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Herbert Fried joined W. B. Doner & Co. in 1955 after working launching his career at Foote, Cone & Belding (from 1948 to '54) and Weiss & Geller (1954-55). He established the agency's Baltimore office and remains continues to be based there. He is now chairman and CEO.

Alan Kalter joined agency in 1967. He currently runs the Detroit office as president and COO, and he is expected to assume the chairman/CEO position when Mr. Fried steps down.

Because the agency describes its two principal offices as "co-headquarters," this interview is a joint conversation. It took place in Southfield, Mich., and was conducted for Advertising Age by John McDonough.

Advertising Age: So, we have Detroit and Baltimore together in one room.

Mr. Kalter: You speak as if you're negotiating a peace treaty. (Laughs)

AA: Should I be?

Mr. Kalter: No. We function as a total agency and draw upon the resources of the agency to serve our clients. A lot of our clients today have a Doner team recruited from several offices. So there aren't really Detroit or Baltimore accounts.

AA: As recently as 1990, press reports painted a picture of a rivalry between Detroit and Baltimore, referring to ego clashes and outright animosity. In the words of one source: "Detroit looks down on Baltimore as flashy showboats." Is the relationship smoother now?

Mr. Fried: I think it is. Ten years ago we were more competitive. Detroit was here and Baltimore was down there. We used our joint resources, but not to the extent that we have for the last three or four years.

AA: What made the offices different?

Mr. Kalter: The only difference was Detroit had more retail clients than Baltimore. Other than that, there really were no differences, because Baltimore was staffed by people who grew up in Detroit and understood the Doner culture. Three creative directors in a row came to Baltimore from Detroit.

AA: The retail issue may account for the perception that Baltimore was the glamour office and Detroit was the nuts and bolts shop.

Mr. Fried: I don't think that's a fair characterization.

Mr. Kalter: From a work standpoint, both offices are equally hard working. They both have middle American values. Baltimore was far more mid-American than any East Coast agency. There was great kinship to Detroit and little to New York.

Mr. Fried: Brod [Doner] and I worked together for 35 years. And in that time we had only three arguments. . The relationship was unique. He was like a father or older brother. It was a wonderful experience for us both.

AA: Maybe the reason you had only three arguments was because he was in Detroit and you were in Baltimore.

Mr. Fried: No. We are not competing with each other. We are, I think, the largest ad agency without a New York office. It's a hell of a success story for a very strong regional agency.

AA: The advertising industry is accused of complicity in undermining the country's health by promoting tobacco and liquor. Doner has handled both. Do you feel these are issues, especially the recent debate over liquor ads on television?

Mr. Fried: I don't consider liquor advertising a positive, and I don't think under current marketing situations they're going to use TV. Certain stations may accept it, but the networks are not. Personally, I prefer it not be on television.

AA: Why?

Mr. Fried: I think it's negative to your health. It's got the same effect that cigarettes have. Why aren't cigarettes on TV? Because it's illegal. As for liquor, I think that print and outdoor is appropriate. TV is not. This is a personal view.

Brod Doner refused to accept cigarette advertising because he thought it was bad for your health. We also would not do advertising for the National Rifle Association.

AA: You handled DWG Cigars. Was that a different category?

Mr. Fried: We thought cigars were okay.

AA: Some feel another possible threat to advertising is cultural fragmentation in the media and marketplace.

Mr. Kalter: You pose them as threats. I see them, to use the overused word, as opportunities. TV came on the scene in 1949, and people said: My God, what will happen to radio? Now we have a number of media available to the consumer. It just means you have to find more clever ways to target your audience. You have to be a lot smarter. And you have be a lot more defined about what you're going to say. Most important, your creative has to be more memorable. Consumers are much more savvy about advertising today than 40 years ago.

AA: Doner has a history of using alternatives to the commission system. What is the future of this in advertising?

Mr. Fried: I don't think the commission system is viable any more. It's what the trade will bear now. You have to be very competitive in pricing today, unlike when we had the 15% commission and everyone charged the same.

There are very few accounts that I know of that are on the 15% basis. You have every possible way of doing business now: hours, fees, commissions. I think that will continue.

AA: Is Doner's compensation different with each client?

Mr. Fried: There are different financial arrangements with various clients. I believe we even have a couple of clients on the 15% commission basis.

AA: Is this characteristic of the industry in general?

Mr. Fried: I think it's industry wide. There is no standardization.

AA: When did Doner start retreating from commissions?

Mr. Kalter: We have always had many retail accounts, which are results-driven and get daily sales numbers from their stores-if not hourly figures. When they started to find their way into broadcast, they didn't understand the commission system. It didn't make sense to them. You didn't just pay people a percentage of something for the privilege of working with them. You pay them for performance. We started talking to clients like this in the late 1970s.

Agencies and clients both understand you should be paid for the work you do and should make a profit. For a number of clients we have also tied in a sharing of the results. If they are at risk, the agency to some degree should also be at risk. We're willing to share in that risk.DNM

AA: How do you allocate the risk factor within an agency-client compensation formula? If a campaign fails, how do you assign fault between advertising on the one hand and distribution, merchandising and quality on the other?

Mr. Kalter: Risk will vary by client, depending upon what role the advertising plays in the overall objective. For a number of clients, sales can't be the measurement because advertising doesn't play a strong enough role. If weather kills you, for instance, advertising should not be penalized. There are a lot of different ways to ascribe how you evaluate performance. But risk has to be a part of it.

Mr. Fried: I think we've done that jointly with the client. We agree on the goals, and it becomes a joint effort.

Mr. Kalter: There's a reward side to this too. We're willing to put ourselves somewhat at risk if they're willing to let us, to an extent, share in the rewards of a successful campaign that exceeds expectations.

It works out great for everyone. They get better value and we get greater rewards.

AA: You have been with this company for 41 years, Mr. Fried. In a business notoriously predisposed to youth, how do you account for your longevity?

Mr. Fried: It's due to Brod. That, and a fantastic run of luck. He taught me everything I know. Certainly my partners today are a joy to work with also. That provided me with long life.

AA: Have you tried to be a mentor to others?

Mr. Fried: I hope so, although I don't know if I've been successful. I think I've contributed to Alan's growth, John Decerchio's, John Considine's and others in Baltimore. If your look at the management of Doner and the longevity of the senior people, it's been quite extensive. I don't take all the credit, but I've been around.

AA: To what extent has Doner wanted to become a national agency?

Mr. Fried: What was on Brod Doner's mind was the creative product. He would say if your do great creative, the money will follow. I don't think it was ever a burning ambition of his-or ours-to be in the top 20 agencies. We've created what we consider an important niche, and we have grown nicely without having those lofty goals.

Mr. Kalter: We're a very strong regional agency. We have a little bit of national business and quite a bit of international business. BP is our biggest client, and it's worldwide. We also have Chiquita, Iams Pet Food and MTD.

AA: Do you think a strong retail history is a burden when going after a brand account?

Mr. Kalter: I think our competitors would like to think that, since they try to give us that left-handed complement about us being "a good retail agency." But in today's environment, the translation is: We understand how to do advertising that gets results now. I can't think of many advertisers who don't want to see some results. [Many] see the retail experience as evidence we can operate under heavy fire. We don't mind that kind of measurement. This goes back to the compensation issue. We don't mind being measured for our advertising. For us, retail is a mantle we wear proudly. It says: "We understand how to make things happen in the short term."

When we were hired by National Car Rental (they were owned by GM then), the game plan was to get this company in shape to be sold profitably because GM was getting ready to take a $750 million write-off on the company. We had basically three years to make it happen. . ..

Mr. Fried: And we did. Then we lost the business.

AA: Where would you like Doner to be in five years?

Mr. Fried: My main goal is to be sure that if or when I ever retire, the management is in place. And I believe it is. Certainly Alan is going to succeed me, whenever that is. And we've got a very strong management team in place to run this company for the next decade. I'm very happy about that.

AA: And where would that new management like to be in 10 years, Mr. Kalter?

Mr. Kalter: A lot bigger than we are today, and still independent. We have no intention of selling. There's no accrued benefit to any of us. We're approached regularly because we're one of the last independent agencies of our size. When are you going to join the club, they ask. We say we're not going to.

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