Starbucks Win Can't Save Burnett Spinoff

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Leo Burnett USA has folded its hotshop sub-brand LB Works just as the boutique looked set to snare an agency of record assignment from Starbucks.

The fast-growing offshoot has been reabsorbed in a bid to bolster the agency and "eliminate overlap" between the two shops.

As a result of the move, LB Works was forced to resign its Starbucks Coffee Co. account, which would have conflicted with rival McDonald's Corp., a longtime global client of Leo Burnett. In August, Starbucks handed a nine-month assignment to the boutique to create holiday-themed ads, now breaking.

"It's incredibly frustrating for me and sad," said LB Works President Jeff Jones, who oversaw the closure of the unit's predecessor Leo Burnett Technology Group and rebirth two years ago as LB Works. "I'd be lying if I didn't admit that."

Starbucks issue

A Starbucks spokeswoman confirmed LB Works was doing holiday work on a project basis but would not speculate about the naming of an agency of record. "We will complete our current contract with them and appreciate the work they have done," said the spokeswoman.

LB Works opened in 2001 with business-to-business accounts as well as Maytag and Kraft Foods' Altoids, which had been nurtured by Steffan Postaer, chief creative at the boutique, when he was executive creative director at Burnett. Since then, LB Works has amassed 11 accounts, including hotly contested wins for Storagetek, Earthlink and Lexmark in 2002, as well as the $200 million Gateway business and Starbucks this year.

"It did start to create some confusion," said Linda Wolf, chairman-CEO of Leo Burnett Worldwide. "In the marketplace you want to have clarity about the Leo Burnett brand and what the Leo Burnett brand stands for. It made sense to bring them back into Burnett as opposed to having them be a separate company."

`indirect slam'

Therein lies the problem with agencies within agencies, said agency consultant David Beals, CEO of Jones Lundin Beals. "They want to draw from the parent equity but want to somehow serve themselves up as unique and different and anytime you do that, it creates a potential for a branding issue. ... Everything they said about themselves was an indirect slam on their parent company." On its Web site and marketing materials, LB Works uses images of Mr. Burnett and several of his famed sayings along with the tagline "New Tools. Old School."

"Where clients and consultants trip up is you can call yourself whatever you want, but you're still called Leo," added Mr. Beals.

Even in informing clients of the move, Mr. Jones admits that clients were amenable to the switch as long as the teams and the work remained the same. But that stability could be in question. While they'll continue at Burnett as exec VPs and will continue oversight on their accounts, Mssrs. Jones and Postaer have become accustomed to running their own unit and having the prestige of their more entrepreneurial titles. "We're working through what's going to be the best opportunities for them," Ms. Wolf said.

Before moving to LB Works, Mr. Postaer was widely known to have been looking for a chief creative officer post after being passed over for the job at Burnett. Mr. Postaer has not been in the office since Nov. 17 and did not return calls. For now, Mr. Jones has already begun moving on the integration, which will be final on Jan. 1, by working on the identity change with clients and staff.

"It's about the people and the work and if those things stay, [clients] considered us Burnetters anyway," Mr. Jones said.

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