Wednesday, August 24, 2005
What Pat Fallon Said about being fired by BMW
I would give you the link, but as Laura Ries and I complain, the WSJ won't allow it. When will they ever understand the viral value of blog links?
So here is the article with full credit so the Dow Jones family does not get upset.
Questions for Pat Fallon
By BRIAN STEINBERG
Staff Reporter of THE WALL STREET JOURNAL
August 24, 2005; Page B3D
Pat Fallon has been raising eyebrows for years. Ads from his agency, Publicis Groupe's Fallon Worldwide, are hard to ignore, and often need more than one viewing to really sink in.
His agency's commercials have included such eye-popping sights as a group of cowboys herding cats over an open plain for EDS; people speaking in the voices of others to demonstrate the problems of identity theft for Citigroup; and a curious assemblage of Hasidic twins, a man in a Kwanzaa robe, a Buddhist monk, an Indian Santa wearing a turban and a naked girl covered by an oversized cellphone warbling an odd holiday tune for Virgin Mobile.
[Pat Fallon]
Mr. Fallon, 59 years old, has had an interesting time of it lately. He recently parted ways with BMW AG's BMW of North America. The auto maker opted to put its ad account into review after housing it with Mr. Fallon's shop since 1995. And his firm closed its New York office, betting that clients will make the trek to the heart of the firm's operations, in Minneapolis. Below, Mr. Fallon candidly discusses these developments and predicts that advertisers will still have a need for his cerebral brand of commercial, as long as it keeps evolving with consumer tastes.
The Wall Street Journal: Your agency is known for advertising that some would consider avant-garde. But at a time when more advertisers are calling for ads that create a traceable consumer response through phone numbers or Web addresses, is there still a place for that kind of stuff?
Mr. Fallon: Great creative and business results are not mutually exclusive. It depends on the job. [Commercials] can carry direct response, but it all has to be part of a total package. A TV ad doesn't need to be expected to do everything now, with all the media opportunities that are available. ... When you talk about direct-response or 1-800 numbers, you have to step back and say what role is this commercial going to play in an entire [marketing] program.
WSJ: Fallon was the force behind the popular BMWfilms, a series of short, Internet-based movies by critically acclaimed movie directors. Since that time, advertiser use of the Web has exploded, with all kinds of short pieces of content available. Have we gotten to the point where this sort of thing no longer stands out?
Mr. Fallon: Here's the thing: You've lost the first-mover advantage of being new. The surprise element of that is not there, and strategically, that's taking something away from you. ... [To keep things fresh] the execution with those should have some sort of customer reward, whether that be a surprise, or a challenge, some sort of reward that says this isn't the same as before. Because, really, sameness is the enemy of all of us. I do think that it just can't be another piece of content.
WSJ: Speaking of BMW, you recently decided not to take part when the auto maker put its ad account up for review. Advertisers put accounts up for review all the time. Why didn't you stick around to see if you would win?
Mr. Fallon: If you examine most accounts that are in review, there are significant business decisions driving the review. There is disappointment. There are sliding sales. ... There is something there in the marketplace that prompts a review, but we had 10 years of remarkable success -- back to back to back, quarter to quarter to quarter. Rarely do you see the most successful player in a category, particularly in a competitive category, review their business. So if there's not a business reason to renew it, I'm not sure it's the best use of our resources to go through four months of competition ... I guess in the end, I didn't think a review was appropriate and I couldn't get my head around the business reason for the review. Normally, we've been in situations where business has been put up for review and I said, 'You know what, somebody is going to have to take this from us because we are going to defend it with all of our might.' This is not our normal posture. ... We decided we'll live with the legacy of our work. [BMW declined to comment.]
WSJ: With independent shops such as Wieden + Kennedy and Crispin Porter + Bogusky all the rage, do you think you made a good decision when you chose to sell your agency to Publicis Groupe?
Mr. Fallon: We made a good decision because we had and have clients that have global reach, and if we weren't able to satisfy their global needs, they were going to find somebody that did. ... In a performance world, would we like to be independent? Yes, but the reality is that we had clients that had aggressive global needs, and we had to answer them. We had to be smart about it while keeping our culture.
WSJ: Fallon recently decided to close its New York office. Now your clients will have to make the trek to Minneapolis if they want to see you. Does an agency's geography make a difference to advertisers?
Mr. Fallon: Twenty-four years ago, Minneapolis got in the way. I'd say half the time, it got in the way, and 10 years ago, it got in the way a quarter of the time, and five years ago, it didn't get in the way at all. [During that time] we decided we needed a New York office, a kind of export office, because the world did business with New York. It didn't necessarily do business with Minneapolis. You know what? We were wrong. Our clients showed us that they are willing to come to Minneapolis.
WSJ: David Lubars, an ad executive widely seen as your successor, left Fallon to join Omnicom's BBDO last year. Do you need to name a successor?
Mr. Fallon: I will have a succession plan and team in place before I leave, and that's a very high priority for me. But as far as I know, I'm not going anywhere immediately -- unless you've heard something. ... Plus, you didn't know this, but I can bench press a Buick. So don't count me out too quickly.
Write to Brian Steinberg at brian.steinberg@wsj.com
So here is the article with full credit so the Dow Jones family does not get upset.
Questions for Pat Fallon
By BRIAN STEINBERG
Staff Reporter of THE WALL STREET JOURNAL
August 24, 2005; Page B3D
Pat Fallon has been raising eyebrows for years. Ads from his agency, Publicis Groupe's Fallon Worldwide, are hard to ignore, and often need more than one viewing to really sink in.
His agency's commercials have included such eye-popping sights as a group of cowboys herding cats over an open plain for EDS; people speaking in the voices of others to demonstrate the problems of identity theft for Citigroup; and a curious assemblage of Hasidic twins, a man in a Kwanzaa robe, a Buddhist monk, an Indian Santa wearing a turban and a naked girl covered by an oversized cellphone warbling an odd holiday tune for Virgin Mobile.
[Pat Fallon]
Mr. Fallon, 59 years old, has had an interesting time of it lately. He recently parted ways with BMW AG's BMW of North America. The auto maker opted to put its ad account into review after housing it with Mr. Fallon's shop since 1995. And his firm closed its New York office, betting that clients will make the trek to the heart of the firm's operations, in Minneapolis. Below, Mr. Fallon candidly discusses these developments and predicts that advertisers will still have a need for his cerebral brand of commercial, as long as it keeps evolving with consumer tastes.
The Wall Street Journal: Your agency is known for advertising that some would consider avant-garde. But at a time when more advertisers are calling for ads that create a traceable consumer response through phone numbers or Web addresses, is there still a place for that kind of stuff?
Mr. Fallon: Great creative and business results are not mutually exclusive. It depends on the job. [Commercials] can carry direct response, but it all has to be part of a total package. A TV ad doesn't need to be expected to do everything now, with all the media opportunities that are available. ... When you talk about direct-response or 1-800 numbers, you have to step back and say what role is this commercial going to play in an entire [marketing] program.
WSJ: Fallon was the force behind the popular BMWfilms, a series of short, Internet-based movies by critically acclaimed movie directors. Since that time, advertiser use of the Web has exploded, with all kinds of short pieces of content available. Have we gotten to the point where this sort of thing no longer stands out?
Mr. Fallon: Here's the thing: You've lost the first-mover advantage of being new. The surprise element of that is not there, and strategically, that's taking something away from you. ... [To keep things fresh] the execution with those should have some sort of customer reward, whether that be a surprise, or a challenge, some sort of reward that says this isn't the same as before. Because, really, sameness is the enemy of all of us. I do think that it just can't be another piece of content.
WSJ: Speaking of BMW, you recently decided not to take part when the auto maker put its ad account up for review. Advertisers put accounts up for review all the time. Why didn't you stick around to see if you would win?
Mr. Fallon: If you examine most accounts that are in review, there are significant business decisions driving the review. There is disappointment. There are sliding sales. ... There is something there in the marketplace that prompts a review, but we had 10 years of remarkable success -- back to back to back, quarter to quarter to quarter. Rarely do you see the most successful player in a category, particularly in a competitive category, review their business. So if there's not a business reason to renew it, I'm not sure it's the best use of our resources to go through four months of competition ... I guess in the end, I didn't think a review was appropriate and I couldn't get my head around the business reason for the review. Normally, we've been in situations where business has been put up for review and I said, 'You know what, somebody is going to have to take this from us because we are going to defend it with all of our might.' This is not our normal posture. ... We decided we'll live with the legacy of our work. [BMW declined to comment.]
WSJ: With independent shops such as Wieden + Kennedy and Crispin Porter + Bogusky all the rage, do you think you made a good decision when you chose to sell your agency to Publicis Groupe?
Mr. Fallon: We made a good decision because we had and have clients that have global reach, and if we weren't able to satisfy their global needs, they were going to find somebody that did. ... In a performance world, would we like to be independent? Yes, but the reality is that we had clients that had aggressive global needs, and we had to answer them. We had to be smart about it while keeping our culture.
WSJ: Fallon recently decided to close its New York office. Now your clients will have to make the trek to Minneapolis if they want to see you. Does an agency's geography make a difference to advertisers?
Mr. Fallon: Twenty-four years ago, Minneapolis got in the way. I'd say half the time, it got in the way, and 10 years ago, it got in the way a quarter of the time, and five years ago, it didn't get in the way at all. [During that time] we decided we needed a New York office, a kind of export office, because the world did business with New York. It didn't necessarily do business with Minneapolis. You know what? We were wrong. Our clients showed us that they are willing to come to Minneapolis.
WSJ: David Lubars, an ad executive widely seen as your successor, left Fallon to join Omnicom's BBDO last year. Do you need to name a successor?
Mr. Fallon: I will have a succession plan and team in place before I leave, and that's a very high priority for me. But as far as I know, I'm not going anywhere immediately -- unless you've heard something. ... Plus, you didn't know this, but I can bench press a Buick. So don't count me out too quickly.
Write to Brian Steinberg at brian.steinberg@wsj.com
BMW Agency Review Update
As expected, the usual suspects are involved.
As usual the usual suspects will be bridesmaids. A very expensive venture.
There are many agencies that could use help to acquire an auto account. Especially in New York.
Some time ago, prior to the recent BMW parting with Fallon, I remarked to a New York colleague of mine, Don Gilbert, of Gilbert Taney Farlie who is in the agency search business inter alia, that there were some great agencies that would continue to finish second in a major automotive agency search. I named Kirshenbaum and Bond as one that deserves an automotive account that was unlikely to ever get one. When Don asked me to explain, here's what I told him.
“Automotive people can smell whether people have a passion for automobiles. Unless there is someone they feel has gasoline in their veins playing a vital role, they will ultimately go where they feel they will not need to explain things that people should feel”.
This thought was echoed in the book, "Where the suckers moon" by Randall Rothenberg. ‘What hurt Wieden & Kennedy more than anything was it’s collective lack of passion for automobiles. Car companies and their dealers can sense such ardor; when it is present they can forgive advertising people their flakiness and other transgressions. It’s absence, however, sows mistrust’.
The same book states that auto dealers mistrust people who ride subways and trains to work.
That’s why these people are extremely rare in New York. That is why even great agencies don’t actually get that they could be deficient when pitching a car account. That they might need help.
I explained to Don that the automotive world speaks the language of purchase funnels and IQS, which can be learned, but only with an obvious accent. But there are bigger issues than the research lexicon, and faux pas like calling a Marque a nameplate and vice versa.
Tom Purvis, CEO of BMW North America for instance, is the real deal. One conversation with him will reveal where you stand in his world to him.
Tom has driven a racecar in anger. He has been a passenger around famous circuits like the Nurburgring driven by F1 world champions. He knows everyone who ever was a player in European motor sports. I am not a buddy of Tom’s, but I do live in Tom’s world.
Racing Drivers have an affinity for one another, yet they are fiercely competitive on the track. This same bond is true amongst the automotive fraternity, but it cannot be grafted on.
One can not re-create years of traveling tohether, working with automotive journalists on Long lead trips to overseas factories, torturing cars on test tracks or spending time with engineers and international product teams.
The shared memories of the various motor sports events, stories listened to together with people like Tom, from John Fitch, Hans Stuck, Tom Morton, Chris Economacki, David E Davis, Carol Shelby, David Donohue, Brock Yates, Stirling Moss and on and on, cannot be recreated intellectually by even the brightest of advertising people.
Memberships in automotive clubs from serious racing fraternities like the SCCA and SVRA/HSR to the frivolous like the Madison Avenue Sportscar Driving and Chowder Society, but even the latter hard-core car nuts stands up to scutiny. Tom was there.
Automotive is not just another product category; it seems to be a way of life. This is not understood by agencies who have said as much in print.
It seems obvious that you cannot recreate the driver’s schools, the races won and lost, the war stories and camaraderie in between. Even participating at a BMWCA racing event. Towing nightmares, on-track incidents and medals on the wall in the den. Being upside down after hitting the wall with gasoline pouring on you cannot be imagined, only experienced. Like the early spring or late fall wind on your face at Lime Rock in an open car.
This is the main reason why some really great agencies may never win an auto account. They ultimately do not understand this aspect well enough to know they need help.
Help from someone who is the real deal or remain bridesmaids, a very costly strategy.
I reminded Don that in addition to motorsports, I have a day job.
Most recently I was Director of Integration for the 15 Omnicom marketing services companies servicing Mercedes-Benz USA.
Prior to that, in my own agency Doig Elliott Schur in New York, we developed a long running TV campaign for Mercedes-Benz USA in California that featured Cybil Shepherd as the customer from hell and David Naughton, (American Werewolf in London, now a cult movie), the dealer who put up with her ridiculous demands.
In addition to a long and successful vintage motor racing career, I have driven the Rubicon trail in the world famous Jeep Jamboree and the AMG challenge at the Texas Motor Speedway, both with my Clients.
I have also run F1 promotions for Honda together with my Client, been to all parts of Japan with them, driven all kinds of cars on all kinds of tracks with them as well as attending and often organizing countless dealer meetings and new prodcut introductions.
Scott Keogh, General Manager Marketing Communications Mercedes-Benz USA once introduced me as the real deal. He should know. He drove the Mille Miglia a few years ago in a 1955 300SLR. He is the real deal.
As usual the usual suspects will be bridesmaids. A very expensive venture.
There are many agencies that could use help to acquire an auto account. Especially in New York.
Some time ago, prior to the recent BMW parting with Fallon, I remarked to a New York colleague of mine, Don Gilbert, of Gilbert Taney Farlie who is in the agency search business inter alia, that there were some great agencies that would continue to finish second in a major automotive agency search. I named Kirshenbaum and Bond as one that deserves an automotive account that was unlikely to ever get one. When Don asked me to explain, here's what I told him.
“Automotive people can smell whether people have a passion for automobiles. Unless there is someone they feel has gasoline in their veins playing a vital role, they will ultimately go where they feel they will not need to explain things that people should feel”.
This thought was echoed in the book, "Where the suckers moon" by Randall Rothenberg. ‘What hurt Wieden & Kennedy more than anything was it’s collective lack of passion for automobiles. Car companies and their dealers can sense such ardor; when it is present they can forgive advertising people their flakiness and other transgressions. It’s absence, however, sows mistrust’.
The same book states that auto dealers mistrust people who ride subways and trains to work.
That’s why these people are extremely rare in New York. That is why even great agencies don’t actually get that they could be deficient when pitching a car account. That they might need help.
I explained to Don that the automotive world speaks the language of purchase funnels and IQS, which can be learned, but only with an obvious accent. But there are bigger issues than the research lexicon, and faux pas like calling a Marque a nameplate and vice versa.
Tom Purvis, CEO of BMW North America for instance, is the real deal. One conversation with him will reveal where you stand in his world to him.
Tom has driven a racecar in anger. He has been a passenger around famous circuits like the Nurburgring driven by F1 world champions. He knows everyone who ever was a player in European motor sports. I am not a buddy of Tom’s, but I do live in Tom’s world.
Racing Drivers have an affinity for one another, yet they are fiercely competitive on the track. This same bond is true amongst the automotive fraternity, but it cannot be grafted on.
One can not re-create years of traveling tohether, working with automotive journalists on Long lead trips to overseas factories, torturing cars on test tracks or spending time with engineers and international product teams.
The shared memories of the various motor sports events, stories listened to together with people like Tom, from John Fitch, Hans Stuck, Tom Morton, Chris Economacki, David E Davis, Carol Shelby, David Donohue, Brock Yates, Stirling Moss and on and on, cannot be recreated intellectually by even the brightest of advertising people.
Memberships in automotive clubs from serious racing fraternities like the SCCA and SVRA/HSR to the frivolous like the Madison Avenue Sportscar Driving and Chowder Society, but even the latter hard-core car nuts stands up to scutiny. Tom was there.
Automotive is not just another product category; it seems to be a way of life. This is not understood by agencies who have said as much in print.
It seems obvious that you cannot recreate the driver’s schools, the races won and lost, the war stories and camaraderie in between. Even participating at a BMWCA racing event. Towing nightmares, on-track incidents and medals on the wall in the den. Being upside down after hitting the wall with gasoline pouring on you cannot be imagined, only experienced. Like the early spring or late fall wind on your face at Lime Rock in an open car.
This is the main reason why some really great agencies may never win an auto account. They ultimately do not understand this aspect well enough to know they need help.
Help from someone who is the real deal or remain bridesmaids, a very costly strategy.
I reminded Don that in addition to motorsports, I have a day job.
Most recently I was Director of Integration for the 15 Omnicom marketing services companies servicing Mercedes-Benz USA.
Prior to that, in my own agency Doig Elliott Schur in New York, we developed a long running TV campaign for Mercedes-Benz USA in California that featured Cybil Shepherd as the customer from hell and David Naughton, (American Werewolf in London, now a cult movie), the dealer who put up with her ridiculous demands.
In addition to a long and successful vintage motor racing career, I have driven the Rubicon trail in the world famous Jeep Jamboree and the AMG challenge at the Texas Motor Speedway, both with my Clients.
I have also run F1 promotions for Honda together with my Client, been to all parts of Japan with them, driven all kinds of cars on all kinds of tracks with them as well as attending and often organizing countless dealer meetings and new prodcut introductions.
Scott Keogh, General Manager Marketing Communications Mercedes-Benz USA once introduced me as the real deal. He should know. He drove the Mille Miglia a few years ago in a 1955 300SLR. He is the real deal.
Monday, August 22, 2005
A New Client model is needed
KATHY THACKER of The Dallas Morning News wrote on August 19, 2005.
7-Eleven Inc. has chosen Omnicom Group for its estimated $40 million integrated marketing account in what may be a new spin on advertising agency relationships.
Omnicom formed a "virtual" agency called FreshWorks dedicated to 7-Eleven. It brings together Dallas-based subsidiaries TracyLocke, the Promotion Network, the Integer Group and Dieste Harmel & Partners.
7-Eleven's advertising and promotions business had been handled independently at TracyLocke and other Omnicom agencies before the Dallas-based convenience store chain sought new ideas in March.
7-Eleven initially began looking at separate advertising and promotions agencies. But it combined the business during the search, according to Bob Chimbel, TracyLocke Dallas president.
Two other major agency holding companies, WPP Group and Interpublic Group, were finalists for the account.
"We saw an integrated approach from all the agencies that presented, but Omnicom was the clear winner because they organized in a unique way that will give us access to best-of-class agencies, talent and creative," 7-Eleven marketing vice president Doug Foster said in a statement.
"They essentially assembled a cluster of agencies managed by a single account team that presents one face to us and ensures complete integration and quality control."
The integrated approach to advertising is gaining steam as media become more fragmented, Mr. Chimbel said. Advertising must reach into new channels such as the Internet in addition to radio, television and print.
Omnicom has used it in the past for PepsiCo, for example, but forming a virtual agency for 7-Eleven was a new solution, he said.
Led by new TracyLocke chief executive Ron Askew – who rejoined the shop in July from Coors Brewing Co. – FreshWorks will bring together key agency partners in a "board of directors" to work on the business, Mr. Chimbel said. Details of how the units will interact have yet to be worked out.
"We hope this becomes a model for agency-client relationships," he said.
The agreement will be effective in September. Specialties represented in the agency include promotions and point-of-purchase and – in the case of Dieste Harmel – Hispanic advertising.
It's not unusual in today's advertising environment for agencies to pitch their integrated abilities, said Dr. Patricia Alvey, director of the Temerlin Advertising Institute at Southern Methodist University.
As early as the 1970s, advertising companies began merging so that they could create more global reach and strategic alliances, she said.
The new approach – creating a named entity by combining a complex web of specialty units – is "a smart move," Dr. Alvey said.
The Omnicom agencies and 7-Eleven worked out the agency concept together. 7-Eleven marketing chief Mr. Foster "wanted to assure himself that he had the best and brightest minds," Mr. Chimbel said.
Why name the 7-Eleven agency? "This forces everybody to think holistically," he said.
Mr. Chimbel is almost prophetic in what he said. "Forces everybody to think holistically"
We believe that integration properly done, is like surround sound for communication.It adds a dimension that only a holistic approach can achieve. And it is exponentially more effective as case studies prove.
There are some very cogent articles on ROI as well as the distress signals of audience fragmentation, media proliferation and increasing digital technology options. McKinsey Quarterly and the HBR come to mind.
Many others are jumping on the misery of the 60s and 70s mass media strategies with new econometric models to solve the ROI problem. Others are quick to blame Advertising Agencies for stoically maintaining a broken model.
While most are not wrong, they are missing the practical point that Marketing companies are not structured to take advantage of the changing environment. They are still structured in the silos that define marketing disciplines as they were in the 60s and 70s.
Maximizing Marketing Return On Investment (ROMI) today is even more dependent on integration. And integration is impossible without collaborative marketing teams.
In many marketing companies, the agencies and marketing services groups deploy agencies on a departmental basis. There is no centralized budgeting or accountability let alone planning and execution. Often, this is left to agencies to sort out. There is a reason many of these delegated responsibilities either fail or don't last.
Marketing silos like the autonomy and seperate budgets of their discipline. If CMOs want Integration and they should because it's good business, they need to structure their companies to eliminate marketing silos.
The 7 Eleven idea is one way to approach it. But frankly, until the actual departmental silos are demolished, integration will remain difficult. Until they are eliminated, agency integration teams will continue to suffer from individual marketing service company P&L pressure to grab budgets by discipline.
Marketing Vice President of 7 Eleven Doug Foster is onto something here.
Other marketers might want to take note.
7-Eleven Inc. has chosen Omnicom Group for its estimated $40 million integrated marketing account in what may be a new spin on advertising agency relationships.
Omnicom formed a "virtual" agency called FreshWorks dedicated to 7-Eleven. It brings together Dallas-based subsidiaries TracyLocke, the Promotion Network, the Integer Group and Dieste Harmel & Partners.
7-Eleven's advertising and promotions business had been handled independently at TracyLocke and other Omnicom agencies before the Dallas-based convenience store chain sought new ideas in March.
7-Eleven initially began looking at separate advertising and promotions agencies. But it combined the business during the search, according to Bob Chimbel, TracyLocke Dallas president.
Two other major agency holding companies, WPP Group and Interpublic Group, were finalists for the account.
"We saw an integrated approach from all the agencies that presented, but Omnicom was the clear winner because they organized in a unique way that will give us access to best-of-class agencies, talent and creative," 7-Eleven marketing vice president Doug Foster said in a statement.
"They essentially assembled a cluster of agencies managed by a single account team that presents one face to us and ensures complete integration and quality control."
The integrated approach to advertising is gaining steam as media become more fragmented, Mr. Chimbel said. Advertising must reach into new channels such as the Internet in addition to radio, television and print.
Omnicom has used it in the past for PepsiCo, for example, but forming a virtual agency for 7-Eleven was a new solution, he said.
Led by new TracyLocke chief executive Ron Askew – who rejoined the shop in July from Coors Brewing Co. – FreshWorks will bring together key agency partners in a "board of directors" to work on the business, Mr. Chimbel said. Details of how the units will interact have yet to be worked out.
"We hope this becomes a model for agency-client relationships," he said.
The agreement will be effective in September. Specialties represented in the agency include promotions and point-of-purchase and – in the case of Dieste Harmel – Hispanic advertising.
It's not unusual in today's advertising environment for agencies to pitch their integrated abilities, said Dr. Patricia Alvey, director of the Temerlin Advertising Institute at Southern Methodist University.
As early as the 1970s, advertising companies began merging so that they could create more global reach and strategic alliances, she said.
The new approach – creating a named entity by combining a complex web of specialty units – is "a smart move," Dr. Alvey said.
The Omnicom agencies and 7-Eleven worked out the agency concept together. 7-Eleven marketing chief Mr. Foster "wanted to assure himself that he had the best and brightest minds," Mr. Chimbel said.
Why name the 7-Eleven agency? "This forces everybody to think holistically," he said.
Mr. Chimbel is almost prophetic in what he said. "Forces everybody to think holistically"
We believe that integration properly done, is like surround sound for communication.It adds a dimension that only a holistic approach can achieve. And it is exponentially more effective as case studies prove.
There are some very cogent articles on ROI as well as the distress signals of audience fragmentation, media proliferation and increasing digital technology options. McKinsey Quarterly and the HBR come to mind.
Many others are jumping on the misery of the 60s and 70s mass media strategies with new econometric models to solve the ROI problem. Others are quick to blame Advertising Agencies for stoically maintaining a broken model.
While most are not wrong, they are missing the practical point that Marketing companies are not structured to take advantage of the changing environment. They are still structured in the silos that define marketing disciplines as they were in the 60s and 70s.
Maximizing Marketing Return On Investment (ROMI) today is even more dependent on integration. And integration is impossible without collaborative marketing teams.
In many marketing companies, the agencies and marketing services groups deploy agencies on a departmental basis. There is no centralized budgeting or accountability let alone planning and execution. Often, this is left to agencies to sort out. There is a reason many of these delegated responsibilities either fail or don't last.
Marketing silos like the autonomy and seperate budgets of their discipline. If CMOs want Integration and they should because it's good business, they need to structure their companies to eliminate marketing silos.
The 7 Eleven idea is one way to approach it. But frankly, until the actual departmental silos are demolished, integration will remain difficult. Until they are eliminated, agency integration teams will continue to suffer from individual marketing service company P&L pressure to grab budgets by discipline.
Marketing Vice President of 7 Eleven Doug Foster is onto something here.
Other marketers might want to take note.
Thursday, August 18, 2005
Jack of All trades, or master of one?
Laura Ries posted her Dad and partner's WSJ Divergence article on her Blog. I would send you straight to the WSJ as would Laura if we could.
But we are hampered by the WSJ's antiquated subscription policy.
When will the old media understand about when to charge and when to get free publicity?
I am still looking for this formidable duo to say something I can disagree with. Until then, let me build on what they are saying.
It's not that the luminaries quoted like Michael Dell, Paul Otellini Sir Howard Stringer and John Sculley are wrong. How could Bill Gates be wrong. He owns, well Germany I think.
Gates' Smartphone venture is going well. Why? Because people want phones. Why do children buy Game boys and Nintendos? Because they want a game device. And a game device is a brand. Like Playstation.
They are not looking for a PDA they want a Wizard. They want a Blackberry and not a "Multipurpose thing that does lot's of stuff". Sounds like, rhymes with, looks like.
We have learned that multipurpose fax machines that copy, scan and offer printing are not as popular as fax machines, copiers printers and scanners. The customer perception is that the specialist product does a better job and that quality must somehow give in an all purpose machine
TVs with built in VCRs never took off any better in the past than TVs with DVDs now.
Does anyone really know what a convection oven is and is it a brand discriminator that people will pay a premium for? Why does the cooks kitchen separate everything that once was a unit while Sanyo has just launched a stove, oven and microwave combined?
Ipod built a great success because they launched an IPod, not a Mac appendage or an Apple music player.
So even the greatest genius of them all, Bill Gates could learn a thing or two from Lord Byron's advice, "The best prophets of the future is the past".
Gideon Rose wrote a great editorial in the NYT this morning titled Get Real. This shows that one could have predicted the Clinton and Bush 2 Presidencies, behaviors and results. Based on the past, it also tells us that we will have a benign Democratic presidency next.
In the unlikely event I was ever asked by Bill Gates what a perfect man could do to improve, I would respond by saying "Mr. Gates, I think you might like to try getting over over your hardware hang up."
Google is a great company, but they do not make anything-yet. MSN may or may not be a good idea but perhaps don't bet the farm on a non-brand.
But Microsoft can dominate in all the convergent arenas, but should not make the mistake that everyone else has, thinking that convergence means Jack of all trades. It means be a master of something. A thing people want. A device, a game, a portal etc., and then brand it and market it like there is no tomorrow because there often isn't.
But we are hampered by the WSJ's antiquated subscription policy.
When will the old media understand about when to charge and when to get free publicity?
I am still looking for this formidable duo to say something I can disagree with. Until then, let me build on what they are saying.
It's not that the luminaries quoted like Michael Dell, Paul Otellini Sir Howard Stringer and John Sculley are wrong. How could Bill Gates be wrong. He owns, well Germany I think.
Gates' Smartphone venture is going well. Why? Because people want phones. Why do children buy Game boys and Nintendos? Because they want a game device. And a game device is a brand. Like Playstation.
They are not looking for a PDA they want a Wizard. They want a Blackberry and not a "Multipurpose thing that does lot's of stuff". Sounds like, rhymes with, looks like.
We have learned that multipurpose fax machines that copy, scan and offer printing are not as popular as fax machines, copiers printers and scanners. The customer perception is that the specialist product does a better job and that quality must somehow give in an all purpose machine
TVs with built in VCRs never took off any better in the past than TVs with DVDs now.
Does anyone really know what a convection oven is and is it a brand discriminator that people will pay a premium for? Why does the cooks kitchen separate everything that once was a unit while Sanyo has just launched a stove, oven and microwave combined?
Ipod built a great success because they launched an IPod, not a Mac appendage or an Apple music player.
So even the greatest genius of them all, Bill Gates could learn a thing or two from Lord Byron's advice, "The best prophets of the future is the past".
Gideon Rose wrote a great editorial in the NYT this morning titled Get Real. This shows that one could have predicted the Clinton and Bush 2 Presidencies, behaviors and results. Based on the past, it also tells us that we will have a benign Democratic presidency next.
In the unlikely event I was ever asked by Bill Gates what a perfect man could do to improve, I would respond by saying "Mr. Gates, I think you might like to try getting over over your hardware hang up."
Google is a great company, but they do not make anything-yet. MSN may or may not be a good idea but perhaps don't bet the farm on a non-brand.
But Microsoft can dominate in all the convergent arenas, but should not make the mistake that everyone else has, thinking that convergence means Jack of all trades. It means be a master of something. A thing people want. A device, a game, a portal etc., and then brand it and market it like there is no tomorrow because there often isn't.
Wednesday, August 17, 2005
Integration can be tense
Here is a column titled "Inside the Bank of America-IPG break up".
The irony is that the new RFP to the usual suspects is just less than three years since Omnicom and WPP were beaten out for this global assignment.(See excerpts below)
But the result, the break up documented by AdAge ambulance chaser Lisa Sanders who has become the self appointed expert in agency reviews, was predictable.
When a Client appoints a lead person they expect them to lead. And unless top management supports that person unequivocally, the Agencies who "report" to the Chief integrator will feel undermined. They and their Clients in turn become unlikely allies in disintegration by fighting the Chief Integration Officer.
The better the job the Integrator does, the worse it gets. Until it blows up. Bank of America was not the first place this has happened.
We once received a call from a Client, a CMO to set up a dinner with all the marketing services company CEOs servicing that business. A private room was specifically requested.The dinner was billed as "The last supper".
The Client announced that as of that night, they would not respond to anyone but the CEO of the lead agency and that this person alone was responsible for the entire relationship. These entrepreneurs and some multimillionaires having been bought out by Omnicom were not amused. Resentment was high.
Add to the resentment mix on Bank of America the negotiation of a master contract and you have all the makings of a nightmare, unless top management on both sides is completely supportive.
Our Client followed up the dinner some months later with the demand that there be one Omnicom contract. Just like BOA. So we spent over a year negotiating and breaking down all the integration goodwill we had built in the previous years.
Someone invariably has to take the blame for these negotiations, as they can only serve to decrease existing individual marketing Services company revenues and offer new players reduced margins.
It is the Client who benefits financially from a global contract,that's why they do it. Top management is often reluctant to take blame as in the IPG case and inevitably it is the negotiators that take the fall. As Omnicom top management once said to me, "it is a very unpopular role".
But when the Client insists on it as clearly in the BOA case they did, someone has to do it.
Funnily enough, here is where Sir Martin Sorrel's command and control superstar teams have an advantage. We believe this advantage is short term, but it needs to be countered by an enlightened top management fully supporting a Global leader, when that is what the Client wants.
This is especially true as most Marketing companies are not structured or geared to handle global servicing. Agencies are often asked to help fix this problem.
Fortunately for Omnicom, the branded agency network solution versus holding company dream teams has developed many best practices that are in place to help ease the tension.
Global Account leaders like Paul Price at DDB and Chris Thomas at BBDO's Proximity can help guide the next generation of Global leaders, helped by Omnicom's Susan Smith-Ellis.
This is why the holding company CEO conundrum is so difficult. From the evidence presented by AdAge, Mr Roth would seem to lack agency Client service expertise. Perhaps Bruce was a prima donna but that is not what we hear.
I'm sure Client service great John Dooner would have handled this situation very differently. But John had a tough time in Mr Roth's world, Wall Street. it's hard to do both.
This is why the two financially trained CEOs, John Wren and Martin Sorrell have the best feel. They have grown up in advertising. Additionally, they are both entrepreneurs.
I don't personally believe you can lead a company without both sets of experience.
So the question is, where do the next Agency holding company CEOs come from?
If they have not served in the trenches they will never understand this unique business. Yet if they are too steeped in it, like previous Omnicom CEO Alan Rosenshine or IPG's John Dooner, they are unlikely to succeed with Wall Street. The press will likely do them in before they have a chance anyway.
As John Wren said the other day, he is not going anywhere. But WPP's Sorrell has a much more difficult job as we have just seen with the Grey and Y&R CEO situations at the brand level.
2002
IPG BEATS OUT OMNICOM FOR BANK OF AMERICA ACCOUNT
by Mercedes M. Cardona October 28, 2002
NEW YORK (AdAge.com) -- Bank of America awarded the bulk of its $167 million account to Interpublic Group of Cos. as the beleaguered holding company bested rival Omnicom Group in one of the more hotly contested and closely watched creative reviews of the year.
2005
BANK OF AMERICA ISSUES MARKETING RFP
Omnicom and WPP Contacted About Massive Account
July 28, 2005
By Matthew Creamer
NEW YORK (AdAge.com) -- Bank of America, one of Interpublic Group of Cos.' largest accounts, has contacted holding companies, including Omnicom Group and WPP Group, about its massive integrated marketing account, according to executives familiar with the matter.
Omnicom Lands Bank of America
Account Had Been Sought
For Its Size, Concentration;
Defeat for WPP, Interpublic
By BRIAN STEINBERG
Staff Reporter of THE WALL STREET JOURNAL
September 1, 2005; Page B5
Omnicom Group won a hard-fought contest among three of the world's biggest ad-holding companies for Bank of America's strategically important marketing and advertising account.
Omnicom defeated a pitch from rival WPP Group, of Britain, and efforts by Interpublic Group, which had the account, to keep the business. The account has generated $60 million to $65 million in annual revenue for Interpublic.
All three wanted the contract because, unlike accounts at most big companies, it encompasses all of the bank's marketing work, from traditional advertising to sports marketing, public relations and media buying. The concentration with one ad firm made the business strategically valuable for big ad-holding companies such as WPP and Omnicom. It gives them a chance to demonstrate the advantage of owning an array of agencies at a time when some marketers are questioning such efficiency.
Adding to the account's allure are expectations that Bank of America, which has grown rapidly through acquisitions in recent years, is poised to become a major brand name in consumer marketing. It is the second-biggest bank advertiser after Citigroup and spent $306.8 million on media space and time last year, according to TNS Media Intelligence. Its advertising spending may rise as a result of its pending acquisition of credit-card giant MBNA.
Omnicom's win will add fuel to a debate over how ad-holding companies should structure their pitches: whether to try to coordinate their different units at the corporate level, as WPP Chief Executive Sir Martin Sorrell advocates, or to encourage agencies to compete for business under their own name rather than the corporate mantle, as Omnicom favors.
"In this case, the client wanted to have stewardship from the holding-company level, and so we were willing to do that," says Susan Smith Ellis, the Omnicom executive vice president who will supervise the Bank of America account.
In its 2004 annual report, WPP likened ad-holding companies to "super-agencies," saying the big ad conglomerates can serve the needs of global advertisers that are growing through consolidation. But some in the ad industry question whether forcing ad agencies to work together is a viable approach in the long term, given the entrepreneurial personalities that tend to run them.
"The jury is out" on whether the WPP approach or the Omnicom philosophy is the better one for advertisers, says Arthur Anderson, principal of Morgan Anderson Consulting, a New York firm that works with advertisers.
WPP's approach helped it land a number of important accounts recently, such as HSBC and Samsung. Bank of America required a coordinated approach, and Omnicom responded successfully -- a sign that Omnicom is willing to change its approach if a client wishes.
For Interpublic, the loss of the Bank of America account is the latest setback for a company already struggling to deal with accounting problems. Interpublic has been the subject of a Securities and Exchange Commission probe since late 2002. While it is cooperating with the investigation, Interpublic hasn't officially reported earnings since the third quarter of 2004 and must update its results for investors and creditors by Sept. 30.
Bank of America is the second large Interpublic client to pull business in recent months. General Motors said in May that it intended to move a massive media-buying account, with total spending estimated at around $3.6 billion, to France's Publicis Groupe, effective Oct. 1.
"Bank of America has notified us of its intention to move to Omnicom and our agencies will continue to partner with them during a transitional period of up to six months. The bank is a great client, we are proud of the model we built together with them and we wish them well going forward," Interpublic said in a statement.
Write to Brian Steinberg at brian.steinberg@wsj.com
The irony is that the new RFP to the usual suspects is just less than three years since Omnicom and WPP were beaten out for this global assignment.(See excerpts below)
But the result, the break up documented by AdAge ambulance chaser Lisa Sanders who has become the self appointed expert in agency reviews, was predictable.
When a Client appoints a lead person they expect them to lead. And unless top management supports that person unequivocally, the Agencies who "report" to the Chief integrator will feel undermined. They and their Clients in turn become unlikely allies in disintegration by fighting the Chief Integration Officer.
The better the job the Integrator does, the worse it gets. Until it blows up. Bank of America was not the first place this has happened.
We once received a call from a Client, a CMO to set up a dinner with all the marketing services company CEOs servicing that business. A private room was specifically requested.The dinner was billed as "The last supper".
The Client announced that as of that night, they would not respond to anyone but the CEO of the lead agency and that this person alone was responsible for the entire relationship. These entrepreneurs and some multimillionaires having been bought out by Omnicom were not amused. Resentment was high.
Add to the resentment mix on Bank of America the negotiation of a master contract and you have all the makings of a nightmare, unless top management on both sides is completely supportive.
Our Client followed up the dinner some months later with the demand that there be one Omnicom contract. Just like BOA. So we spent over a year negotiating and breaking down all the integration goodwill we had built in the previous years.
Someone invariably has to take the blame for these negotiations, as they can only serve to decrease existing individual marketing Services company revenues and offer new players reduced margins.
It is the Client who benefits financially from a global contract,that's why they do it. Top management is often reluctant to take blame as in the IPG case and inevitably it is the negotiators that take the fall. As Omnicom top management once said to me, "it is a very unpopular role".
But when the Client insists on it as clearly in the BOA case they did, someone has to do it.
Funnily enough, here is where Sir Martin Sorrel's command and control superstar teams have an advantage. We believe this advantage is short term, but it needs to be countered by an enlightened top management fully supporting a Global leader, when that is what the Client wants.
This is especially true as most Marketing companies are not structured or geared to handle global servicing. Agencies are often asked to help fix this problem.
Fortunately for Omnicom, the branded agency network solution versus holding company dream teams has developed many best practices that are in place to help ease the tension.
Global Account leaders like Paul Price at DDB and Chris Thomas at BBDO's Proximity can help guide the next generation of Global leaders, helped by Omnicom's Susan Smith-Ellis.
This is why the holding company CEO conundrum is so difficult. From the evidence presented by AdAge, Mr Roth would seem to lack agency Client service expertise. Perhaps Bruce was a prima donna but that is not what we hear.
I'm sure Client service great John Dooner would have handled this situation very differently. But John had a tough time in Mr Roth's world, Wall Street. it's hard to do both.
This is why the two financially trained CEOs, John Wren and Martin Sorrell have the best feel. They have grown up in advertising. Additionally, they are both entrepreneurs.
I don't personally believe you can lead a company without both sets of experience.
So the question is, where do the next Agency holding company CEOs come from?
If they have not served in the trenches they will never understand this unique business. Yet if they are too steeped in it, like previous Omnicom CEO Alan Rosenshine or IPG's John Dooner, they are unlikely to succeed with Wall Street. The press will likely do them in before they have a chance anyway.
As John Wren said the other day, he is not going anywhere. But WPP's Sorrell has a much more difficult job as we have just seen with the Grey and Y&R CEO situations at the brand level.
2002
IPG BEATS OUT OMNICOM FOR BANK OF AMERICA ACCOUNT
by Mercedes M. Cardona October 28, 2002
NEW YORK (AdAge.com) -- Bank of America awarded the bulk of its $167 million account to Interpublic Group of Cos. as the beleaguered holding company bested rival Omnicom Group in one of the more hotly contested and closely watched creative reviews of the year.
2005
BANK OF AMERICA ISSUES MARKETING RFP
Omnicom and WPP Contacted About Massive Account
July 28, 2005
By Matthew Creamer
NEW YORK (AdAge.com) -- Bank of America, one of Interpublic Group of Cos.' largest accounts, has contacted holding companies, including Omnicom Group and WPP Group, about its massive integrated marketing account, according to executives familiar with the matter.
Omnicom Lands Bank of America
Account Had Been Sought
For Its Size, Concentration;
Defeat for WPP, Interpublic
By BRIAN STEINBERG
Staff Reporter of THE WALL STREET JOURNAL
September 1, 2005; Page B5
Omnicom Group won a hard-fought contest among three of the world's biggest ad-holding companies for Bank of America's strategically important marketing and advertising account.
Omnicom defeated a pitch from rival WPP Group, of Britain, and efforts by Interpublic Group, which had the account, to keep the business. The account has generated $60 million to $65 million in annual revenue for Interpublic.
All three wanted the contract because, unlike accounts at most big companies, it encompasses all of the bank's marketing work, from traditional advertising to sports marketing, public relations and media buying. The concentration with one ad firm made the business strategically valuable for big ad-holding companies such as WPP and Omnicom. It gives them a chance to demonstrate the advantage of owning an array of agencies at a time when some marketers are questioning such efficiency.
Adding to the account's allure are expectations that Bank of America, which has grown rapidly through acquisitions in recent years, is poised to become a major brand name in consumer marketing. It is the second-biggest bank advertiser after Citigroup and spent $306.8 million on media space and time last year, according to TNS Media Intelligence. Its advertising spending may rise as a result of its pending acquisition of credit-card giant MBNA.
Omnicom's win will add fuel to a debate over how ad-holding companies should structure their pitches: whether to try to coordinate their different units at the corporate level, as WPP Chief Executive Sir Martin Sorrell advocates, or to encourage agencies to compete for business under their own name rather than the corporate mantle, as Omnicom favors.
"In this case, the client wanted to have stewardship from the holding-company level, and so we were willing to do that," says Susan Smith Ellis, the Omnicom executive vice president who will supervise the Bank of America account.
In its 2004 annual report, WPP likened ad-holding companies to "super-agencies," saying the big ad conglomerates can serve the needs of global advertisers that are growing through consolidation. But some in the ad industry question whether forcing ad agencies to work together is a viable approach in the long term, given the entrepreneurial personalities that tend to run them.
"The jury is out" on whether the WPP approach or the Omnicom philosophy is the better one for advertisers, says Arthur Anderson, principal of Morgan Anderson Consulting, a New York firm that works with advertisers.
WPP's approach helped it land a number of important accounts recently, such as HSBC and Samsung. Bank of America required a coordinated approach, and Omnicom responded successfully -- a sign that Omnicom is willing to change its approach if a client wishes.
For Interpublic, the loss of the Bank of America account is the latest setback for a company already struggling to deal with accounting problems. Interpublic has been the subject of a Securities and Exchange Commission probe since late 2002. While it is cooperating with the investigation, Interpublic hasn't officially reported earnings since the third quarter of 2004 and must update its results for investors and creditors by Sept. 30.
Bank of America is the second large Interpublic client to pull business in recent months. General Motors said in May that it intended to move a massive media-buying account, with total spending estimated at around $3.6 billion, to France's Publicis Groupe, effective Oct. 1.
"Bank of America has notified us of its intention to move to Omnicom and our agencies will continue to partner with them during a transitional period of up to six months. The bank is a great client, we are proud of the model we built together with them and we wish them well going forward," Interpublic said in a statement.
Write to Brian Steinberg at brian.steinberg@wsj.com
Monday, August 15, 2005
MERCEDES-BENZ: BRAND IN DECLINE-Really?
They love to knock a leader off it's pedestal. You would think they would do it with facts. If they keep writing about the potential agency review for long enough, they might be right in a few more years.
What Jean Halliday might have pointed out in her AdAge article (See below) is that Cadillac just bounced off the bottom of a long decline. And good for them. Cadillac was always ahead of BMW Lexus and Mercedes until they took over. Now it's a four way race. When I last looked, Mercedes was still the leader in cars. Lexus does more than 50% of the volume in trucks, Mercedes' specific weakness over the last four years. And the Escalade SUV was the turnaround model for Caddy.
I am sure that AMCI's Jim Sanfilippo was quoted out of context and that he will not be pleased to see his name in a negative attack on Mercedes reputation.
Yes Mercedes has had it's travails with initial quality, particularly as measured by JDPower, often a blunt instrument which the LA Times has treid to sharpen, unsuccessfully. The lower Mercedes IQS scores (Intitial Quality) were mainly against higher customer expectations than for any other Marque. These intitial and fleeting scores have has done nothing to damage long term loyalty, resale values as well as overall cost of ownership. Read this for yourself at Edmunds ewhere the E Class has the lowest operating costs and the lowest depreciation. Or read what Mckinsey has to say about the strenth of the Mercedes brand
Far more important criteria in both customer perception and reality.
In addition, the recalls mentioned were primarily preventitive, actions that manufacturers get little credit for.
As for the two people who claim to have been previously close to Mercedes, how would they know about the current Merkley + Partners relationship? Maybe they have all been reading Delaney which started this rumor. Fortunately even he recognized that August is a slow news month and has taken the next two weeks off. But not before trying to stir up a Volkswagen review rumor about Arnold.
The fact is that M+P have weathered 4 CMOs. That tells you something about a relationship that does not change with the new breeze of each new marketing executive.
In this case, it's an old friend of M+P. Scott Keogh is a professional, intelligent and demanding executive who really understands the DNA of Mercedes as well as the US uniqueness, not always a Stuttgart strength. He has worked on both sides of the Altantic and will likely put his unique stamp on the communications that M+P produce.
The relationship should be just fine.
Here is what Jean thinks about it.
Cadillac Overtakes It as Third Best-Selling Luxury Vehicle
August 15, 2005 By Jean Halliday DETROIT (AdAge.com)
Once the king of the road in the automotive luxury sector, battered Mercedes-Benz finds itself boxed in on the slow lane.
The latest to overtake the once great Mercedes marque is General Motors Corp.’s revived Cadillac, which last year leapfrogged the German brand to move into third place in luxury car sales. And although Mercedes-Benz USA reported the best July sales month in its history with 20,791 units sold, it was still stuck behind Lexus, Cadillac, BMW and even American Honda Motor Co.’s Acura.
Quality issues
“Quality issues put a dent in Mercedes,” said Jim Sanfilippo, executive vice president of consultant AMCI. “Everybody else is getting better faster.” As if the quality issues were not enough to damage its image, the Mercedes brand was also tarnished by its decision to introduce a number of lower-priced models.
Financially Mercedes-Benz Group’s profitability has slipped since 2004’s second quarter, and the company posted a first-quarter operating loss of about $1 billion.
Its management is unsettled: Not only has CEO Eckhard Cordes tendered his resignation in recent weeks after being passed over for the top job at parent DaimlerChrysler in Germany, the automaker lost U.S. Vice President of Marketing Michelle Cervantez, who joined Hyundai Motor America.
Decline in U.S. spending
Mercedes, moreover, hasn’t been spending at competitive levels in the U.S. The brand spent only $25 million in the first quarter of the year, according to TNS Media Intelligence, some $10 million below outlays for the same period in 2004. One former insider said the budget is being crimped as part of the company’s efficiency effort that resulted in a small operating profit of $15 million in the first quarter. Mercedes declined to comment for this story.
Then there’s the question of whether Mercedes will seek a new U.S. agency. Two executives once close to the troubled automaker said Omnicom Group’s Merkley & Partners, New York, which got the account in 1999 without a review, is in trouble on the account; one gave 50/50 odds a review would be called. Both laid partial blame on the marketer’s revolving door of four marketing VPs since 1999. Merkley CEO Alex Gellert didn’t return calls for comment.
The Mercedes-Benz Group “had lots of distractions,” like its Smart car and the ultra-luxury Maybach brand launch that diverted resources from the core Mercedes brand, said Iceology consultant Wes Brown. This year’s launch of the second-generation M-Class sport utility vehicle “wasn’t enough to get the word out,” he said, and the campaign “got lost” in sea of SUV ads.
Consumer loyalty slipping
Meanwhile, the brand’s loyalty rate slipped from 44.1% during calendar 2004 to 42.7% in the first quarter of this year, according to figures from researcher R.L. Polk & Co. In the same period Lexus, the Toyota Motor Sales USA luxury marque, rose from 44.7% to 46.5%.
The brand, moreover, lost some of its cachet by introducing lower-priced models. Mr. Brown’s research with owners of pricier Mercedes’ models like the S-Class found they disliked the broadened buyer base with lower-priced models like the entry-level C-Class hatchback. Despite that, most said they would continue to buy the brand. Now the one-time pinnacle in automotive luxury is trying to get consumers to fall in love with the brand again by struggling to improve its quality and regain lost customer loyalty.
Restore its luster
Mr. Brown, for one, is confident Mercedes-Benz can restore its luster and “turn it around in a relatively short period of time.” What will help, he said, is the new CLS four-door coupe, launched this year, which he called a “smash hit.”
Mercedes is fixing its slumping quality of recent years. Despite a setback with its biggest global recall in the spring of more than a million units (including hundreds of thousands in the U.S.), its initial U.S. vehicle quality during the first 90 days of ownership rose in 2005 to sixth place from 10th in 2004 and 15th in 2003, said consultant J.D. Power and Associates based on annual owner surveys."
Related Stories:
MERCEDES NAMES NEW MARKETING COMMUNICATIONS GENERAL MANAGER
Scott Keogh Was With Carmaker's Recently Disbanded Smart USA Unit
HYUNDAI NAMES NEW MARKETING CHIEF
Michelle Cervantez Was Mercedes' Top Marketing Exec
What Jean Halliday might have pointed out in her AdAge article (See below) is that Cadillac just bounced off the bottom of a long decline. And good for them. Cadillac was always ahead of BMW Lexus and Mercedes until they took over. Now it's a four way race. When I last looked, Mercedes was still the leader in cars. Lexus does more than 50% of the volume in trucks, Mercedes' specific weakness over the last four years. And the Escalade SUV was the turnaround model for Caddy.
I am sure that AMCI's Jim Sanfilippo was quoted out of context and that he will not be pleased to see his name in a negative attack on Mercedes reputation.
Yes Mercedes has had it's travails with initial quality, particularly as measured by JDPower, often a blunt instrument which the LA Times has treid to sharpen, unsuccessfully. The lower Mercedes IQS scores (Intitial Quality) were mainly against higher customer expectations than for any other Marque. These intitial and fleeting scores have has done nothing to damage long term loyalty, resale values as well as overall cost of ownership. Read this for yourself at Edmunds ewhere the E Class has the lowest operating costs and the lowest depreciation. Or read what Mckinsey has to say about the strenth of the Mercedes brand
Far more important criteria in both customer perception and reality.
In addition, the recalls mentioned were primarily preventitive, actions that manufacturers get little credit for.
As for the two people who claim to have been previously close to Mercedes, how would they know about the current Merkley + Partners relationship? Maybe they have all been reading Delaney which started this rumor. Fortunately even he recognized that August is a slow news month and has taken the next two weeks off. But not before trying to stir up a Volkswagen review rumor about Arnold.
The fact is that M+P have weathered 4 CMOs. That tells you something about a relationship that does not change with the new breeze of each new marketing executive.
In this case, it's an old friend of M+P. Scott Keogh is a professional, intelligent and demanding executive who really understands the DNA of Mercedes as well as the US uniqueness, not always a Stuttgart strength. He has worked on both sides of the Altantic and will likely put his unique stamp on the communications that M+P produce.
The relationship should be just fine.
Here is what Jean thinks about it.
Cadillac Overtakes It as Third Best-Selling Luxury Vehicle
August 15, 2005 By Jean Halliday DETROIT (AdAge.com)
Once the king of the road in the automotive luxury sector, battered Mercedes-Benz finds itself boxed in on the slow lane.
The latest to overtake the once great Mercedes marque is General Motors Corp.’s revived Cadillac, which last year leapfrogged the German brand to move into third place in luxury car sales. And although Mercedes-Benz USA reported the best July sales month in its history with 20,791 units sold, it was still stuck behind Lexus, Cadillac, BMW and even American Honda Motor Co.’s Acura.
Quality issues
“Quality issues put a dent in Mercedes,” said Jim Sanfilippo, executive vice president of consultant AMCI. “Everybody else is getting better faster.” As if the quality issues were not enough to damage its image, the Mercedes brand was also tarnished by its decision to introduce a number of lower-priced models.
Financially Mercedes-Benz Group’s profitability has slipped since 2004’s second quarter, and the company posted a first-quarter operating loss of about $1 billion.
Its management is unsettled: Not only has CEO Eckhard Cordes tendered his resignation in recent weeks after being passed over for the top job at parent DaimlerChrysler in Germany, the automaker lost U.S. Vice President of Marketing Michelle Cervantez, who joined Hyundai Motor America.
Decline in U.S. spending
Mercedes, moreover, hasn’t been spending at competitive levels in the U.S. The brand spent only $25 million in the first quarter of the year, according to TNS Media Intelligence, some $10 million below outlays for the same period in 2004. One former insider said the budget is being crimped as part of the company’s efficiency effort that resulted in a small operating profit of $15 million in the first quarter. Mercedes declined to comment for this story.
Then there’s the question of whether Mercedes will seek a new U.S. agency. Two executives once close to the troubled automaker said Omnicom Group’s Merkley & Partners, New York, which got the account in 1999 without a review, is in trouble on the account; one gave 50/50 odds a review would be called. Both laid partial blame on the marketer’s revolving door of four marketing VPs since 1999. Merkley CEO Alex Gellert didn’t return calls for comment.
The Mercedes-Benz Group “had lots of distractions,” like its Smart car and the ultra-luxury Maybach brand launch that diverted resources from the core Mercedes brand, said Iceology consultant Wes Brown. This year’s launch of the second-generation M-Class sport utility vehicle “wasn’t enough to get the word out,” he said, and the campaign “got lost” in sea of SUV ads.
Consumer loyalty slipping
Meanwhile, the brand’s loyalty rate slipped from 44.1% during calendar 2004 to 42.7% in the first quarter of this year, according to figures from researcher R.L. Polk & Co. In the same period Lexus, the Toyota Motor Sales USA luxury marque, rose from 44.7% to 46.5%.
The brand, moreover, lost some of its cachet by introducing lower-priced models. Mr. Brown’s research with owners of pricier Mercedes’ models like the S-Class found they disliked the broadened buyer base with lower-priced models like the entry-level C-Class hatchback. Despite that, most said they would continue to buy the brand. Now the one-time pinnacle in automotive luxury is trying to get consumers to fall in love with the brand again by struggling to improve its quality and regain lost customer loyalty.
Restore its luster
Mr. Brown, for one, is confident Mercedes-Benz can restore its luster and “turn it around in a relatively short period of time.” What will help, he said, is the new CLS four-door coupe, launched this year, which he called a “smash hit.”
Mercedes is fixing its slumping quality of recent years. Despite a setback with its biggest global recall in the spring of more than a million units (including hundreds of thousands in the U.S.), its initial U.S. vehicle quality during the first 90 days of ownership rose in 2005 to sixth place from 10th in 2004 and 15th in 2003, said consultant J.D. Power and Associates based on annual owner surveys."
Related Stories:
MERCEDES NAMES NEW MARKETING COMMUNICATIONS GENERAL MANAGER
Scott Keogh Was With Carmaker's Recently Disbanded Smart USA Unit
HYUNDAI NAMES NEW MARKETING CHIEF
Michelle Cervantez Was Mercedes' Top Marketing Exec
Wednesday, August 10, 2005
When in Doubt, follow the leader. BMW.
DETROIT (AdAge) August 09, 2005
Jean Halliday writes: "Online Short-Film Efforts Become the Rage of Auto Marketing"
BMW could well respond with, " Been there done that".
Four years after BMW launched The Hire, rival automakers are still trying to replicate the buzz generated by the film series and tap into the appeal of entertainment.
Beginning in 2001, BMW's 'The Hire' series established a benchmark for online short film promotions that has not been equaled since.
The issue is, should they even try. Yes it was a neat idea and yes we all thought of it at the time. However, BMW was the only company to do it and for that they deserve all the credit they have been given. But there is little to suggest ROI will be realized from all the copycat programs. These great agency resources would be better off leapfrogging the BMW films idea with the next "Best thing" and stop the derivative efforts listed below.
Audi of America has just unveiled three documentary films on its Web site that were produced by young filmmakers from the American Film Institute that feature the company's new A3. The automaker sent a crew on a cross-country road trip that left L.A. on May 3 and had them drive to New York, filming and blogging along the way. Apple and Sony partnered in the deal, which bubbled up from Audi's sponsorship of the film institute's annual film festival called AFI Fest.
Volkswagen of America bowed its scripted The Check Up at the Sundance Film Festival and released the 15-minute film online and on DVD, as part of the launch of its new Jetta in the spring. Subaru of America gathered 115 entries of 30-second films in an online promotion for the launch of its B9 Tribeca model.
Toyotas Scion, a sub-brand of Toyota Motor Sales USA is in the midst of soliciting short online films from hip-hop emcee contenders who can win a music video of themselves and the opportunity to perform live at its events.
Nissan has produced a scripted 20-minute film born out of its Original Drama ad campaign for England’s Sky One that will be packaged with the release of Fox’s drama 24 on DVD and features four new models launched by the automaker in Britain this year.
Mercury, which is trying to dust off its image with new models aimed at younger buyers launched an online blitz, called Meet the Lucky Ones, followed the comic misadventures of 10 people whose stories unfolded in 30-second videos over five weeks.
Mercury recently announced it would be the presenting sponsor of AOL's new Moviefone.com Short Film Festival as part of this fall's launch of the all-new Milan sedan. Award-winning shorts from around the world can be viewed at www.moviefone.com/shorts.
Honda owners and their cars
The Honda brand extended a 2004 TV commercial showing owners who looked like their cars via a casting call on hondacars.com. Even non-Honda owners could pick their vehicle match. Viewers voted for the best pairings, which were used in a short film only shown online.
Jean Halliday writes: "Online Short-Film Efforts Become the Rage of Auto Marketing"
BMW could well respond with, " Been there done that".
Four years after BMW launched The Hire, rival automakers are still trying to replicate the buzz generated by the film series and tap into the appeal of entertainment.
Beginning in 2001, BMW's 'The Hire' series established a benchmark for online short film promotions that has not been equaled since.
The issue is, should they even try. Yes it was a neat idea and yes we all thought of it at the time. However, BMW was the only company to do it and for that they deserve all the credit they have been given. But there is little to suggest ROI will be realized from all the copycat programs. These great agency resources would be better off leapfrogging the BMW films idea with the next "Best thing" and stop the derivative efforts listed below.
Audi of America has just unveiled three documentary films on its Web site that were produced by young filmmakers from the American Film Institute that feature the company's new A3. The automaker sent a crew on a cross-country road trip that left L.A. on May 3 and had them drive to New York, filming and blogging along the way. Apple and Sony partnered in the deal, which bubbled up from Audi's sponsorship of the film institute's annual film festival called AFI Fest.
Volkswagen of America bowed its scripted The Check Up at the Sundance Film Festival and released the 15-minute film online and on DVD, as part of the launch of its new Jetta in the spring. Subaru of America gathered 115 entries of 30-second films in an online promotion for the launch of its B9 Tribeca model.
Toyotas Scion, a sub-brand of Toyota Motor Sales USA is in the midst of soliciting short online films from hip-hop emcee contenders who can win a music video of themselves and the opportunity to perform live at its events.
Nissan has produced a scripted 20-minute film born out of its Original Drama ad campaign for England’s Sky One that will be packaged with the release of Fox’s drama 24 on DVD and features four new models launched by the automaker in Britain this year.
Mercury, which is trying to dust off its image with new models aimed at younger buyers launched an online blitz, called Meet the Lucky Ones, followed the comic misadventures of 10 people whose stories unfolded in 30-second videos over five weeks.
Mercury recently announced it would be the presenting sponsor of AOL's new Moviefone.com Short Film Festival as part of this fall's launch of the all-new Milan sedan. Award-winning shorts from around the world can be viewed at www.moviefone.com/shorts.
Honda owners and their cars
The Honda brand extended a 2004 TV commercial showing owners who looked like their cars via a casting call on hondacars.com. Even non-Honda owners could pick their vehicle match. Viewers voted for the best pairings, which were used in a short film only shown online.
BMW Beware
Jack Trout again warns BMW to pay attention to it's success.
http://www.forbes.com/business/2005/08/08/advertising-marketing-media-cx_jt_0808trout.html
I am sure that Tom Purvis CEO and Jack Pitney New BMW Marketing Chief know the rules. But it is as well to heed the warnings of the likes of Jack Trout and Al Ries, or even Laura Trout.(see archive "BMW right or wrong".)
Jack and Tom were both honored by Automotive News Magazine a short while ago. Jack has subsequently moved from Mini to BMW. Clearly, Tom wants some of the innovative magic Jack brought to Mini for the main brand. And Jack will no doubt provide this.
But they will both need to resist the pressure, wherever it comes from, to tamper with the basic positioning of the Ultimate Driving Machine.
They will need to select an agency to replace the venerable Fallon, and one that truly has the passion to handle no just a car account that many covet, but "The Ultimate Driving Machine".
I remember presenting to Victor Doolan in 1993, before Fallon had the business. At that time, no one at BMW was in love with the Ammirati line. We finished second, the most expensive finishing position in an agency pitch. The one thing we believed was sacrosanct, was the brand positioning and the line itself that expressed it.
What needed work then was the current meaning and relevance of the line, which from reading volumes of proprietary research on the subject, is as true today as it was then.
As Tom Purvis explained at a lunch in New York very eloquently a few months ago, BMW have done a brilliant job so far about managing the breadth of their product line. Including the rationale for Rolls Royce.
The emergence of "mini-Bimmer" websites for fans the 1 series is an indication that the envelope is really being pushed hard even amongst loyal BMW owners.
Even Porsche has been dragged into the sedan category stretching it's brand positioning further from it's sporstcar roots than the Cayenne.
This means that BMW will need to really pay attention to it's true brand strength in the USA to preserve the essence of the brand while expanding it's user base.
Having listened to Tom it seems to be in good hands.
http://www.forbes.com/business/2005/08/08/advertising-marketing-media-cx_jt_0808trout.html
I am sure that Tom Purvis CEO and Jack Pitney New BMW Marketing Chief know the rules. But it is as well to heed the warnings of the likes of Jack Trout and Al Ries, or even Laura Trout.(see archive "BMW right or wrong".)
Jack and Tom were both honored by Automotive News Magazine a short while ago. Jack has subsequently moved from Mini to BMW. Clearly, Tom wants some of the innovative magic Jack brought to Mini for the main brand. And Jack will no doubt provide this.
But they will both need to resist the pressure, wherever it comes from, to tamper with the basic positioning of the Ultimate Driving Machine.
They will need to select an agency to replace the venerable Fallon, and one that truly has the passion to handle no just a car account that many covet, but "The Ultimate Driving Machine".
I remember presenting to Victor Doolan in 1993, before Fallon had the business. At that time, no one at BMW was in love with the Ammirati line. We finished second, the most expensive finishing position in an agency pitch. The one thing we believed was sacrosanct, was the brand positioning and the line itself that expressed it.
What needed work then was the current meaning and relevance of the line, which from reading volumes of proprietary research on the subject, is as true today as it was then.
As Tom Purvis explained at a lunch in New York very eloquently a few months ago, BMW have done a brilliant job so far about managing the breadth of their product line. Including the rationale for Rolls Royce.
The emergence of "mini-Bimmer" websites for fans the 1 series is an indication that the envelope is really being pushed hard even amongst loyal BMW owners.
Even Porsche has been dragged into the sedan category stretching it's brand positioning further from it's sporstcar roots than the Cayenne.
This means that BMW will need to really pay attention to it's true brand strength in the USA to preserve the essence of the brand while expanding it's user base.
Having listened to Tom it seems to be in good hands.
Friday, August 05, 2005
A Different Kind of Holding Company
IPG's Nelson to Depart Amid BofA Review
AD News August 04, 2005
By Andrew McMains
This article points to the difficulty of delivering Global service.
Even the command and control Holding companies have trouble keeping their promises to their own people let alone Clients.
Unlike WPP and IPG whose agencies like Ogilvy and McCann followed their Clients around the world to service multinational Clients like American Express, IBM, Unilever and Coca Cola, Omnicom bought best of breed agencies and marketing services companies.
This is why CEO John Wren has been reluctant to brand the holding company and create “Dream Teams” like the competition.
As softball legend Lisa Fernandez said, “The team with the best athletes doesn't usually win. It's the team with the athletes who play best together.”
Bruce Nelson, chief marketing officer at Interpublic Group since 2000 and top executive on the holding company's Bank of America business now in review, said today that he is leaving IPG after a disagreement about how the account should be run.
Nelson has overseen the business from the corporate level, directing the efforts of more than a dozen IPG agencies, while IPG CEO Michael Roth is said to want to give more power to the operating units [Adweek, Aug. 1].
"My reasons for leaving have to do with my belief that IPG does not sufficiently support the holding company model that we had pioneered and built," Nelson said. "
The paper I wrote about in “A Fortunate Series of events” which I presented to Omnicom University (See archive) last month, was about how to indentify and mobilize a Global coalition of the willing. This capitalizes on Omnicom’s competitive strength, A holding company of talent, and is entirely consistent with CEO John Wren’s branded and strategically aligned Agency Network Strategy.
Clearly both the corporate and regional levels of IPG were not willing according to both Bruce Nelson and CEO Roth.
AD News August 04, 2005
By Andrew McMains
This article points to the difficulty of delivering Global service.
Even the command and control Holding companies have trouble keeping their promises to their own people let alone Clients.
Unlike WPP and IPG whose agencies like Ogilvy and McCann followed their Clients around the world to service multinational Clients like American Express, IBM, Unilever and Coca Cola, Omnicom bought best of breed agencies and marketing services companies.
This is why CEO John Wren has been reluctant to brand the holding company and create “Dream Teams” like the competition.
As softball legend Lisa Fernandez said, “The team with the best athletes doesn't usually win. It's the team with the athletes who play best together.”
Bruce Nelson, chief marketing officer at Interpublic Group since 2000 and top executive on the holding company's Bank of America business now in review, said today that he is leaving IPG after a disagreement about how the account should be run.
Nelson has overseen the business from the corporate level, directing the efforts of more than a dozen IPG agencies, while IPG CEO Michael Roth is said to want to give more power to the operating units [Adweek, Aug. 1].
"My reasons for leaving have to do with my belief that IPG does not sufficiently support the holding company model that we had pioneered and built," Nelson said. "
The paper I wrote about in “A Fortunate Series of events” which I presented to Omnicom University (See archive) last month, was about how to indentify and mobilize a Global coalition of the willing. This capitalizes on Omnicom’s competitive strength, A holding company of talent, and is entirely consistent with CEO John Wren’s branded and strategically aligned Agency Network Strategy.
Clearly both the corporate and regional levels of IPG were not willing according to both Bruce Nelson and CEO Roth.
Thursday, August 04, 2005
A Fortunate Series of Events
When I attended the Omnicom University session mentioned in "Back to the Future", I was asked by HBS Professor Jim Heskett what I would personally take back with me as an action plan.
One of the major issues we talked about was the advent of holding company pitches, in a parody title of Lemony Snickett, "An Unfortunate Series of Events" or a new trend?
I told Jim that I would develop a plan to help Susan Ellis, Exec VP Omnicom Group to be better prepared for the next Global pitch, if there is one.
I managed to squeeze this in within a week of returning to civilian life and Susan and I agreed to take the plan to Dean Watson as it involved Omnicom University.
Susan and I met with Dean Tom Watson. The result is that we decided to "test" the proposal live at the next Saturday's session at Omnicom University after they completed the Global Business case in the inaugural post graduate Class.
Subject to John Wren, CEO Omnicom Group's approval, the proposal was a go. But we first needed to test it before recommending it to John.
There was no pressure that Saturday. There is a saying at the Harvard, "Never follow Len Schlesinger".
Len was winding down his Superstar performance, a tough act follow in any circumstances.
The class was mostly DAS/Omnicom CEOs from around the world, including many local luminaries.
Tom Harrison and Dale Adams DAS CEO and President were right behind me as was the entire HBS faculty assembled together for the first time according to Tom Watson, as they are seldom in the class together.
As my life flashed before me, in walked John Wren. He was an hour early for his round table due after the lunch break.I have never felt quite so nervous about a presentation. He was not even supposed to know about it until after we had "tested it" with the class.
The short version is that despite my lousy delivery, the proposal was enthusiastically received by students, faculty, and Omnicom top management, including John.
I told the entire Omnicom world that Saturday that there may never be another pitch or that it could happen as soon as when they got back from the university. But either way, we had better be prepared.
John Wren also predicted at the same session that global Clients we had not won in the previous 5 global pitches like Bank of America would review their International business within two years and that Interpublic was not likely to survive as a holding company.
This is this morning's news.
"Bank of America, now one of Interpublic Group's largest clients, has contacted WPP Group and Omnicom Group about its account, sources said. The Charlotte, N.C., banking giant spends nearly $600 million in integrated marketing annually".
We all looked pretty smart. Now we have to win it to be smart.
One of the major issues we talked about was the advent of holding company pitches, in a parody title of Lemony Snickett, "An Unfortunate Series of Events" or a new trend?
I told Jim that I would develop a plan to help Susan Ellis, Exec VP Omnicom Group to be better prepared for the next Global pitch, if there is one.
I managed to squeeze this in within a week of returning to civilian life and Susan and I agreed to take the plan to Dean Watson as it involved Omnicom University.
Susan and I met with Dean Tom Watson. The result is that we decided to "test" the proposal live at the next Saturday's session at Omnicom University after they completed the Global Business case in the inaugural post graduate Class.
Subject to John Wren, CEO Omnicom Group's approval, the proposal was a go. But we first needed to test it before recommending it to John.
There was no pressure that Saturday. There is a saying at the Harvard, "Never follow Len Schlesinger".
Len was winding down his Superstar performance, a tough act follow in any circumstances.
The class was mostly DAS/Omnicom CEOs from around the world, including many local luminaries.
Tom Harrison and Dale Adams DAS CEO and President were right behind me as was the entire HBS faculty assembled together for the first time according to Tom Watson, as they are seldom in the class together.
As my life flashed before me, in walked John Wren. He was an hour early for his round table due after the lunch break.I have never felt quite so nervous about a presentation. He was not even supposed to know about it until after we had "tested it" with the class.
The short version is that despite my lousy delivery, the proposal was enthusiastically received by students, faculty, and Omnicom top management, including John.
I told the entire Omnicom world that Saturday that there may never be another pitch or that it could happen as soon as when they got back from the university. But either way, we had better be prepared.
John Wren also predicted at the same session that global Clients we had not won in the previous 5 global pitches like Bank of America would review their International business within two years and that Interpublic was not likely to survive as a holding company.
This is this morning's news.
"Bank of America, now one of Interpublic Group's largest clients, has contacted WPP Group and Omnicom Group about its account, sources said. The Charlotte, N.C., banking giant spends nearly $600 million in integrated marketing annually".
We all looked pretty smart. Now we have to win it to be smart.
