TATHAM REORGANIZATION INCLUDES EQUITY BUYBACK: EURO RSCG AGENCY SETS GROWTH PLAN

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Euro RSCG Tatham is reconstructing itself from the ground up with a plan that includes an equity buyback from its French parent.

The restructuring also includes a new division to compete against marketing-services providers; a new Consumer Insight & Planning unit; a reconfigured operating structure based on "category clusters"; and new office architecture to foster teamwork.

In addition, the agency is in discussions to buy an unidentified Chicago interactive specialist.

POSITIONING FOR GROWTH

The restructuring is "designed to position us for significant growth," said Gary Epstein, president of the agency, which has billings of $500 million. "We're labeled as a traditional package-goods agency, but we're a very agile creative shop that can bridge the gap between small boutiques and a large agency."

The shifts come as CEO Mary Baglivo leaves for personal reasons -- perhaps not coincidentally months after Tatham lost its $90 million Procter & Gamble Co. account, on which she worked closely.

Mr. Epstein insisted the makeover is unrelated to her exit.

"This has been under way for three years," he said, adding, "If anything, the P&G separation made this easier. The old Tatham was structured around a 40-year relationship with P&G."

Ms. Baglivo is moving back to the New York area and is expected to return to the agency business this fall, possibly with J. Walter Thompson Co. or DDB Worldwide.

'NOBODY OWNS STOCK'

"Right now, nobody at Tatham owns [the agency's] stock," Mr. Epstein said. "By virtue of being the first [Havas Advertising] acquisition in the U.S., Tatham was the only shop left without local equity in the hands of its principals."

"Of the 160 agencies [in the Euro group] probably over 100 of them are run in a partnership way," said Bob Schmetterer, chairman-CEO of Havas' Euro RSCG Worldwide. "It's something I've come to believe in."

Tatham won't discuss how much equity is being bought back or in whose hands it will wind up. But deals of this nature often result in local management owning 20% to 30%.

"What we're heading toward is a core group of partners who have a piece of the action," said Robert Welke, Tatham chairman-chief creative officer.

The new marketing services division -- the Euro RSCG Tatham Sales Machine -- will be focused on integrated marketing services, such as database marketing and promotion. The agency will hire an outside executive to run that operation.

Also as part of the restructuring, Tatham is splitting apart its media buying and planning functions, melding the latter with strategic planning into the new Consumer Insight & Planning unit. It, too, will be headed by an executive hired from outside.

Phil Gerber, now director of media, will focus exclusively on buying. When the agency moves into its new headquarters in the fall, its sibling SFM Media unit will share space and work closely with Mr. Gerber and the Tatham media department. His new title will be director of media buying.

BIGGEST CHANGE: CLUSTERS

Perhaps the largest shift will come in the basic agency structure as it moves to what Mr. Epstein calls "category clusters." The five clusters are hospitality, food and grocery, retail, homecare and healthcare. Media experts and strategic planners will be assigned to each cluster; creatives won't be tied to any one group.

"The way it is now, the guy running Carrier [air conditioning] might also run Summer's Eve [disposable douche]," Mr. Epstein said. "It doesn't make sense, particularly when agencies are getting picked off by consultants."

Tatham named Donna Kirchman, former group media director, to head the homecare cluster. Other executives who take the new title of category director are Suzanne Lord (healthcare), Mike Holsinger (hospitality), Pam Crain (food and grocery) and Athena Golianis (retail).

The cluster concept seems to mirror Leo Burnett Co.'s mini-agency structure.

"We're all trying to get away from a traditional structure," Mr. Welke said, who disputes any connection.

That is reflected in the layout of the new offices. The space will include catwalks; "war rooms" for the category teams; and a two-story open area to foster collaboration.

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