Days Of Doubt For A Creator Of IconsJulia Flynn
Richard Fizdale calls it the low point in his nine months as chair man and chief executive of ad agency Leo Burnett Co. On Sept. 16, General Motors Corp.'s Oldsmobile Division said it would put its advertising business--a Burnett account worth some $140 million in billings--up for review. It is the first time in decades that a GM division has publicly considered ditching an ad agency. For Burnett, the giant Chicago shop with almost $4 billion in billings, it is the first major account to be at risk since it resigned RCA's business in 1987. Suddenly, Burnett, which had seemed to defy gravity in the recession, looks vulnerable.
Oldsmobile's move set the ad world buzzing about Burnett's setback. But the 53-year-old Fizdale has already had his share of headaches in his brief tenure. Burnett's work on the $110 million Miller Lite account--remember "It's It and That's That"?--has been derided as ineffective by ad gurus and Miller distributors. The tag line is out, and now Burnett has to work with a new president at Miller, longtime Anheuser-Busch Cos. executive Jack N. MacDonough. Fizdale has his internal challenges, too. In May, Burnett Vice-Chairman John C. Kraft, the agency's finance man, abruptly quit. Kraft exited just as Fizdale was trying to turn Burnett from a traditional ad shop into a provider of multiple marketing services. That effort, says one recently departed executive, has caused enormous controversy at the firm.
It's premature to proclaim Burnett, which created the Marlboro Man and the Pillsbury Doughboy, an agency adrift. Some competitors even see Burnett's travails as a sign of too much success. Says Carl Spielvogel, chairman of rival agency Backer Spielvogel Bates Worldwide Inc.: "When you win a lot of new business, there's always a need to digest it. Burnett has had a helluva ride." Since 1991, Burnett has been the winner of such coveted accounts as Miller Lite, Sony, Nintendo, and the Beef Industry Council. And robust growth overseas will probably produce a gain in overall billings this year. In 1992, billings from Burnett's international business are expected to top domestic billings of $2 billion or so for the first time.
TROUBLE AHEAD. But U.S. billings are flat for the third year in a row. So losing Oldsmobile would be particularly painful for the shop, which so far has avoided layoffs. Olds represents 7% of Burnett's domestic billings, and the agency, a privately held company, employs 107 staffers in a Southfield (Mich.) office dedicated to the Olds account. Burnett will now compete for the business against other agencies, but incumbents rarely succeed in winning accounts back. "The review may not necessarily be about failure," says Leonard Pearlstein, president of ad agency Lord, Dentsu & Partners. "But it still means trouble for Burnett."
Burnett's trouble may have started in the late 1980s, when its slogan "The New Generation of Olds," and later "The Power of Intelligent Engineering," failed to boost the carmaker's sales. At the fourth largest GM division, car and light-truck sales slipped 8.2% in the model year that just ended last month. Says Fizdale, who has overseen the account, "Olds thought the ads were good enough to spend millions on them."
Now, Olds's new chief, John D. Rock, and new marketing man, W. Knox Ramsey Jr., want changes. "There's been criticism from the dealers for some time," says Ramsey. He says Olds must shoulder part of the blame: "I'm not sure we've been the greatest client." But, Ramsey adds, "it's felt that advertising is a piece of it."
Fizdale says Burnett's "world-class resources" will help retain the Oldsmobile account. Whatever happens, he also must tend to Miller Lite. The brewer says that Lite's sales trends are improving. But Jerry Steinman, publisher of the industry newsletter Beer Marketer's Insights, estimates that the brand's total 1992 volume declined 4.5% through July, against a drop in all premium brands of 2.5% during the same period. And the Philip Morris Cos. unit's decision to hire MacDonough, the marketing executive responsible for the successful "This Bud's For You" campaign, is a clear sign of changes to come. Indeed, within two weeks of joining Miller, MacDonough traveled to Chicago to meet with Burnett for an orientation meeting. MacDonough declined to comment.
Fizdale may also have some fence-mending to do inside Burnett. According to a recently departed senior staffer, Fizdale has bruised many an ego by pushing hard on a plan to make Burnett "media neutral"--offering clients an array of marketing, public relations, and promotional services, not just traditional ads. Fizdale believes this push will position Burnett to serve clients in the years ahead. Longtime client H.J. Heinz Co., for example, is shifting the bulk of its budget from media advertising to promotions. By offering such nonadvertising services as direct mail, Fizdale hopes Burnett won't lose out in such switches.
THE CRITTER SHOP. Problem is, Fizdale's expansion into integrated services comes in the midst of an austerity program for the rest of the agency. "Fizdale's strategy is bleeding the agency dry," says the ex-Burnett officer, explaining that the push has required sizable investments in training and personnel and has hurt morale on the ad side. Fizdale admits there's "some anxiety" but adds the majority of staffers support the strategy. And although insiders speculate that Kraft left because of the changes, Fizdale maintains that Kraft backed him. Kraft could not be reached.
An integrated approach would represent a radical departure for Burnett, which has remained tightly focused on media advertising. Burnett's prowess has been in creating icons, not coupons. It earned its nickname "The Critter Shop" by producing characters, such as the Jolly Green Giant and Charlie the Tuna, that worked perfectly in mass advertising. And Burnett's fidelity to the old agency ways contrasts with other agencies and agency conglomerates, such as WPP Group PLC and Young & Rubicam Inc., whose experiments in integrated marketing have yielded largely unimpressive results.
As he engineers changes, Fizdale wants to maintain Burnett's fanatic loyalty to clients. Staffers on the McDonald's Corp. account, for example, wear McDonald's wristwatches and answer the phone "McDonald's Group," rather than "Leo Burnett." That same intensity helped Burnett win the Beef Industry Council account last year: Staffers went on tours of cattle ranches to prepare the pitch.
And despite the unmemorable slogans coined for Olds, others cherish Burnett's work. "They've put together one of the best creative groups in the country," says John E. Ruhaak, United Airlines Inc.'s vice-president for advertising. The agency's campaign for United, featuring George Gershwin's Rhapsody in Blue, has garnered lavish industry praise. In part, that's the result of Burnett's practice of pitting creative teams against each other and choosing the best work. In a meeting in late September, five separate agency teams presented three months' worth of work to Ruhaak, who picked new ads for a campaign introducing Europeans to United.
Fizdale is relying on such satisfied clients to help him through the rough times. The fight for Olds will be brutal. And by pushing Burnett into integrated marketing, he is challenging the status quo. Then again, it isn't the first time Fizdale has done that. On his first day of work in 1969, he recalls, he met legendary founder Leo Burnett. Sporting bell-bottoms, a tie-dyed shirt, and a bell tied around his ankle, the 29-year-old copywriter didn't exactly groove with the 78-year-old chairman. As Fizdale tells it, Leo Burnett took one look, shook his head, and said: "You better be good." As chairman, Fizdale will have to prove just how good he is.
GOOD NEWS AND BAD NEWS FOR LEO BURNETT STRENGTHS LONG-TERM CLIENTS Pillsbury (48 years), Kellogg (43 years), Philip Morris (38 years), Maytag (37 years), Allstate Insurance (35 years), and United Airlines (27 years) NEW BUSINESS 1991 wins include Sony U.S.A. ($70 million billings), the Beef Industry Council ($25 million), Nintendo ($50 million), and Benson & Hedges ($40 million) OVERSEAS GROWTH New international assignments this year include Goodyear (Latin America and Asia), 3M (Middle East), and Sony (Greece, Philippines, Malaysia) CHALLENGES TROUBLED CAMPAIGNS Both the $140 million Oldsmobile and $110 million Miller Lite campaigns have suffered from so-so ad copy, confused messages, and multiple revisions SLOW-SPENDING CLIENTS Core U.S. clients are cutting back on domestic ad spending, making it vital to win additional clients and hold on to existing business MANAGEMENT CHANGE CEO Fizdale is trying to refocus Burnett to meet all of a client's marketing needs, not just advertising, a big shift from longtime strategy DATA: COMPANY REPORTS, BW
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