Young & Rubicam

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Founded in Philadelphia, 1923; headquarters moved to New York, 1926; grew rapidly during era of network radio to become the second-largest U.S. agency by 1944; issued first initial public offering, 1998; acquired by WPP Group, 2000.

Young & Rubicam was founded in May 1923 by John Orr Young and Raymond Rubicam in Philadelphia. Mr. Young handled the accounts and new business while Mr. Rubicam handled creative. In 1924, the agency won the account of Postum Co., which in 1929 became General Foods Corp. The first ads for Postum ("Why men crack," "When the iron man begins to rust"), written in 1924 by Mr. Rubicam and Robert Work, promised relaxation and sound sleep to coffee drinkers.

But there was a condition attached to the Postum account. The marketer wanted the flagship office of its agency in New York, not Philadelphia, so in 1926, Y&R left behind a small office in Philadelphia and moved to New York. Soon after its move, Y&R also won the Jell-O business.

In 1927, Mr. Rubicam became president and took controlling interest in the agency; Mr. Young became a VP, but left the agency in 1934. He died May 1, 1976.

Tony Geoghegan took over media work at the agency in 1928. In an early coup, Mr. Geoghegan bought a schedule of ads for each of Y&R's eight most important clients at a guaranteed circulation rate of 250,000 in Henry Luce's incipient Life. Within four weeks, the circulation of Life hit 1.25 million.

In 1930, Y&R had billings of about $10 million and clients included Black Flag, Borden, Budd railroad cars, Columbia Phonograph, Fels, General Foods, International Silver, Johnson & Johnson, Norwich, Quaker State, Rolls-Royce and Spalding.

To give Y&R a competitive edge, Mr. Rubicam, like other ad executives before him, looked to research. In 1932, he recruited George Gallup from Northwestern University to set up a copy research department. Mr. Gallup sent interviewers into the field to blanket the country, dig out data and use the information to get Y&R ads read by more people.

By 1936, the agency had increased its billings to $20 million and added General Foods' Sanka; Cluett, Peabody & Co. (Arrow shirts); Parke-Davis; Northern Paper Mills; and Packard Motor Car Co. to its client roster. It closed its Philadelphia office but opened offices in Chicago and Detroit.

On the radio

By 1935, network radio was drawing Y&R into show business. Mr. Young's retirement created space for two key Y&R executives who would carry the agency into its glory days. When Chester J. LaRoche became president and Sigurd Larmon took over new business, Y&R rushed into broadcasting, a medium Mr. Rubicam had been reluctant to enter.

By the mid-1930s, there were four radio networks whose only product was time. Aside from political conventions and coverage of special events, they provided little original programming, filling only the slots they could not sell. The time that was sold was bought exclusively by ad agencies on behalf of their clients.

In 1934, Jell-O's advertising had been eclipsed by that of rival Royal Puddings, and General Foods was impatient with a lack of radio skills at Y&R. But by 1938, under Mr. LaRoche, the radio staff became the power center of the agency because the programs it created had become the power behind the advertising.

Y&R's reputation developed chiefly around its relationship with Jack Benny and Fred Allen, whose shows the agency produced for General Foods and Bristol-Myers, respectively. In October 1934, "The Jack Benny Program" debuted with Jell-O as its sponsor and, by January 1935, Jell-O posted record sales.

Also in 1934, Y&R hired Mr. Allen, whose "Town Hall Tonight" was sponsored by two products, Ipana toothpaste and Sal Hepatica laxative, in the first step toward participating sponsorship in broadcasting. In 1944, the agency produced one of broadcasting's most enduring sitcoms for International Silver Co., "Ozzie & Harriet." It, as well as many such Y&R radio productions, later moved onto TV.

In 1942, Mr. LaRoche left to start his own agency, the C.J. LaRoche Co. (it later became McCaffrey & McCall), and Mr. Larmon became president of Y&R. Two years later, Mr. Rubicam retired just after Y&R opened a London office.

After Rubicam

Mr. Larmon continued as president of Y&R until 1958, when he hired George Gribbin to be president while he became chairman and CEO. During his tenure, Mr. Larmon took the agency from radio into the early triumphs of TV, largely on the strength of programs for General Foods, Bristol-Myers and General Electric as well as the long-running "Goodyear Playhouse."

In the 1950s, Y&R and General Foods also were involved in two incidents of political blacklisting centered on "The Aldrich Family" and "The Goldbergs," both of which featured actors suspected of unfashionable political affiliations.

At the time, production costs in TV were driving a revolution across network broadcasting. Y&R's radio and TV departments, which once had overseen all production and negotiated the buying of all time, were losing ground to network packagers and independent production on the outside as well as the agency's own media department.

Among Y&R's best-remembered campaigns during the 1960s and '70s, were "Number one to the sun" and "The wings of man" (for Eastern Airlines), "Bet you can't eat just one" (Lay's potato chips), "The dogs kids love to bite" (Armour hot dogs) and "Be a Pepper" (Dr Pepper).

When Mr. Larmon stepped down in 1963, billings had reached $280 million and the agency was headed into a race with JWT for the position of No. 1 agency in the U.S. Overseas revenues were also growing. In 1956, the agency's network of six international offices (in Canada, Mexico, Puerto Rico, Venezuela, West Germany and the U.K.) earned about $16 million. Mr. Gribbin and Ed Bond, who succeeded him in 1965, focused on international growth. By the end of the decade, Ed Ney, as head of Y&R International, had built overseas revenues to $113 million and was on a fast track to the top.

Mr. Ney became CEO in November 1970, and appointed former football star Alex Kroll to lead Y&R's creative department. Mr. Ney then launched a campaign of domestic and international growth. In February 1973, Y&R agreed to an exchange of stock with Sudler & Hennessey, which handled $30 million in medical advertising. In November, a similar merger was worked out with direct response shop Wunderman, Ricotta & Kline, which brought in $30 million, putting Y&R ahead of JWT for the first time.

Soon after, the agency acquired Cato Johnson and Landor Associates, a corporate identity design firm. In October 1979, Y&R acquired Marsteller Inc. and Burson-Marsteller, a Chicago-based advertising and public relations combination that added revenue of $306 million.

Y&R also built agencies from scratch. In 1973, Chrysler Corp.'s Chrysler-Plymouth Division introduced the Trailblazer, a vehicle that competed directly with the International Harvester's Scout, a key account at Y&R's Chicago office. To sidestep the conflict, Y&R induced Ralph Ammirati and Martin Puris to leave Carl Ally Inc. and establish a new agency with Julian AvRutick. Half of the financing for the new Ammirati Puris AvRutick shop came from Y&R.

By the mid-1970s, Y&R marketed its new assets in what it called "the Whole Egg" strategy, a branded integrated communications effort.

Global expansion

In 1972, Y&R opened an office in Tokyo to demonstrate to Dentsu, the top Japanese agency, that Y&R was serious about Japan without presenting itself as a threat. In 1981, the two shops announced a Dentsu-Y&R joint venture that continues today throughout Asia as Dentsu, Young & Rubicam.

By the time Mr. Kroll took over Y&R in 1985, the agency was expanding its Whole Egg strategy while trying to catch up in the race for global presence behind competitors JWT and McCann-Erickson. It had about 160 offices in 1985 and nearly 340 nine years later. It had three agencies in Latin America and four in Asia. The agency attempted to leapfrog into developing markets and went into China in 1985 as the first non-Chinese agency based there. Y&R opened shop in Moscow in 1988, a year before the collapse of the Soviet Union, and expansion into former Soviet bloc countries followed.

Mr. Kroll retired in 1994, and Peter Georgescu became chairman of Y&R the following year. In 1997, Y&R restructured its media operations by buying Media Edge; it opened a separate global division in September 1998. In May, with billings of $12 billion and the book value of the company's stock rising at about 4% a year, Y&R became one of the last agency giants to make an initial public offering.

In September Thomas Bell moved over from Burson-Marsteller to become worldwide chairman-CEO of Y&R Advertising. (The new holding company continued to be called Young & Rubicam while the agency unit was renamed.) In 1999, Mr. Bell succeeded Mr. Georgescu.

In April 2000, reports began to circulate that Y&R was a takeover target. In May, Y&R agreed to be acquired by WPP Group for $4.7 billion. The deal was the largest in advertising history to that time and briefly made the WPP Group the world's largest advertising company, surpassing Omnicom. (The following year Interpublic became No. 1 when it bought True North.)

In May 2003, Y&R named Ann Fudge chairman-CEO of the holding company and its Y&R Advertising unit. The appointment made her one of the few African-American female CEOs in the U.S.

In 2003, Y&R had U.S. revenue of $215.7 million, up 12.8% from 2002, and ranked No. 9 among U.S. agency brands, according to Advertising Age. It had worldwide revenue of $517.1, up 17% from the previous year.

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