Saatchi saga: What's the deal?

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The most sought-after man in advertising sought out the sun last week in St. Bart's.

In coming weeks, Mike Burns, the Saatchi & Saatchi vice chairman who masterminded his dramatic departure from the agency, followed by a team of 19 account, planning and creative executives, is expected to unveil a venture with Interpublic Group of Cos.-although rival holding companies were also said to be in pursuit.

"I'm on vacation," Mr. Burns told Advertising Age when reached at the Caribbean island on his cellphone last week. "I'm under contract to Saatchi until [March] 15th. After the 15th, I'm lucky enough to have opportunities to consider."

He wouldn't answer any other questions, but there were many being asked on the heels of the departure of the 25-year agency veteran, who ran the $200 million-plus global General Mills account. The subsequent, stunning Valentine's Day letters of resignation handed in by his former subordinates set off the loudest breakaway buzz since a trio of executives dubbed the "three amigos" followed Maurice and Charles Saatchi out of Saatchi & Saatchi's doors in 1995.

Given the legal battles that can ensue when employees leave an agency, especially if clients follow them, industry executives were loath to openly discuss details. But one executive familiar with the matter said that Interpublic was close to a deal to create a youth-and-family-focused health unit under Annette Adriance, Mr. Burns' longtime No. 2, who defected from Saatchi last week along with her assistant. An Interpublic spokesman declined to comment.

Other possibilities include a New York office of Interpublic's Campbell Mithun, whose clients include-you guessed it-General Mills, or a unit within one of the larger networks that would give the team global resources.

a public test

The mass resignations at Saatchi were a highly public test of the management team hired last September by Worldwide CEO Kevin Roberts to jump-start the sleepy New York office. CEO Mary Baglivo and Executive Creative Director Tony Granger moved quickly to control the crisis. They labeled the departures "unfortunate" and said they would personally run the General Mills account. They also passed along to employees reassurances from General Mills executive Doug Moore, VP-advertising and branding.

A General Mills spokesman said the company was "very pleased with Saatchi's work" and looked "forward to continuing our 80-year relationship." He declined to comment further.

Privately, some industry observers believe that despite its assurances, General Mills-which is believed to have known in advance of Mr. Burns' departure-is sending a signal of unhappiness to the agency and its management.

Mr. Burns built his career on General Mills at Saatchi and its predecessor agencies over the past 25 years, and is known for inspiring loyalty. Several observers said his departure and the mass resignations were the result of deep-seated frustration. Saatchi management, said one, "didn't treat him like an important inside guy. He wasn't happy about the way things transpired." When Ms. Baglivo and Mr. Granger were hired, Mr. Burns was not told until the night before it was publicly announced. "It isn't so much what you do, it is how you do it," said the executive.

General Mills, too, is under pressure. Credit Suisse First Boston analyst Dave Nelson said the company has been in "turmoil" and distracted from innovation and effective brand messages since integrating Pillsbury in November 2002. The company has suffered "earnings miss after earnings miss" and though it in November posted improved results, those are still "far less than anybody would have thought they'd be delivering two years ago," Mr. Nelson said. Despite the much-touted reformulation of its cereals to include whole grains, he said, "Mills hasn't had a lot of new news to justify ad spending."

Others theorized that General Mills might use Saatchi's internal issues as cover to make changes in its agency roster. In addition to Campbell Mithun, the food company works with Interpublic's McCann Erickson.

Burt Flickinger of Strategic Growth Resources suggested that Saatchi may have taken General Mills for granted, "pursuing its own profits first at the expense of investing resources in General Mills," especially because bigger client Procter & Gamble takes priority.

He also said that "Mills has to do something dramatic" to regain the leadership role it "fought a half century to seize" from rival Kellogg Co. in the ready-to-eat cereal category. General Mills' drop to No. 2 in recent years stems in part from the fact that "advertising has not led demand beyond Cheerios." General Mills has been lagging behind in pre-sweetened offerings for kids as well as in adult cereals, where "Total and Wheaties in particular [both handled by Saatchi] should be seeing more market-share growth."

Even as Saatchi & Saatchi deals with the turmoil, it is trying to keep a tight lid on internal proceedings. Outside the company's New York office Feb. 18, several people who identified themselves as Saatchi employees repeatedly rebuffed requests for comment. "I couldn't help you in any way, shape, or form," said one, without pausing to break stride.

contributing: jon fine

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