Trying Transformation: D'Arcy 'uprising' falls flat in first 14 months

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D'Arcy Masius Benton & Bowles President-CEO John Farrell pauses, reflects briefly, then quietly asks: "It's a good question. Why should anyone care about D'Arcy right now?"

Mr. Farrell and his partners Susan Giannino, chairman, president and chief branding officer, and Lee Garfinkel, president-chief creative officer, have been at work to answer that very question.

The Bcom3 Group-owned agency has been headline fodder of late due to its loss of its global Mars account, a nearly 50-year-old relationship. News that millions of dollars in supermarket brands such as Skittles, Uncle Ben's and Whiskas and other pet food brands were up for grabs sparked a flurry of activity in an industry starved for new business.

In addition to that, D'Arcy in the past 12 months has logged other significant global account losses worth an estimated $100 million with no global account wins to replace them (see charts, P. 20, 21). Some wins, including the $80 million U.S. Heineken account as well as additions to Procter & Gamble Co.'s global business (Pepto-Bismol, $20 million; Metamucil, $14 million) offset the departed accounts and regional offices have reeled in some accounts. But the agency's global network remains hungry for a hefty portion or two of new business.

Against that backdrop, D'Arcy Worldwide is in the midst of transformation. It began in January 2001, when Mr. Farrell and Ms. Giannino took the worldwide helm of D'Arcy, determined to change an organization known mostly for its client service, strategic vigor and package-goods and automotive accounts, to one recognized for quality and creativity.

"There's been a global blanding of advertising agencies," said Mr. Farrell, a Brit with a sales promotion background. "At a time when advertising is at its most mediocre, we hope in the next 12 to 18 months to create a global agency that stands out." Currently, D'Arcy Worldwide overall ranks as the world's 14th largest agency brand, with $763 million in worldwide gross income in 2001, according to Advertising Age data (AA, April 22). But assessed regionally, D'Arcy's standing is uneven: in Europe it is the 14th largest, but in Asia it doesn't don't make the top 20, according to Ad Age figures. In the U.S., it is No. 11 among agency brands, with $317 million in gross income.

`a long haul'

Transformation is an ambitious goal. "It is a long haul and you have to stay with it," Ms. Gianinno said.

The agency's history with large consumer-products and package-goods companies dates back nearly a century. D'Arcy Advertising in St. Louis, the network's foundation, opened in 1906, serving such clients as Anheuser-Busch Cos.' Budweiser and Coca-Cola Co.

D'Arcy grew largely via mergers as its clients expanded globally. Transactions in 1971, 1973 and 1985 yielded D'Arcy Masius Benton & Bowles, owned by parent company MacManus Group, which in 2000 merged with the Leo Group to create Bcom3 Group, a Chicago holding company. Bcom3 is slated to merge with Publicis Groupe in July.

"Our impression of [Publicis' CEO] Maurice's [Levy] expectation is that we continue on course," D'Arcy's CEO Mr. Farrell said. "If anything, we should pursue it even more aggressively."

Dubbed a "creative uprising," the course is "drastically improving our creative output and consequently our visibility and reputation," wrote Pasquale Barbella, D'Arcy transatlantic creative director, in a memo posted on It is "a precise project based on measurable objectives and hard actions designed to achieve them."

D'Arcy's strength, historically, has been in strategy. Creatively, "they have not had a perception in the marketplace," said Leslie Winthrop, founder-managing partner of AAR Partners, an industry consultancy. "The agency has to improve its creative product and remain strategically sound."

Crucial to that task is Mr. Garfinkel, who started at D'Arcy, New York, in September 2001. Most recently chairman-CEO and chief creative officer at Interpublic Group of Cos.' Lowe, he is known for turning that agency into a noted creative shop that turned out well-received ads for Coca-Cola Co.'s Diet Coke and Sprite, Heineken and Mercedes-Benz, among others.

two years

"I give myself two years," said the soft-spoken yet disarmingly confident Mr. Garfinkel. Nine months on the job, Mr. Garfinkel says his greatest accomplishment is communicating his creative philosophies and beliefs to D'Arcy employees and clients.

"I've spent time with [Procter & Gamble CEO] A.G. Lafley and [General Motors Corp. Vice Chairman] Bob Lutz. I feel very energized about the potential with both of those clients," he said. He is a patient teacher. "I'm trying to retrain everyone," he said, "not only to know what great work is, but also how to sell that work in a smart way."

New senior creative hires by D'Arcy, New York, thus far are limited to two, both Mr. Garfinkel's former colleagues. Bob Nelson arrived in January from Lowe as exec VP-managing director, global creative services. In early May, John Russo came on board as exec VP-executive creative director at D'Arcy New York. Explaining his decision to hire Mr. Russo-whom Mr. Garfinkel calls his mentor from days when both men worked at Levine Huntley Schmidt & Beaver- rather than a rising talent, Mr. Garfinkel said, "I had to make a decision: Do I bring in someone with a star reputation and who knows how good he really is? Or do I bring in someone who is consistent, smart, entertaining, and who can be a mentor to young people in the business?"

Mr. Garfinkel does not take ownership of any current D'Arcy work. There's "nothing yet that's indicative of the new D'Arcy," he says, though he has taken the creative lead on some recent pitches, such as GM's Saturn, where the agency was one of three finalists. Losing that "was a big let-down," said Patrick Sherwood, president of D'Arcy North America, Troy, Mich. But he maintains that agency-wide critiques of work-part of D'Arcy's creative uprising program-are improving the quality of creative. "We're delighted by the response to the work done in Troy for Cadillac. Work for Pontiac has certainly gone under the microscope," he said.

low profile

Those who've worked with Mr. Garfinkel in the past aren't surprised by his low profile thus far. Kevin McKeon, a creative under Mr. Garfinkel at Lowe, said, "Lee took one or two accounts that had the most potential and concentrated on turning them around. " Mr. McKeon, now executive creative director at Bcom3-backed Bartle Bogle Hegarty, New York, adds, "Lee is good at seeing potential and recognizing what people are capable of."

Reshaping D'Arcy into a creative dynamo demands changes in the agency's structure. Historically, D'Arcy hired staff to match a client's organization-referred to as "man-on-man" staffing-in every function, worldwide. That's not necessary now, Mr. Farrell said. "You can run businesses smarter now because of technology, and clients want efficiency."

That, plus the current emphasis on creative, means D'Arcy is hiring employees with different skills and sometimes a higher price tag. In Germany, for instance, in the past 12 months four separate offices were consolidated into one in Hamburg. "We have fewer people now in Germany," Mr. Farrell said, but "I'd argue that our average cost per person is higher, and we have more employees in key creative posts." In May, Mr. Farrell hired away Luca Lindner, CEO of WPP Group's Red Cell, to run D'Arcy Europe, Middle East and Africa. Though Red Cell is a troubled network, Mr. Lindner is entrepreneurial and highly regarded by WPP Group Chief Executive Martin Sorrell. In Mexico, D'Arcy promoted one of that country's most-prominent ad women, Ana Maria Olabuenaga, to general manager, Noble/D'Arcy, Mexico City. Mr. Farrell adds that in the last five years, profits and operating margins have doubled.

Of course, the agency has also slashed overhead in the past year. In addition to consolidations overseas, in the U.S. D'Arcy cut nearly 100 employees in New York, another 30 in Michigan, closed its St. Louis office and merged its San Francisco Highway One operation with D'Arcy L.A.

"If the dialogue [on strategy and campaigns] is taking place between the creative heads and [P&G's A.G.] Lafley and [GM's Bob] Lutz, then you don't need armies of account people and research people," said a former international D'Arcy employee.

Some of D'Arcy's cost-containing moves are a result of bad times and business losses. Account wins, particularly of a global, network-sustaining sort, have been few. "We need more upside," acknowledges Ms. Gianinno. "We need to replace Mars."

But she and her management cohorts are committed to the agency re-creation begun in January 2001. D'Arcy's original model was "very successful," said North American chief Mr. Sherwood. "But the world has clearly changed. ... We are being judged by all our clients on the quality of the strategy and creative."

contributing: alice z. cuneo, jean halliday, laurel wentz

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