Keeping the fizz

By Published on .

If Steve Heyer doesn't ascend to the Coca-Cola throne most had assumed was his, it could cause an unraveling of the marketing revolution he started at Big Red.

When, in the wake of the announced planned departure of Chairman-CEO Doug Daft, dissension on the board prevented the immediate anointing of Mr. Heyer as CEO, it sparked serious questions about the likelihood of his staying with the company. The board's decision to begin an external search while naming Mr. Heyer, now president-chief operating officer, as the sole internal candidate cast a cloud of uncertainty over Coke about its future management and direction.

The move to look outside the organization stunned Wall Street, where Mr. Heyer is a favored candidate. Since Coca-Cola disclosed Mr. Daft would step down at yearend, the stock dropped 2.5% to close last week at $49.96. That's down 43% from the all-time high of about $88 in 1988, but still up more than 10% since Mr. Heyer joined the company in 2001.

Nobody knows for sure whether Mr. Heyer will stick around, although observers put his odds at getting the post anywhere from 15% to at best 50%. That raises questions about whether his marketing mission would leave if he did. It's not clear whether Coke would be as aggressive in exploring alternatives or would again embrace more traditional marketing practices.

In his short tenure, Mr. Heyer made seismic changes to the company's brand strategy, marketing philosophy and the internal and external marketing teams. He became the marketing industry's paradigm-breaker, issuing a manifesto to shatter old methods, and a demand for greater collaboration among marketing partners. He is also a champion of branded-entertainment initiatives.

likely to change

"The odds are whoever comes in will want his or her ideas," said Manny Goldman, a former analyst turned consultant. Coca-Cola "might stick with what they have for awhile, but marketing is something people have their own particular views on."

Contenders being bandied about for Mr. Heyer's job include Andrea Jung at Avon, David Novak at Yum Brands, Gillette CEO Jim Kilts and former Coca-Cola executives Jack Stahl, now at Revlon and Charlie Frenette, now retired. Few observers agreed Mr. Novak would be well received in Atlanta considering his long alignment with PepsiCo.

Mr. Heyer shook up the genteel giant, which spent $570 million on U.S. marketing last year, by moving ad duties for the company's flagship brand to WPP Group's Berlin Cameron/Red Cell, New York, from Interpublic Group of Cos.' McCann-Erickson, New York.

He put media planning and buying assignments into review, including a $350 million U.S. account that landed at Publicis Groupe's Starcom MediaVest. He brought new blood to the marketing department, recruiting Dan Palumbo from Eastman-Kodak Co. as global chief marketing officer and ad agency veteran Esther Lee as chief creative officer.

If he leaves, all bets are off. "On certain levels those who have been closest to him will have to view themselves as under threat," said one executive close to the marketer. It's no secret that newly reappointed board member Don Keough, former president of Coca-Cola and perhaps the most powerful executive at the company, has strong ties to Interpublic and McCann.

"The Keough connection is irrefutable," said the executive, who nonetheless believes the company won't make wholesale agency changes. Mr. Keough "was such an overt and upfront champion [of Interpublic] that in the end when IPG was not able to deliver, it was embarrassing to Keough and the board."


"I can't imagine that there's not lobbying going on," for Interpublic to regain some Coca-Cola business, said an Interpublic executive.

Others argue that Mr. Heyer's recent moves to elevate Chris Lowe to president-service and hospitality and to name Don Knauss president Coca-Cola North America, protects some of his initiatives. "These are strong business guys and the health of North America is critical to the overall health of the company," said an executive familiar with the company.

Some believe the board's lack of faith in Mr. Heyer is not related to his marketing ideas but to his brash manner. "This is a style issue. Don [Keough] really thinks he is managing Steve Heyer ... this is putting on pressure for results. He wants to pressure Steve Heyer in order to get the numbers up over the next six months," said one executive.

Although the company announced 2003 volume grew 4%, short of its 5% to 6% annual growth target, Mr. Heyer is forecasting double-digit profit targets said to be demanded by the board. Analysts, however, have lowered their own expectations to 7% to 8%.

contributing: lisa sanders

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