Ask Alex Kroll about baby oil and he turns almost mournful. The chairman of Young & Rubicam winced last August when Johnson & Johnson yanked the ad accounts for its baby oil and powder from his shop in favor of Lintas, a rival agency. At $15 million in billings, the loss was modest. But the accounts were a memento of J&J's six-decade relationship with Young & Rubicam Inc.: "Baby oil runs in the veins of our people," says Kroll.
It has been that kind of year for the country's largest advertising agency. Y&R hasn't suffered the financial meltdown of Britain's Saatchi & Saatchi and WPP Group. But the recession has brought a steady stream of bad tidings. Such big clients as American Telephone & Telegraph Co. have slashed their ad budgets while others, such as J&J and R. J. Reynolds Tobacco, have shifted some business to other agencies (table).
The result is a perception on Madison Avenue that Y&R has lost its touch. The agency's malaise stumps many who still remember Y&R's formidable reputation in the 1980s, both for the creative panache of such campaigns as its ads featuring the ubiquitous Merrill Lynch bull and for its enviable record of landing juicy accounts. The agency hasn't won a significant new account in the U.S. since it bagged the $40 million Xerox business back in July, 1990. And despite a new creative director in its flagship New York office, its ads are regarded as stodgy.
SHAKEUP. Kroll points out that smaller and overseas account wins brought Y&R $650 million worth of new billings last year. But that 8.5% gain was wiped out by lost accounts and reduced spending by existing clients. Y&R's global billings and revenues in 1991 were flat at $7.5 billion and $1 billion, respectively. The agency won't disclose profits. But Kroll says: "I'm not pleased. How could you be?"
Now, Kroll is determined to jolt Y&R out of its lethargy. He is pursuing a two-pronged campaign to upgrade customer service and restore creative luster. The first task is by far the easier: On Jan. 14, he unveiled a shakeup that makes top executives--including Kroll himself--directly responsible for major accounts. "To me, the solution was: Strip the hierarchy, and aim everybody toward the clients," he says.
Kroll acknowledges that several clients have made it clear they would like more attention from agency top brass. By forging such bonds, Kroll hopes to rekindle the affection of such clients as J&J and Reynolds. The agency was stunned in October when the tobacco giant shifted the creative part of its Camel cigarette account to Mezzina/Brown, a tiny shop started by two former Y&R creative executives. Reynolds says it wanted to retain the services of the two, who helped popularize Joe Camel, the brand's highly successful, albeit controversial, mascot.
`SHORT SHRIFT.' In many ways, Kroll is applying the same recessionary marketing technique to Y&R that his clients are using: Hold on to your customers, since new ones are much harder to come by. Indeed, some notable Y&R clients are applauding the shift: "We regard this as a positive step for us," says Robert Watson, director of advertising services at AT&T. The company trimmed media spending 30% in the first nine months of 1991, according to Leading National Advertisers. Although Watson doesn't criticize Kroll individually, he says many big-agency executives began neglecting their clients in the 1980s as they concentrated on mergers and acquisitions: "In many cases, the clients were getting short shrift."
That's not likely to happen to AT&T anymore. To underscore his urgency about service, Kroll says he'll personally handle the AT&T and Colgate accounts. That means he'll help to choose staffers for the accounts and speed up the production of ads. Kroll, a former copywriter, will even delve into the nitty-gritty of AT&T's ad campaigns. "The management has to commit their own blood," he says.
The care and feeding of AT&T and Colgate aren't the only new items in Kroll's job description. In mid-January, he removed one of his closest colleagues and onetime college football opponent, Joseph E. DeDeo, as president of Y&R's core ad agency. The agency now reports directly to Kroll, who as chairman of the holding company also oversees Y&R's direct marketing and public-relations units. The day after the shakeup, Y&R confirmed a layoff of 45 New York staffers, or 3.8% of the agency's 1,192-person flagship staff. "I believe Y&R can play better with fewer, better people," says Kroll.
Although DeDeo lost a plum operating title, he has hardly been put out to pasture. He is now chief creative officer, and his mandate is to raise the standards of Y&R's creative output around the world. That's a tall order, even for DeDeo, who earned his stripes by turning Y&R's European and Australian units into creative powerhouses. DeDeo says he asked Kroll for the job. And he feels Y&R is still producing "first-rate and competitive work."
Still, observers and former Y&R execs agree that the agency hasn't produced much memorable advertising in recent years. Y&R's work tends toward the mainstream: the U. S. Army's long-running recruitment campaign, for example. "In the past, Y&R was known as the best of the big packaged-goods agencies," says Clay S. Timon, who worked closely with the agency until 1990 as director of worldwide advertising for Colgate before becoming a consultant. "Now, it is no better than the average."
That assessment is all the more puzzling since the people who vaulted Y&R to creative prominence are still largely in place. Kroll himself ran the New York creative department, writing such campaigns as "The Wings of Man" for Eastern Air Lines Inc. And there's new blood, too: In late 1990, DeDeo hired Helayne Spivak as creative director for the New York office. A 39-year-old copywriter from Hal Riney & Partners Inc., her witty campaigns include the Schweppes ads with comedian John Cleese.
But Spivak's presence hasn't helped Y&R's flagship office snare much new business yet. Last year, the agency competed for the $20 million Weight Watchers International account but lost out to Earle Palmer Brown. And it teamed up with a subsidiary agency, Wunderman Worldwide, in a bid for the $60 million American Express Green Card account that failed, even though Wunderman handles other AmEx business. DeDeo concedes that the flagship shop has been in a slump but predicts it will rebound.
MASTER PLAN. For her part, Spivak, who started her working life as a secretary and aspiring actress, says she pays little heed to critics who assert she has yet to put her imprint on the New York office. She insists she is only in the second year of a three-year plan to rejuvenate the department. Spivak points out that she has hired David Harner and David Johnson, a sought-after team who worked on the flashy Pepsi ads at BBDO Worldwide. "In the third year, things will come together," she predicts.
Three years may seem like an eternity in the 30-second world of advertising. Yet Kroll says he is pleased Spivak is taking a measured pace: "Nobody believed this would be as easy as walking from Macy's to Gimbels," he says. Indeed, if Spivak can help recapture Young & Rubicam's creative elan, Kroll will consider it well worth the wait.
A BUMPY RIDE FOR Y&R Key account moves in the last 18 months Annual billings (Millions) RESIGNED TRANS WORLD AIRLINES $45 LOST R.J. REYNOLDS' CAMEL CIGARETTES 30 JOHNSON & JOHNSON BABY OIL, POWDER, AND LOTION 15 WON NINTENDO (EUROPE) 30 DATA: COMPANY REPORTS, ADWEEK