Why Verizon Dropped McCann for McGarry on Wireless Business

Despite Good 'Maps' Work, C-Suite Relationship With Droid Agency Cinched Move, Dealing Massive Blow to Brien's Shop

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NEW YORK (AdAge.com) -- Nick Brien was tapped as just the type of turnaround guy who could save troubled McCann WorldGroup. But less than a week into his new job, things are much, much worse than they initially appeared.

On April 7, Verizon summoned agency executives to its New Jersey offices to tell them creative work for Verizon Wireless was being yanked from McCann and handed to roster shop McGarryBowen -- and more McCann work could walk out the door now that Verizon has launched a review for its $300 million Fios business.

All told, it could amount to a loss the size of a midsize agency -- as much as $30 million in revenue, executives familiar with the matter say -- which will likely spur a round of cuts in the double-digits at McCann's 650-person New York office.

For Mr. Brien, the Verizon situation represents a major headache in the early days of his helm, and there are potentially bigger ones looming on the horizon. L'Oréal has been rumored to be chatting with other agencies; there's a new global chief marketing officer at Mastercard; and McCann's gigantic U.S. Army account is slated for review later this year.

In an internal note alerting staffers to the loss, McCann, New York, President Thom Gruhler wrote: "We are justifiably proud of our long partnership with Verizon Wireless. We have consistently produced smart, strategic and powerful work."

Qualified success
The success of the work, at least of late, is hard to argue. Since McCann was handed the Verizon Wireless business in February 2004, it helped the company double subscribers to 91 million, making it the country's largest carrier even without the industry-changing iPhone. Last fall's McCann-created "Maps for That" campaign kicked off an ad war between Verizon and rival AT&T, which many hailed as a brilliant marketing maneuver that rode the public's discontent with AT&T's iPhone-strained network.

So if the work was working, why move the account?

It's less about where McCann mistepped on marketing strategy and more about what McGarryBowen, which Ad Age named 2009 agency of the year, gets about courting the account relationship, according to people familiar with the shift. It's a reminder that while marketing must move the needle, in adland business also hinges on masterfully managing client relationships.

Last summer McCann promoted longtime Verizon account leader Mr. Gruhler to lead the agency -- a critical flaw, according to insiders, because it distracted him from the all-important account. That gave entrée to McGarryBowen, the shop behind last year's successful launch of the Verizon Droid, and its founder, account baron John McGarry, to siphon more business.

Mr. McGarry is renowned for his knack for building and maintaining strong relationships with top marketers. In the case of Verizon, which was McGarryBowen's founding client when it opened in 2002, Mr. McGarry kept up a relationship with Chief Marketing Officer John Stratton despite the fact Mr. Stratton cut McGarry from the agency roster.

"He worked for two-and-a-half years to maintain the relationship, despite what were probably hard feelings," Mr. Stratton told Ad Age earlier this year. "John really understands how to manage relationships well."

Strategy shift
McGarryBowen's ads to launch the Droid handset on Verizon were considered a success, selling 600,000 units within the first two months. Under McGarryBowen, Verizon is likely to shift to a larger brand idea rather than retain the 'Map for that' strategy, which was deemed too tactical to use for years to come.

Both McCann and McGarryBowen referred calls to Verizon, which would only say: "We are moving some of our advertising to McGarryBowen, but McCann Erickson will continue to be one of our agencies of record."

In his tenure at Universal McCann and MediaBrands, Mr. Brien was applauded for his ability to forge high-level global account relationships, and he'll need that talent in his new role. While McCann has brought in a spate of new accounts in recent months, like Nasdaq and Holiday Inn in New York, and identity-theft brand LifeLock last week on the West Coast, the agency desperately needs to reel in much bigger fish, and fast, if it wants to replace lost Verizon revenue.

The most immediate concern is the Fios pitch, for which McCann will face McGarryBowen. A decision is expected by the end of the month and Mr. Brien is said to be personally involved in helping McCann to defend the business.

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