Leo Group posts stunning turnaround

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In the dismal days of 1996, Chairman Rick Fizdale told a meeting of dejected Leo Burnett USA employees that a turnaround would come. Not just any turnaround: He vowed that Burnett would win an agency of the year award within three years.

It didn't seem likely. The agency had lost United Airlines, Miller Lite and Rockport Co. that year. Samsonite Corp. was on its way out as well.

"It seems we had ceased to believe we would ever rebound," Mr. Fizdale says.

It did. In 1999, the renamed Leo Group won more than 300 pieces of business globally, raked in $2 billion in new billings on the creative and media sides, rolled out Starcom media operations in 75 countries and acquired or started another 31 operations from Brazil to Ghana.

The company also came out of denial and admitted it needed to adapt to survive. It announced a merger, with the MacManus Group, and even--gasp--admitted the need to go public.

Leo Group's turnaround, and its boldness in addressing its problems, led of the year.


Mr. Fizdale stepped back into day-to-day operations in 1997, a role he had relinquished in 1993. He and the Burnett board realized the network had to expand its global scope of services, improve a creative product that wasn't all that creative, and boost morale for workers floating their portfolios around the industry.

When Burnett purchased a piece of London-based Bartle Bogle Hegarty in 1997 it was just warming up. It proved it was back in the game when it bested creative superstar TBWA/Chiat/Day, Playa del Rey, Calif., for Delta Airlines' $100 million business, and beat out Ad Age's 1998 Agency of the Year, Deutsch, New York, for the $75 million Toys "R" Us account.

Globally, the agency pulled in the $13 million Scandinavian Airline System account, led by its office in Stockholm; the $20 million Acer Group, led by the office in Taipei, Taiwan; and information technology company Getronics' account, led by the Amersterdam office.

Burnett even gave a creative spark to Procter & Gamble Co.'s laundry detergents in Latin America. In the humorous "Tough guys" campaign for Bold, hard-bitten cops, soldiers and bikers ooh and aah over fabric softener. And a Latin twist to an international detergent campaign more than doubled Ace's market share in Argentina as an exuberant TV crew took the product's whiteness challenge to the streets.

Perhaps most indicative that the Leo Group had gotten its swagger back was that it stopped bringing back-up work to pitches in case prospects weren't blown away by the first presentation.

"What you're seeing now is the result of being persistent and [demanding excellence] and nurturing it and convincing people over time that it can be done for any client," Chief Creative Officer Michael Conrad says. "We know what we are looking for. It is very clear what we want to avoid in our advertising and what we want to reach for and what we must do."

The office that last year scored the most international creative awards was Leo Burnett, Bangkok.


Last year, Leo Burnett, Warsaw, was named Agency of the Year at the leading ad festival for Central and Eastern Europe, and the Spanish agency won a Gold Lion at the International Advertising Festival in Cannes for a humorous mobile phone spot.

One example of a catchy campaign features a man running around with a portable sink offering to wash people's hair with P&G's Pert Plus shampoo in "Sink Boy" spots, which run in Canada, Venezuela, Pakistan and the U.S.

Two of Leo Group's strongest growth engines last year were Leo Burnett USA and Starcom. The U.S. agency--Leo Group's largest--won about $500 million in new business with Delta, Toys "R" Us and others.


Starcom, last year's Ad Age U.S. Media Agency of the Year, continued strong, pulling in $1.2 billion in new billings. Its Christmas present was a victory it snared along with MacManus' MediaVest, the hotly contested pitch for China's biggest account, P&G's $150 million media-buying business. The assignment had been at Zenith.

The new joint venture--Quest-- didn't even have a name when P&G awarded it the business.

"In today's very complex, changing media world, as a media company, where we provide the most value to our clients is in knowing what to buy, not how to buy," says Bob Brennan, Starcom's chief operating officer. "It's knowing when to use outdoor, when and how to use magazines, when and how to use digital media . . . We've been delivering a product that the marketplace wants to buy."

A year ago, Starcom was a brand for Australia, Mexico, Thailand and the U.S. There were doubts Burnett had enough media clout to build a stand-alone global media operation. An initial attempt to merge with MacManus Group's worldwide media unit fell apart--embarrassingly and publicly--at the last minute in November 1998. At the time, the two groups already were jointly pitching clients in the U.K.

For more than six decades, the Burnett mantra was independence. Now, with the Leo Group-MacManus merger and investment from Japanese power house Dentsu, independence is yielding to growth.


Once the deal to create the entity--tentatively called BDM--is done, Leo Group will have morphed into the world's fourth largest ad group--a $1.7 billion, 500-office monolith with increased access to Japan and the rest of Asia thanks to Dentsu. BDM likely will stage an IPO this year that could raise up to $5.4 billion and make millionaires out of the people who prided themselves on their autonomy.

The deal ensures the Burnett name will survive in an era of mergers that have seen corporate names and philosophies tossed away with outdated letterhead.

For the first time, the agency that gave birth to American institutions such as the Jolly Green Giant and the Marlboro man selected a foreigner to take the helm. Roger Haupt, a 52-year-old Brit and Mr. Fizdale's hand-picked successor, directly addressed the agency's weaknesses and forged the Dentsu-MacManus deal. He was the architect in Burnett's taking a 49% stake in BBH in 1997 and was a chief advocate in helping Starcom go global.


With Mr. Haupt in the leadership role and Mr. Conrad, a German, Burnett is cultivating a global mindset beyond its traditional Midwestern image.

"Getting focus on the basics, innovation, and the right management team--what you are seeing now is the result of that foundation that was put in place two to three years ago," Mr. Haupt says. "I think 1999 really did show the benefits of doing those things."

As for the future, Mr. Fizdale says Leo Group will build or buy a global or U.S. direct marketing company and that he would "play a role in blowing out our Internet capabilities globally."

This is a global business, says Mr. Haupt. "You've got to be good everywhere."

Contributing: Laurel Wentz and Normandy Madden

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