One of the top priorities for Young & Rubicam and its Y&R Advertising continues to be expansion into the Internet marketplace. Y&R, in fact, will announce plans this week to take a minority stake in Harris Interactive, the online offshoot of leading market research and polling company Harris.
Harris Interactive is being spun off in anticipation of a public stock offering.
GAINING ONLINE POLLING
That acquisition and other plans were revealed by Y&R President-Chief Operating Officer Tom Bell, 49, and Y&R Advertising Chairman-CEO Graham Phillips, 60, during an interview with Advertising Age to talk about what's in store for the ad organization.
The Harris Interactive deal will give Y&R access to its online polling capabilities. Mr. Bell said one of the most appealing tools is real-time measurement of ads.
"They're only one of two or three companies to do real-time measurement. Once broadband is more widespread, it will have a big impact," he said. "We can test a concept within 48 hours."
Other issues of import for the new regime include performance-based compensation (a favorite of retiring Chairman-CEO Peter Georgescu); a concentrated effort on acquisitions and construction of a stronger integrated marketing operation. The executives said they still would shy away from a second agency network.
"We'd only go to market on the Y&R perspective. Going and just plucking a second network is not what we'd do," Mr. Bell said. "But it's not something we'd reject as long as it would fulfill our strategy."
The executives also insist Y&R is not interested in being acquired. But WPP Group, London, is known to be interested in buying Y&R, and pressures from consolidation among competitors could eventually force its hand. One of the reasons for WPP Chief Executive Martin Sorrell to hold back is a management trust that owns 45% of the Y&R shares; those shares can't be sold until May.
Mr. Phillips also joked that a deal with WPP was unlikely because "I was at Ogilvy when Sorrell came along [and] lightning can't strike twice."
A newer item on the holding company's agenda is the bottom line. As an 18-month-old public company, increasing shareholder value becomes the primary focus of the new executive team. Even before they took over, Y&R had significantly improved its margins as it prepared to go public.
Mr. Bell said the company will finish this year with a profit margin of 12% to 13%, compared to 5% just a few years ago. His goal is to boost that number to 14% to 15% in the next few years to match the margins of other leading advertising holding companies.
Y&R's recent financial results have been solid. Its stock is trading near its 52-week high, and revenue has been rising steadily.
Not all Y&R skies are sunny, of course. One of Mr. Phillips' main priorities is to increase the quality of the agency's creative product. Messrs. Bell and Phillips admitted the work out of the New York office has been spotty, but both also pointed to strides being made under the new leadership of Chief Creative Officer Jim Ferguson.
Y&R has crafted a creative philosophy it plans to release to employees and clients. The statement is designed not just to talk about improving the work but to do something about it, Mr. Phillips said. Y&R also will use superior creative from around the world as benchmarks for its own output.