB has been working hard to replace lost revenue. Before the MillerCoors exit, the agency had said that wins such as the digital account for Discover Card, as well as direct-response and digital marketing for Cox Communications were helping to compensate for nearly half the Chicago revenue that left Chicago with SC Johnson.

Prior to that , the agency had picked up shopper and digital-marketing duties for Coca-Cola Co., and the global Beiersdorf account, handled partly in Chicago but mostly overseas.

The global network is not shrinking. Last year, DraftFCB posted worldwide revenue flat, at $955.4 million, according to Ad Age 's DataCenter.

But DraftFCB's challenges in the U.S. include working through any potential layoffs stemming from the MillerCoors loss, as well as halting turnover. A slew of senior managers have left the Chicago operation in the past couple of years, including North American President Mark Modesto, Global Chief Growth Officer Nick Paul and Chicago Managing Director Karen Sauder.

People familiar with the agency said that lower-level employees have been decamping for crosstown rivals such as Leo Burnett, McGarryBowen and Digitas. In March, DraftFCB filed a lawsuit against Digitas and two former DraftFCB employees for violating signed agreements that allowed them to go to a competitor but prevented them from recruiting former colleagues for one year. The lawsuit was dropped a month later.

One former staffer said that the departure of creatives for other jobs and the gain of accounts that are not advertising-driven would result in a staff that isn't creatively focused.

"When you lose those [creative] skill sets, they're gone," said one former employee.

Mr. Boschetto said DraftFCB has been making an effort to hire more creatives and pointed to recent campaigns for Dow and Sharpie as examples of strong creative and integration, which he noted have been well-received and award-winning. Some insiders credit Messrs. Tilford and Fassnacht, a Draft alum, for working to improve the Chicago office's creative output and placing an importance on elevating the work.

But the agency still has an uphill climb with its creative reputation. As one former employee said, "Once you start losing business, the perception is reality in the industry, like it or not."

One of the most immediate concerns is new business. There will be far more pressure to pitch and land accounts. It's especially important as there have been rumors of instability at other large clients, including Yum and Kmart.

DraftFCB is said to have some reprieve on Yum, as the chain just posted positive quarterly same-store sales after a period of decline. Yum's same-store sales in the U.S. rose 5%, with jumps of 2% at KFC and 6% at Taco Bell.

As the lead on Taco Bell, the shop recently unveiled the "Live Más" campaign, and has helped market its largest product rollout, for the Doritos Locos Taco. DraftFCB has also been handling Taco Bell's digital, though that account recently went into review.

What's next? "In Chicago, I think that they're on a road," Mr. Boschetto said. "They have a pause right now called MillerCoors, and it's a moment for them to regroup and refocus and move forward. ... It's not what happened [last week], it's keeping the momentum alive and moving forward and rallying the rest of the organization" to deliver on the company's vision.

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