At Y&R, A Quiet Man Wins In A Noisy Business
When the Iron Curtain came down on Romania in 1947, 8-year-old Peter Georgescu was sitting in a classroom in Bucharest. His father, Valeriu, an executive at Standard Oil, was at a business meeting in Rockefeller Plaza. Branded a capitalist enemy of the socialist state, the elder Georgescu, along with his wife, was barred from their homeland. Peter, his 13-year-old brother, Constantin, and their grandmother were put under house arrest. For 12 hours a day, six days a week, the boys dug holes and cleaned sewers.
They didn't see their parents again for seven years. Asked to spy for Romania to earn his sons' release, Valeriu went to the FBI. Ultimately, President Dwight D. Eisenhower intervened to win the boys' freedom. Arriving in the U.S. in the spring of 1954, they were hailed as anticommunist heroes. Their photo ran on front pages. Within two weeks, they threw out the first pitch on opening day at Brooklyn's Ebbets Field and appeared, with a translator, on The Today Show and The Ed Sullivan Show. "Ludicrous. Unimaginable," says Georgescu, still at a loss to describe his transformation from prisoner into icon.
It is perhaps fitting that today, more than four decades after becoming a cold-war hero, Peter A. Georgescu sits in a nerve center of free-market capitalism: the corner office at Young & Rubicam Inc., owner of Young & Rubicam Worldwide Advertising, one of the biggest agencies in the world. "This is still a war," he says, laughing at his own comparison. "An economic war."
GRIT. Georgescu, 57, has brought the same quiet intensity to his career that he once applied to remaking himself from a boy without education into a varsity soccer player majoring in political science at Princeton University. Named CEO of Y&R in January, 1994, and chairman a year later, Georgescu has turned the ad agency, which had been losing ground for years, into one of Madison Avenue's hot shops. And on Aug. 12, he broke a 73-year tradition with the announcement that closely held Y&R Inc. was selling a minority stake to an outsider.
Georgescu seems to have barely paused for breath since Apr. 13, 1954, when he and Constantin touched down at New York's Idlewild Airport. By summer, he was at a camp in Maine, learning English. By fall, he was at New England's patrician Phillips Exeter Academy, where the headmaster admitted him after reading about him in the papers. By his own choice, Georgescu entered 10th grade with others his age. He squeaked by with a D average his first year and by graduation had a grade-point average "just north of average." He says he made it on grit, telling himself: "This is a time in life you have to work as hard as before, and you're certainly much better treated." Next came Princeton, then Stanford business school, and then, in 1963, Y&R.
Georgescu's 1994 promotion to CEO capped a climb through the ad business followed by stints as marketing director, then president, of Y&R Inc. Reinvigorating the ad agency, which accounts for 50% of revenues, has been the highlight of his reign. Y&R Advertising has wooed back AT&T, persuaded Colgate-Palmolive to consolidate its worldwide business--worth more than $500 million--with it, and helped rejuvenate Sears Roebuck with its "Softer Side of Sears" campaign. In 1995, the agency won $1.6 billion in new business.
"WAR CHEST." Other units of Y&R Inc.--there are nine in all--are also prospering. Burson-Marsteller widened its lead as the world's largest public-relations company in 1995, and design company Landor Associates beat its profit projections by a third, in part by snagging the contract to create Microsoft Corp.'s packaging. In 1995, worldwide billings for Y&R Inc. were $10 billion and gross income rose 15%, topping $1 billion.
Y&R's Aug. 12 announcement of a recapitalization plan that includes selling a minority stake to Hellman & Friedman, a San Francisco buyout specialist, ends its long run as a 100% employee-owned company. Georgescu says the plan was driven by three goals: to buy up smaller houses; to invest in online media, database marketing, and other things; and to buy back shares from former employees, consolidating control with current management. "We want to put together a war chest for acquisitions," he says. Hellman & Friedman's Warren Hellman says: "Had we not thought Peter was sensational, we would not have done this deal....He is a tremendous natural leader."
As CEO, Georgescu quickly refocused Y&R Advertising on making good ads. In recent years, it had become known as a kind of marketing think tank that turned out safe, uninspired campaigns--"the McKinsey of Madison Avenue," says one insider. Georgescu's message to his executive team: It's time to get humble--before others humble us.
In fact, others had already begun. AT&T and Johnson & Johnson had pulled their business, and by early 1994, the number of employees had fallen to 720 from 1,200. Now, Y&R has not only won back a good chunk of AT&T's business but has also added 7UP and Blockbuster Videos Inc., among others. Not that everything's perfect. Y&R's work has done little to halt 7UP's slide; Eastman Kodak Co. and Holiday Inn Worldwide went elsewhere in 1995; and Y&R, the largest U.S. ad agency in 1993, currently ranks third. But there's no doubt Y&R is on a roll. "Before he took over, it wasn't as sharp, and there was more internal dissension," says client Stephen A. Cone, chief marketing officer at Key, the Cleveland financial-services company.
Such raves notwithstanding, many companies see ads as an easy cost to cut. That's why Georgescu has become a leading voice for pay-for-performance contracts, in which agency fees are based in part on how well ads work. Y&R says it has earned more on the $40 million-a-year Sears campaign that way than it would have with a 15% commission.
Georgescu's strategy for the agency is guided by his belief that the slowing of the domestic and global economies over 25 years has made ad agencies indispensable. With massive overcapacity in industries worldwide, selling products is harder, and differentiating goods more critical. "Advertising," Georgescu asserts with no trace of irony, "is more important now than it has ever been in the history of the human species."
He delivers such pronouncements in idiomatic English cloaked in a velvety East European accent. Georgescu's famous drive is masked by a courtly style that gives him more the air of a professor than an adman. His office bookshelves hold not just predictable fare about branding but also biographies of Niels Bohr and John Maynard Keynes. In conversation, he happily digresses into a 15-minute discourse on the U.S. economy.
About his childhood ordeal, however, he is strikingly taciturn. Most of his colleagues first learned of it when his father died in 1993 and The New York Times recounted Valeriu's quest for his sons' freedom. Asked whether, as children, he and Constantin felt abandoned by their parents, Peter's response is terse: "They felt guilty. We never felt anger."
Because he was so young, he says, he got away with minor rebellions against his captors, such as mouthing off. He thinks his brother suffered more. Constantin later studied linguistics, worked in the Mideast, and taught. He also worked nine years for the National Security Agency, according to his 1992 obituary. All Georgescu will say is: "He worked for the government. Let's leave it at that."
Some colleagues think Georgescu's childhood experience has left its mark. "He has a peace about him that's very serene, and you don't see that a lot in advertising," says Theodore Bell, the agency's creative head. Georgescu agrees that he was left with an equanimity that persists no matter what's going on around him, whether it's account executives afraid of losing a client or Exeter classmates anxious about an exam. "Having been in a work camp, you don't particularly worry about doing homework past nine o'clock at night," he says dryly. The fact is, Georgescu doesn't seem like somebody who spends a lot of time worrying about anything. That's especially so these days, when there's lots less to fret over at Y&R.