Ogilvy looks to the power of one

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WPP Group's Ogilvy & Mather is dramatically changing the way it operates in the U.S., combining its advertising, direct marketing, public relations, health-care and sales promotion agencies into a single reporting structure and profit-and-loss statement.

The changes, which have already begun and will be in full effect in 2006, are a reaction to marketers' desire for a wider range of solutions that fall outside the 30-second spot, as consumers are increasingly turning away from traditional media. Ogilvy already derives more than half its revenue from disciplines other than advertising.

"The definitions of disciplines are morphing pretty fast," said Carla Hendra, co-CEO of Ogilvy North America and part of the team running the structure.

"We're reacting to market forces that started 10 years ago," she said. "There's now clearly a watershed moment where major advertisers are talking about shifting budgets into digital or nontraditional media. We're prepared for this."

Ms. Hendra and another agency veteran, Bill Gray, who also was promoted to co-CEO, will run the combined unit.

The pair, previously charged with running Ogilvy's New York office along with Chief Operating Officer Bill Lee, reports to North American Chairman Tro Piliguian.

The group will be charged with helping improve growth with current clients and netting some new ones. Ogilvy recently won business from Morgan Stanley and Lenovo, but it has also seen significant chunks of business from clients like Sears, Coca-Cola and Motorola shift away.

In another personnel move, the agency is foregrounding its digital offering by promoting Jan Leth, executive creative director at Ogilvy Interactive, to co-chief creative officer of Ogilvy, New York, where he'll work with longtime heads David Apicella and Chris Wall.

The ad agency landscape is already marked by a number of efforts to improve collaboration among disciplines, something that's been a holy grail for years.

Long time

"It's taken a long time for integrated marketing communications to become part of the DNA of agencies and the way they do business," said consultant Arthur Anderson, a principal at Morgan Anderson. "One of the problems ... is that P&Ls were organized to reward each of the disciplines based on how their business did, not how the business overall did."

Even Ogilvy admits that, despite its 360-degree brand position, examples of integrated work for clients like BP or Unilever's Dove are too few and far between.

Said Mr. Gray, "We're trying to align ourselves in a way [integrated work] can happen faster and more often."

"We're trying to find ways to take advantage of scale we've created in New York and not try to create everything independently in their markets," Mr. Gray said.

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