Reconciling differences between advertising and changing market

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Brendan Ryan was up in the air and down to earth: breakfasting at the tony Sky Club on the 56th floor of Manhattan's Met Life building, yet attired not only in his customary work shirt and chinos but, in deference to club policy, in a tie and sport jacket. It was one day before St. Patrick's Day, and three days before his rebirthday as CEO of the newest global agency network at the largest advertising company in the world.

He was jazzed. In anticipation, no doubt, of the Interpublic Group of Cos. agreement to buy True North, his agency's holding company, Mr. Ryan was finally at the doorstep of what he called "this whole new model." Ten years after joining, five years after becoming CEO, and less than a year after the cardinal disappointment of losing the flagship Chrysler account, he had finally arrived at-to quote the title of a memo he penned two years back-the "Time to Reinvent Foote, Cone & Belding."

Maybe he will. For Mr. Ryan understands the three giant challenges facing marketers and marketing communicators in the new economy.

Advertising, a scaleable business in the era of 30-second commercials, has, in the new age of ever-changing, multichannel marketing, become a nonscaleable, knowledge-based business. That transformed industry requires new styles of agency-client relations and new compensation systems. It also means multinational marketing communications companies must align their management systems to the needs of their customers and their customers' customers, reconfiguring both the way they manage accounts and the people they recruit to run them.

"When I was a kid at General Foods, all clients were fundamentally the same," Mr. Ryan told me. "Today's diversity of accounts means the ability to move your people, your ideas, your intelligence across clients has become much more difficult. Clients are now tracking performance vs. budget every day. You can no longer say, `Fifty percent of my spending works, but I don't know which 50%.'

"But there is a way out. There is"-he repeated his earlier affirmation-"this whole new model."

The "new model" ain't brain surgery. Anyone who's been around marketing the past 15 years knows consumers are harder to reach, communications channels are fragmenting, and products and services are commoditizing at an increasingly rapid pace. Matching channel to audience across multiple dimensions simultaneously is a natural solution-but an unnatural management task.

Mr. Ryan's answer has been to abandon the decentralized structure adopted by most large agencies, in which the different disciplines (direct, promotions, media advertising, etc.) are discrete profit centers, and to move them to a common platform, on which a client's communications can be analyzed, executed and measured, under the guidance of a single client officer, with a single P&L, and with a powerful database operation at the heart.

I wondered whether this wasn't a return to Young & Rubicam's "Whole Egg," Ogilvy's "Orchestration" and other failed integrated communications schemes of the 1980s.

"I was running American Express at Ogilvy then," Mr. Ryan reminded me. "The theory was buy one ticket for one orchestra, where the woodwinds, brass and strings played brilliantly under a single conductor. The reality was the agency might have been the Philharmonic, direct the Ford-ham marching band, promotions the Westhampton High School symphony. And there wasn't one conductor, but four guys trying to grab the baton. You need one P&L and one boss, conducting excellence, served up seamlessly."

Coordination isn't the only hurdle. Finding inspired, analytical account bosses means competing for the best and brightest. Because agencies haven't done so, few recent b-school grads are willing to dive into marketing, as Mr. Ryan did when he received his MBA from Wharton in 1966.

"The model is broken," he conceded. Fixing it, he suggested, will create a virtuous circle. "If you can measure the results, you can participate in the growth, and if you can gain on the upside, you can compensate people who can play at the CEO level," said Foote Cone's reinventor. "That's the hope. Otherwise, we"-by which he meant the agency business-"are in a death spiral."

Mr. Rothenberg can be reached at rothenberg_randall@strategy-business.com.

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