STEVE DWORIN TRIES TO REACH OUT AND SAVE AYER
Steve Dworin seems puzzled when asked whether he plans to keep a colorful tapestry hanging in the 35th-floor lobby at his new employer, advertising agency NW Ayer Inc. It was designed by his predecessor, Jerry J. Siano, and contains the phrase "big idea" woven into a pattern of interlocking shapes. "We'll keep it," Dworin says after a pause, "unless Jerry wants to hang it in his house."
Big ideas have seemed scarce at Ayer for some time, which is one reason Dworin replaced Siano as chief executive on Apr. 18. That may also explain why Dworin appears to have paid little attention to Siano's tapestry--or its inspirational message. He has more pressing things to worry about in taking command of Ayer, a venerable but much troubled shop.
Start with AT&t, one of Ayer's linchpin clients, which recently pulled $150 million worth of long-distance advertising. Ayer retained $50 million in AT&t business and won a further $40 million in billings on another AT&t account. But Dworin has to make sure the blow doesn't cripple an 86-year client relationship that has produced such memorable campaigns as "Reach out and touch someone."
"Fresh look." More broadly, Dworin must change a perception that the nation's oldest ad agency has lost its way. Clients have left, ownership has changed, and two very public efforts to merge with other agencies have unraveled. Some marketers even question whether Ayer's large size--but lack of a global network--leaves it ill-equipped to compete in an industry increasingly divided into nimble minnows and multinational whales. Even as they help Ayer celebrate its 125th anniversary this year, clients agree it needs a shakeup: "All organizations become inbred," says Philip Guarascio, general manager of marketing at General Motors Corp. "You sometimes need a fresh look."
Dworin is nothing if not fresh. An account manager who regularly works 13-hour days, he is the first CEO to come from outside Ayer. Although the 40-year-old has spent much of his career at J. Walter Thompson Co., he made his name at Deutsch/Dworin, a flashy creative shop he helped build from $90 million in billings to $275 million in two and a half years. "I see him as a catalyst," says Richard Humphreys, former CEO of Saatchi & Saatchi Advertising, who heads an investor group that bought 60% of Ayer from its managers in March, 1993. "If Ayer is the glass of water, Steve is the Alka-Seltzer that's going to make it fizz."
No question, Dworin has an effervescent reputation. When he left Deutsch/Dworin last February, he instantly became the most sought-after executive on Madison Avenue. Saatchi and Lintas Worldwide were among a half-dozen agencies that wooed Dworin. Humphreys won him with a contract that rival executives put at more than $1 million a year with bonus.
Now, however, Dworin must grapple with the exalted hopes that come from being dubbed advertising's most wanted man. "He has been hung with a millstone of expectations," says Burton J. Manning, who turned around a similarly ailing J. Walter Thompson in 1987. "It could be unfortunate if he doesn't have an instant success."
Tough diagnosis. Just figuring out what's wrong will be hard enough. Ayer's billings dropped 9.6% in 1993, to $945 million, the latest in a string of bad years (table). Yet unlike some shops, whose woes can be traced to bad management or bungled campaigns, Ayer is groping through a miasma of troubles: lack of leadership, weak financing, difficult clients, and so on. With revenues continuing to slide--down 7.7% in 1993, to $108.5 million--Dworin says Ayer's staffers are too demoralized to compete effectively for new business: "When an agency has gone through tough times like we have, people start thinking, 'Why do we deserve to win?'"
Many of Ayer's troubles stem from a shortage of capital. Prior to Humphreys' investment, Ayer was losing money after servicing its steep bank debt. Siano responded by selling off majority stakes in Ayer's European agencies. He also tried to merge Ayer with a Pittsburgh agency, Ketchum Communications Inc. Then, Humphreys agreed to buy a controlling stake with partners that include Choi Won Young, a South Korean publisher whose family controls one of Korea's largest conglomerates, Dong-Ah Construction Industrial Co. Humphreys won't say how much the group has invested, but he doesn't quibble with outsiders who value Ayer at roughly $80 million. That would put his 60% stake at $48 million.
With the cash infusion, Ayer no longer needed a partner to remain financially viable. Yet Siano continued looking for a merger to boost his agency's flagging creative profile. He came close to a deal with San Francisco agency Hal Riney & Partners, but the talks foundered several weeks ago. Now, Humphreys says he is concentrating on buying back the stakes in Ayer's European agencies. He may also use an agency owned by Choi in Seoul as a base to build Ayer's presence in Korea.
Cheerleader. Even though Humphreys has no operating title at Ayer and will soon name Dworin chairman as well as CEO, he plans to supervise Ayer's overseas holdings himself. His goal is to free Dworin to focus on the U.S. operation, which generates 83% of Ayer's billings. Insiders say Dworin may name his own management team. But he insists Ayer's managers are talented: They just need a morale boost.
Reviving Ayer will take more than cheerleading, though. Some marketers say the agency must rethink its place in the industry. They say Ayer is too big to compete with creative shops such as Deutsch but too small to match the overseas presence of an Ogilvy & Mather Inc. "If they want to compete with the Ogilvys of the world, they're going to have to link into a global network," says Robert Thompson, director of advertising services at AT&t.
Yet Dworin seems to be heading in the opposite direction. At Deutsch, he thrived by spiriting accounts away from bigger rivals. So not surprisingly, Dworin wants to instill a small-agency sensibility at Ayer. That means he'll immerse himself in the nitty-gritty of Ayer's work for everyone from GM to auto-repair chain Pep Boys.
But can Dworin square his small-agency style with the need to rebuild Ayer's big-agency capabilities? AT&t says it will spend more and more marketing dollars overseas. Even as he rallies the troops at home, Dworin must satisfy clients who are looking abroad. Clearly, the demands on advertising's most wanted man have only just started.TABLE: AYER DEFLATED
Key account moves Annual billings
in the last three years Millions of dollars
Lost AT&T Consumer 150
Sterling Drug 55
J.C. Penney 45
Won Pep Boys Auto repair 50
Lechter's Housewares 5
Total 1990: $892 million
U.S. billings 1993: $781 million
DATA: COMPANY REPORTS, ADVERTISING AGE
Mark Landler in New York