Advertising Age November 30,1998 Burnett’s Second Wind One year later: With a spate of recent wins, the agency is possibly on the edge of a revival By Mercedes M. Cardona Every December, staffers at Leo Burnett Co.’s Chicago headquarters convene for an "anti meeting. The gathering is a rite that mixes traditional financial updates with farcical skits that both parody and trumpet the past 12 months’ events. Next week, as Burnetters assemble for the 17th annual "breakfast," as insiders call it, the company will have much to crow about– some $713 million by last count. That’s how much Burnett has added this year in disclosed billings alone, albeit a majority in media assignments. At this time last year, the agency was still reeling from a drastic reorganization, $430 million in lost billings and a spate of bad publicity that characterized Burnett as a dinosaur unable to navigate in the digital age. Even the most optimistic Burnetters acknowledged 1997 was a tough year. At last year’s breakfast, staffers clung to the future, heralding the companywide reorganization as the agency’s salvation. In a spoof of the hit song "Men in Black," a Will Smith soundalike rapped: "The thrill was gone but we’re coming back! W’e’re gonna kick some butt with our men in black…It’s been a tough year! We’ve felt hurt/But it couldda been worse/Look at Maw Albert." The chorus: "Leo’s back/We’re gonna have some fun again." The singer seemed to speak for all Burnetters when he pulled out the film’s trademark, pen-shaped memory eraser" and said: "Let’s just forget about 1997. Now, with the successes of recent months, staffers planning this year’s breakfast video could quite possibly take a page from another Hollywood script: "Groundhog Day." With some $700 million in new billings, who wouldn’t want a repeat of this year? MINIAGENCIES It’s been nearly 15 months since the breakup of Burnett into seven "miniagencies" plus a standalone media operation. The minis, called Agency A through G, are staffed with personnel from client services, planning, creative, production and media. They are Burnett’s answer to the question how do you stay nimble while remaining a sizable force in the industry. The proverbial jury is still out on whether events of the past 15 months signal a true turnaround or simply a short-term uptick. One thing is clear: the alphabet agencies have helped trim the Burnett bureaucracy by divvying up responsibility over their 35 accounts. Now, for example, creatives and account execs work side by side, instead of in separate departments, several floors away. Previously, Burnett had been so departmental that just moving among groups–creative, media and account management–required a ride to the lobby and different elevator banks. "We said, ‘Get used to it, or get out, with our blessings’" said Chairman-CEO Rick Fizdale of the new structure. The proximity, staffers say, adds a seamless bond to the overall process. Creatives were initially apprehensive about sitting around the account and research staff, but they have gotten used to their new neighbors, said a former Burnett executive who was there during the transition. ‘THE NEW BURNETT’ The company’s recent win of the $50 million H.J. Heinz Co. ketchup business was a test of what management calls "the new Burnett," a recharged agency that can turn a pitch around in six weeks. The agency is also trying to do more to encourage its new employees. In the past, difficulty climbing the chain of command had been a source of frustration for younger staffers, according to one Chicago-hased executive recruiter. Burnett is trying to give young creatives more responsibility early on, said Cheryl Berman, chief creative officer of Leo Burnett USA. For example, the team that developed the new Pop Tarts ad for client Kellogg Co. had two weeks between when it was assigned and when it created the spot. Even existing clients seem content with Burnett’s minis. Michael Sands, advertising manager for General Motors Corp.’s Oldsmobile division, counts himself one such satisfied client. Today, the marketer has Agency F all to itself, whereas before, Burnett creatives worked on other accounts in addition to the $229 million Olds business. With the dedicated creatives, there has been steady improvement in the quality of Burnett’s work, Mr. Sands said. Dealer groups seem to agree; Burnett’s recent work for the launch of Oldsmobile’s Alero was greeted with enthusiasm from dealers. ‘The work is outstanding, which shows the new way is working," Mr. Sands said. BURNETT ON ‘A JOURNEY’ Not everyone is that starry-eyed. Burnett may have quieted its critics but it hasn’t silenced them yet. Changing a large, venerable organization is not a short-term job, said Norm Rickeman, partner in the media and entertainment practice at Andersen Consulting. "You can make measurable improvements in a year, [hut] it’s a journey. You can be on a journey for a long time," he said. Critics of the reorganization say the business units are confusing, adding another layer of management onto an agency that was considered too bureaucratic already. The business units have not established well-defined identities and are still just more of the same Burnett, critics claim. Linda Wolf, group president-North America at Burnett, counters that the divisions and the chain of command are clear: Each unit is judged on its merits and the results it achieves for its clients. Resources and support are allotted as needed so "people are not fighting for dollars," she said. Longer-term, skeptics say Burnett still hasn’t clearly stated what it eventually wants to become or how it plans to continue to operate as a stand-alone, privately held agency network. To be sure, Mr. Fizdale has admitted the changes so far are part of a larger plan. Although executives have hinted at sectors they’re targeting for growth–technology and healthcare–no one has publicly laid out more than a rough sketch of Burnett’s long-term strategy, something that observers say may become clearer when Mr. Fizdale announces a succession plan by yearend. Then there’s that niggling debate over creative vs. media accounts. Observers point out–not for attribution, of course–that a good majority of this year’s new billings are in media buying, not traditional full-service business. Nearly 59% of this year’s $713 million-plus in new global billings, critics point out, is from Starcom Media Services, Burnett’s media buying unit. The agency, they argue, is still on shaky ground when it comes to preserving creative accounts. The Kellogg review was seen as an example of that. The longtime client had said it wanted to add a third agency to its roster–a move that was expected to come at Burnett’s expense. Last week, Kellogg announced it had added the Martin Agency to its list of shops. But details were still sketchy whether Burnett would lose billings. Further announcements are still pending. Even the agency’s executives acknowledge Starcom’s contribution. At last year’s annual meeting, Burnetters joked the breakfast show was sponsored by "a generous financial grant from Starcom …Follow the money." But executives also stress the strides the company is making in other areas. "We’re continuing with our aggressive acquisition and diversification drive and adding substantial new business across our general-agency roster,’ said a Burnett spokesman. AGENCY EXPANSION The agency is expanding in a variety of directions, from acquisitions to joint ventures that offer clients a larger menu of offerings. Over the past 18 months, Burnett has acquired or invested in five separate entitles. Last December, it launched Vigilante, a New York-based agency that specializes in marketing to urban customers and bought a 49% stake in London creative hot shop Bartle Bogle Hegarty. Seven months later, it acquired TFA Communications, a Chicago-based business-to-business shop that focuses on technology clients. Burnett also has hired a raft of executives during the last year to expand its direct and database marketing functions. Tim Claffey, previously general manager of OgilvyOne, Chicago, signed on in March to head Burnett’s direct and promotions unit. He was followed by Janet Horn, another OgilvyOne executive, who now runs Burnett’s efforts on database management. ‘FULL SERVICE OR ELSE’ NO MORE Burnett’s mantra had been "full service or else," Mr. Fizdale said. But he added that, with clients increasingly unbundling advertising and affiliated disciplines, Burnett is concentrating on building other marketing disciplines so they can be packaged on their own. "Marketers have tremendous choices and they’re shopping a la carte. We have to offer those choices," added Roger Haupt, Burnett’s vice chairman and chief administrative officer. Acquisitions to build up the direct and database operation are under consideration Burnett executives say. The agency is also exploring the possibility of spinning it off into a separate unit much like Starcom. While Burnett claims it is changing everything about the way it does business, there is one principle management won’t budge on: The company won’t go public. Burnett has been rumored to be in talks with Japan’s Denrsu and New York-based MacManus Group–parent of D’Arcy Masius Benton & Bowles and N.W. Ayer & Partners–as well as with outside financial investors seeking a partial stake. Mr. Fizdale won’t address the rumors, except to say Burnett will listen to anyone. TELE VEST MERGER UNDONE As much as Burnett is ready to change its culture, it seems reluctant to adopt someone else’s. Two weeks ago, Burnett and MacManus mutually suspended discussions to merge Starcom with MacManus’ TeleVest media unit. Mr. Fizdale cited "fundamental differences of opinion on how to best run such a massive operation. Amassing size is not a cure-all, said Andersen’s Mr. Rickeman. Holding companies focus on acquiring, but few bring all the parts together in a way that appeals to a client, he said. A private agency that brings those capabilities together well and doesn’t overextend itself in acquisitions and expansion can operatesuccessfully, he added. "If that agency really understands what the client wants and has access to the services their clients need . . . If they have focus, I see no reason why they can’t survive" as a private company, Mr. Rickeman said. Who knows? Next week’s breakfast just may begin with another hit song: Gloria Gaynor’s "I Will Survive." Contributing: Jean Halliday, Judann Pollack, Laurel Wentz. The bird’s-eye view Burnett ranks among the top five agencies in the U.S., as measured by gross income. While its peers are all part of public holding companies, Burnett remains one of the country’s few privately-held shops. Rank U.S. agency organization Holding company Headquarters U.S. gross income (millions) U.S. volume (millions) U.S. staff 1 J. Walter Thompson Co. WPP Group New York $387.8 $2,698.5 2,435 2 Grey Advertising Grey Advertising New York $387.7 $2,586.1 3,339 3 Leo Burnett Co. None Chicago $386.0 $,2.649.3 2,237 4 McCann-Erickson Worldwide Interpublic New York $386.0 $,2.649.3 3,833 5 Foote, Cone & Belding True North Chicago $321.3 $3,386.0 2,390 One stellar year Burnett’s various units have snagged more than $713 million in new global billings. Here are some key wins: • Procter & Gamble Co. Gain detergent Gain, Pepto-Bismol–Hispanic marketing Vidal Sassoon–global U.K. media buying $16 million to $17 million Undisclosed $45 million $287 million • The Gap (outdoor media) $1 million • Kraft Foods (outdoor AOR) $10 million • Searle & Co. (Celebra Rx drug, global) $30 million • Fila $40 million • Walt Disney Co. (DisneyQuest) Undisclosed • Sprint Corp. (African-American marketing) $20 million • Mallinckrodt (OptiMark) Undisclosed • Johnson & Johnson (Critikon) Undisclosed • E! Entertainment TV (media AOR) Undisclosed • H.J. Heinz Co. (Heinz ketchup, global) $50 million • Cola Co. (Coca-Cola brand, Sprite– Hispanic marketing) $15 million • Follett Software Undisclosed • Gooitech (brochures, data sheets) Undisclosed • Budget Rent-A-Car Corp. (media buying) $35 million • younology (AOR) $4 million • Sara Lee Corp (media buying) $100 million • Hoechst Marion Roussel (Allegra Rx drug) $50 million • Major League Baseball (fan advertising) $10 million to $15 million The alphabet agencies and their clients AGENCY A (the Agency formerly known as A) Hoechst Marion Roussel, Allstate Insurance Cos., Eli Lilly & Co., Nature Made Vitamins, Chicago’s Northwestern Memorial Hospital, Procter & Gamble Co., Searle & Co. AGENCY B (Black Pencil) Coca-Cola Co., Jenn-Air, Kraft Foods, Maytag Corp., Pillsbury Co., Sealy Mattress, United Distillers USA AGENCY C (AgenC) Marshall Field & Co., Miller Brewing Co., New York Stock Exchange, Philip Morris USA, Philip Morris International AGENCY D (iDea) Arthur Andersen, Carpet & Run Institute, Dairy Management Inc., Morgan Stanley Dean Witter & Co., Hallmark Cards, Kraft Foods, National Cattlemen’s Beef Association, J.M. Smucker Co. AGENCY E (EKG) Amoco Corp., Commonwealth Edison, McDonald’s Corp., Service Merchandise Co., TruServe AGENCY F (Agency Frank–A swinging subdivision of Leo Burnett) Oldsmobile AGENCY G (Alcatraz) Keebler Co., Kellogg Co., Nintendo of America, Walt Disney Co. Squeezing out victory in review for Heinz Talk about room service. As part of its pitch to recap-ture the account of H.J. Heinz Co., a team of Burnetters converted a conference room at the Doubletree Hotel in Pittsburgh into a diner, with checkered tablecloths and bottles of ketchup perched on every table. But the woman who now serves as global creative director on the Heinz account says it was the transformation of the agency, not of a hotel room, that handed Burnett its victory. The agency’s pitch team was intentionally kept small–consisting of eight U.S. and three London-based staffers– so it could work quickly, said Lisa Bennett, who also serves as senior VP and managing creative director of Burnett’s Agency E business unit. There were only two small creative teams, she said, while in the past, Burnett would have marshalled anywhere between five and 10 teams. "We all rallied around one idea and tried to make it as strong as we could." whereas before we would have had to choose among many ideas," Ms. Bennett said. The pitch team brainstormed in Chicago and, after the initial presentation in Pittsburgh, traveled to London for the final pitch. In Burnett’s London office, the team again worked its decorating magic, converting a conference room into an eatery. The presentation, too, represented a departure from the old Burnett. In the past the agency would have carted out reels of past work to prove it understood the brand. This time, the focus was on concepts for TV, print and new-media advertising that proved the team understood not just where the brand was or is, but where it wants to go in the future, she said. Some agencies that lost the review maintain the deck was stacked in Burnett’s favor; Heinz CEO William Johnson has a long history of working with Burnett, Heinz’s agency until it resigned the account in 1994. But a newcomer in the review, Casey Keller, Heinz USA’s VP-meal enhancement, said Burnett’s victory was hard-won. "There was very fresh thinking, great direction," on the part of all the agencies, he said. Burnett’s effort "pushed the envelope, which is what we wanted to see." –Mercedes M. Cardona Next Article Press Archive