Y&R catalysts need to speed recovery

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Six months ago, Y&R brought in a "Catalyst Team" of executives to find ways of growing its business-triage task force might have been a more appropriate moniker.

Ann Fudge, the ex-Kraft Foods executive who joined parent Young & Rubicam Brands in May 2003 as chairman-CEO, initially trod carefully as she tried to bring new energy to one of the industry's most storied agencies-appearing to focus more on improving process than bringing in new business.

Last year, she made her boldest move. She consolidated Y&R's multiple regional units under a single profit-and-loss structure in an effort to eliminate regional fiefdoms and individual office overheads. She also added a trio of executive-level outsiders, added a pair of insiders, and called them the Catalyst Team.

urgent action

Their stated mission: to work throughout the agency's six offices in North America, per an internal agency memo distributed in July, and bring "their entrepreneurial and unique expertise to" clients' business. Several of those Catalyst Team members now find themselves called into urgent action as the agency fights for traction in North America, its biggest market.

In the past 12 months, Y&R, in conjunction with sibling Young & Rubicam brand companies, has made modest headway in terms of new business. It landed Calloway Golf and Foster Farms Poultry. More notably, it won the $116 million Toys `R' Us account in May from Publicis Groupe's Leo Burnett-although three months after that victory the retailer announced it was considering getting out of the toy business.

But several of the agency's largest accounts have disappeared: Burger King bolted after nine months for Crispin Porter & Bogusky; AT&T exited the consumer-marketing world as it changed its focus to business-to-business operations; and Computer Associates split for Interpublic Group of Cos.' Draft Worldwide. Another key account, Ford Motor Co.'s Jaguar Cars, is in review. Those four accounts alone represent approximately $650 million in billings.

AT&T and Ford both ranked among WPP's top 10 clients by revenue in 2003, as did another Y&R client, Colgate-Palmolive Co. Although industry insiders claim that Colgate is a relatively low-margin piece of business.

Y&R did successfully defend the $25 million Cadbury Schweppes' 7-Up account in a June review. And the agency was considered a favorite in the $200 million U.S. Army review. A decision was expected this month, but due to personnel changes, the current contract with Burnett was extended another six months instead.

Also telling is the report from several executives familiar with Y&R that management plans layoffs in the near future. A Y&R spokeswoman had no comment.

Against such a backdrop, pressure is on the new executives. "Bleeding business is a fact of life for all agencies," said one agency executive familiar with Y&R, "that's why you have to have a substantive pipeline to replace it."

Jon Cropper, a youth-and-urban communications expert hired from Nissan North America, who joined as the team's creative content and channels strategist, is now heavily entrenched in Y&R's effort to retain Jaguar, which went into review in November. Y&R's Irvine, Calif., office is the U.S. incumbent.

John Gerzema, a former Fallon Worldwide planning expert who came onboard as the team's chief insights officer, is enmeshed in Y&R and parent WPP's pitch team for Intel, an ongoing global review.

Meanwhile Matt Eastwood, hired as Catalyst executive creative director and most recently chairman and creative director, M&C Saatchi, New York, is, according to various executives familiar with Y&R, functioning as executive creative director of the agency's New York office, but has not been formally appointed to the job.

A Y&R spokeswoman would not comment on any of the team members' activities, but did confirm that numerous candidates have been approached about the executive creative director New York role.

While Y&R's health overall appears shaky, it does have some bright spots. Y&R, San Francisco, with co-creative directors Brad Berg and Scott Larsen at the helm, were key in the agency's retention of 7-Up after a review-and performed well enough to gain additional duties with the launch of 7-Up Plus.

double strain

In Chicago, where Y&R competes with sibling Ogilvy & Mather, independent Wieden & Kennedy and Interpublic Group of Cos.' Martin Agency for assignments from client SABMiller, Y&R has won assignments on Miller Lite and Genuine Draft.

But the Irvine office has the double strain of having Jaguar in review and relationships on its Sony business, which has new teams on both the marketer and the agency side, still at a delicate stage, said executives familiar with the account. Angela Pih, hired to replace Sony account leader John Partilla, left the agency several weeks ago, and has yet to be replaced.

Some of Y&R's woes are ones common to numerous large agency networks: Clients, increasingly, are demanding creative solutions beyond 30-second TV commercials for the lowest-possible price, and Y&R, said one former agency executive, has not been "organized to be the least-cost supplier."

But others are unique to the agency: After its sale to WPP in 2000, much of the executive bench that built up Y&R left. "Peter [Georgescu, the former chairman-CEO]'s management style was to have a very strong top management and enough worker bees to get the work done, which left a void in middle management. Today, the top people are gone and the middle management may not be strong enough."

contributing: jim arndorfer, alice z. cuneo and jean halliday

Challenges for Fudge

Hired to head Young & Rubicam Brands in May 2003, Ann Fudge appointed a "Catalyst Team" to speed growth at Y&R. Work still to do:

Rev up Y&R's new business machine so it reels in financially significant new accounts.

Retain existing clients, whether by upgrading account and creative talent or anticipating marketers' changing needs.

Generate a buzz about the agency and its capabilities.

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