J. Walter Thompson: A Star Is Reborn
At the May luncheon of the Ad Club of New York, the big news didn't have anything to do with the latest advertising trends. The real buzz concerned the return of one of the ad world's most popular and influential figures. Seated at the J. Walter Thompson Co. table was Charlotte Beers, the most powerful woman ever to work on Madison Avenue, who has recently come out of retirement to take the chairman's job at JWT. Beers's presence was a keynote event. Two of the day's three speakers interrupted their prepared remarks to welcome her back. "[She's] one of the old guard," says Burt Manning, 68, ex-JWT chairman and an advisor with the American Association of Advertising Agencies, known as the Four A's. "Back to do what we do best."
That's the hope of JWT, and by extension much of the industry as it scrambles to remain relevant at a time when traditional notions of how to market products to consumers are undergoing rapid and radical change. Nowhere is the fallout from that change more apparent than at J. Walter Thompson, a 135-year-old agency that helped to invent the very concept of modern advertising. But these days, its influence is on the wane. Facing pressure from upstart Internet agencies, specialized consulting firms, and even their own clients, who are increasingly orchestrating their own branding strategies, agencies like JWT are losing clout with customers.
That's where Beers comes in. An industry veteran known for her glamorous friends--Martha Stewart and Ellen Burstyn are pals--and her ability to cement client relationships, Beers has been lured back from emeritus status to take the chair at Thompson, where she began her advertising career 30 years ago as a lowly assistant account executive. It's a challenge Beers, 63, didn't need to take on. She retired in 1997 after a long and triumphant career that included the turnaround of ad agency Ogilvy & Mather Worldwide Inc. in the '80s, the top slot at Chicago-based agency Euro RCSG Tatham, and a stint as the first woman to head the Four A's.
Beers brings to her latest job decades of experience during Madison Avenue's glory days in the '70s and '80s. The obvious question: In an age when clients are demanding an array of marketing techniques that barely existed when Beers entered the business, is she the right person to reinvent the traditional ad agency? To many in the industry, her ascension signals a return to the days when the ad agency was the guardian and steward of the client's brand. But some marketing experts are less sure. "This is either the new beginning or the last dance of the dinosaurs," says Sam Craig, professor of marketing and international business at New York University.
The Queen of Madison Avenue faces a twofold task: She must keep old clients satisfied with the traditional services at Thompson while simultaneously inspiring the firm to rethink its mission. From her Queen Anne-furnished office in Thompson's Manhattan headquarters, Beers is attempting to recast JWT as master brand strategist. She's crafting a detailed mission statement for the firm. To bolster the new Thompson, she's aggressively recruiting talent in hot areas such as Internet and entertainment marketing. She brought in Mary Baglivo, CEO of a Chicago ad agency, as chief marketing officer to burnish the Thompson brand and sell the new vision to both staff and clients. "We are being called upon to articulate a vision for our time. That's not a strategy, it's a context for the future," Beers says. "I'm here as part of true period of reinvention."
Thompson is still a master at what used to be the most prized form of advertising--the TV commercial. It boasts in its archives such classics as Maxwell House coffee's "good to the last drop" and Rice Krispies' "snap, crackle, and pop" campaigns. But Thompson is less well known for what is currently in hot demand by companies: brand building. That's the broader construction of a product's image and associations. It may involve direct marketing, licensing, sponsorships, public relations--whatever it takes to connect with consumers.
"MAP CHANGE." As a result, Beers leads a company that is one of the biggest and best at what is now just a slice of a much broader marketing pie. Longtime agency consultant Alvin Achenbaum estimates that 20 years ago, companies devoted 90% of their marketing budgets to advertising and the rest to other promotional efforts. Today, advertising commands maybe a third of the budget. "That's quite a map change," he says.
Meanwhile, even Thompson's vaunted ad business is taking some hits. Although JWT gained such clients as Merrill Lynch and Qwest Communications International Inc. in the past year, it has also lost some biggies, such as Sprint and Dell Computers. JWT is holding steady financially. Parent company WPP Group PLC doesn't break out results for the agency, but revenue last year rose 8.3%, to $414 million, according to Advertising Age. Still, the client defections are worrisome. "We need to send the clear message that we are the best caretakers of brands," Beers says.
Months before she accepted the new job, WPP Group Chief Executive Martin Sorrell had already enlisted Beers as ad hoc counsel to Thompson's CEO, Christopher Jones, 43, as he wrestled to retain the firm's grip on big-name clients. But if Beers sees herself as the ad world's Michael Jordan, lured out of retirement to reenergize team and league, she isn't letting on. She's quick in almost every encounter to bill her efforts as a duet with Jones. "Working together allows us to bring our different strengths to the job, philosophical and operational," she says. Jones concurs, but adds: "Charlotte is not here to run JWT. I run JWT." And until last winter, Beers was essentially out of the business, happily walking her white toy poodle on a Florida beach and contemplating a book project.
It's no huge surprise that Beers was not ready to retire. Divorced, with a grown daughter, she's been career-driven for most of her life. The grand piano she bought herself as a retirement present sits in her living room untouched because Beers could never quite squeeze in time for lessons, even after she supposedly ratcheted down her hectic schedule. Friends like financier Darla Moore say Beers couldn't resist a challenge like the reinvigoration of JWT. "I'm not surprised. It's just the sort of thing she'd be attracted to," says Moore.
DRILL TEAM. Stories of Beers's ability to charm clients abound, from the time she wowed the Sears, Roebuck & Co. team by casually assembling a power drill during an account pitch to her role in teaming with Ogilvy exec Shelley Lazarus to lure the entire $500-million IBM account to Ogilvy. A smooth talker with a dry sense of humor and a hint of her native Texas drawl still intact, she objects to her reputation as one of Madison Avenue's all-time best schmoozers. "Makes it sound like all the important work I do is just about eating lunch and playing golf," she says. Beers insists it is her vision for brand stewardship that makes her popular with clients. Yet her charm is most closely associated with her success. "People like Charlotte; clients know her. It's no small thing in a business where relationships are so important," says Allen Rosenshine, head of rival agency BBDO Worldwide in New York.
Her crowning achievement was taking beleaguered Ogilvy and turning it into a powerhouse. But more than just bringing in new business, what industry watchers most remember about her Ogilvy years was her introduction of something called Brand Stewardship. It's a map for turning an ad agency into the total manager of a company's brand. Beers has championed a similar program at JWT, called Thompson Total Branding. Her efforts today are drawing both praise and skepticism. "It's what clients want, for sure, but it's not something you can do quickly," says Alan Siegel, CEO of Siegel & Gale, a consulting firm specializing in brand building.
Perhaps not, but Beers, who tends to view the world in terms of brand strategies, brings a passion to the effort. She attributes the success of her favorite TV show, Law & Order, for example, to good brand management that's given the series a clear identity. "That's how it's survived so many cast changes," she says. Beers wants JWT to accomplish the same thing for clients. "At the end of the day, I don't want them to say, `You give us the best service' or even `You give us the most award-winning advertising,"' she says. "I want them to say, `We don't dare take that brand from Thompson."'
EMOTIONAL LINK. Plenty of other ad chiefs are fighting the same battle, as the industry becomes increasingly marginalized in the marketing universe. At June's meeting of the American Advertising Federation, major corporate clients stunned their ad agencies by ranking advertising sixth out of seven marketing strategies, trailed only by legal counsel. Sixth. While not openly hostile to their agencies, it's clear that companies no longer consider traditional advertising as crucial.
How did the masters of promotion fail overwhelmingly to promote themselves? By failing to change with their clients. Over the past decade, corporations have taken the concept of brand building to a new level that TV commercials only partially address. Clients want to give their products the kind of emotional connection with consumers that has equated Coca-Cola with refreshment, Jaguar with luxury, and Disney with family entertainment. Ads helped to create those images, but the actual consumer experience, the sponsorships, and other forms of marketing were just as important. "Ads build awareness. That's only part of the package today," says Sergio Zyman, chairman of the Z Group, a consulting firm, and former ad chief for Coca-Cola Co.
These days, the need to break through the clutter and reach the consumer has spawned the rise of the marketing consultant as brand builder. By offering specialized services such as event marketing or licensing, the consulting industry has wooed once-loyal agency clients. They've convinced many to spread their trust and marketing dollars around, leaving agencies in the role not of brand steward but of service vendor. The consulting firms have also done a better job attracting top talent to their firms with higher salaries and the chance to work in disciplines that are perceived as more cutting-edge. "This profession doesn't have the sex appeal it had when I started way back when," says Manning. "All the kids have Internet and management-consultant fever."
INTERNET NEWBIE. In fact, the Internet poses a particular threat to traditional agencies such as Thompson. In addition to luring away young, talented minds, it is admittedly a mystery to veterans like Beers. Kevin Wassang left a new-media production company to join JWT earlier this year as director of digital communications. He points proudly to the colorful new iMacs and other Internet tools in the agency's offices. "Six months ago, it wasn't anything like this," he says. Another of Thompson's newly hired Internet experts recently gave Beers a briefing on the digital advertising the agency designed for Merrill Lynch. "It's a totally new vocabulary for me," says Beers. But while Beers is on the learning curve, upstart Internet firms are sprinting ahead to carve yet another slice from the marketing communications pie.
Beers faces another threat from an unlikely source: her own clients. Advertisers have increasingly come to believe that brand management is too crucial to entrust to an outsider. At a recent presentation to Kellogg Co. for the relaunch of breakfast cereal Smart Start, Thompson Group Creative Director Alan Plantt made a pitch steeped in Beers's concept of Total Branding. The campaign, including striking photography, direct marketing, even giant billboards, went over beautifully. But as the meeting broke up, Fred Jacques, Kellogg Co.'s ad chief, made it clear that he sees the agency's job as buttressing a strategy that he and his team control. "Brand strategy is my job," says Jacques. "We get to 90%--we look to our agency to get us over the line."
Even at Ogilvy, where Beers was hailed for creating a brand-strategy blueprint, few clients look to the agency to be the primary brand steward. Longtime Ogilvy client American Express, for example, turns to Ogilvy for TV commercials and print ads, including its popular Jerry Seinfeld campaign. But responsibility for the overall AmEx brand is handled in-house, says John D. Hayes, executive vice-president for global advertising and brand management at AmEx. "Your brand has to live inside your company," he says. "We hire partners who best suit our needs, not ones to do everything."
Even JWT's happiest clients are eating into the agency's pie. Merrill Lynch's Charles V. Mangano, head of brand management, says his firm is thrilled with the ad work JWT has produced this year. But who is the brand strategist? "That aspect is developed in-house," he says. "We were impressed at how well J. Walter came in and picked up on the strategy we have for our brand."
That doesn't faze Beers, who's moving quickly on all fronts to revamp Thompson. By the end of the year, Beers's vision statement will be translated to video and shown to JWT's entire worldwide staff of more than 8,000. She's also working to attract new expertise. Marina Hahn, an expert in entertainment marketing, was recently lured from the talent firm William Morris Agency Inc., where she crafted movie tie-ins for clients such as Tommy Hilfiger Corp. Now she'll develop similar programs for clients such as Unilever PLC. "We are all about transforming the ad agency business," she says. "I'm not here to worry about 30-second commercials."
Neither is Beers, who leaves much of the day-to-day client meetings and projects to the vast JWT staff, putting her time into big-picture efforts such as last month's retreat for high-level staffers and broad strategy discussions with clients. Already, things are looking up. Even if clients aren't ready to hand over brand strategy to the agency, they are ready to give it some of their business. So far this year, Thompson has attracted $645 million in new billings--roughly $90 million in revenues--with accounts from Ragu, Kimberly-Clark, and others.
Despite those gains, however, Beers's broader goal of repositioning the agency as overall brand strategist remains a long shot. It's clear that Beers can boost billings for her firm, thanks to her bulging Rolodex and unparalleled ability to woo business, but even her supporters wonder if she can fundamentally expand the role of the ad agency. "Brand building is bigger now than the industry that invented it," says Achenbaum. It may well be that despite their best efforts, ad agencies will never again be the sole guardians of brand imagery, but simply part of a larger marketing army. And that will be a hard role to play for the members of the old guard.
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