If the aim of the merger was to create something bigger and better out of the strong Draft and the weakening FCB, so far I’d say they’ve failed.
Last week, the DraftFCB network lost its longest-standing client, SC Johnson, and with it a reported $80 million in global income, and it suffered a real knock to its reputation.
After more than half-a-century together, SCJ and DraftFCB (or, really, FCB as it was for most of that time… the good years) had a great run. Relationships like that barely exist anymore. Perhaps it’s no surprise, then, that this one’s just died. Still, after 58 years of partnership, things must have got pretty bad for SCJ to walk away.
In typically bullish fashion, Roth moved quickly to reassure all those staff now worried they might be about to lose their jobs: "The reaction to today’s news, in both the stock market and in the industry trade press, may be disproportionate. The impact of the SCJ loss will not be material to our 2011 financial results."
SCJ’s decision is in some ways another reminder that the old client/agency bonds are increasingly irrelevant. As the global head on the account, Mark Pacchini, admitted to his team: "A 58-year relationship buys you (correctly so) little more than some brand knowledge in today’s highly competitive global marketplace."
Most clients want efficiencies (first) and creative excellence (second); relationships (and people) still matter, but only once the other two boxes have been ticked. And, on that score, DraftFCB didn’t help itself by managing to lose its North American president, Mark "Mr SCJ" Modesto, last summer after 30 years at the agency. Internal politics were blamed.
In the end, the "agency of the future" was beaten to the $1 billion SCJ prize by Ogilvy & Mather and BBDO, with WPP’s Maxus taking on the media buying from IPG’s media shops and media planning, intriguingly, aligned with the creative agencies’ sister media shops.
It is a rather inelegant solution in some ways, but it’s impossible not to read into the decision a prognosis on the state of DraftFCB and its original merger ambitions. The network seems to be falling short of its initial promise. Mind you, looking back at the press coverage from the time, it’s clear there were plenty of sceptics. Back in 2006, an analyst from Merrill Lynch told Advertising Age: "We do not believe this is a good idea, given the difficulties encountered in previous mergers such as Bozell and FCB as well as Lowe and Lintas."
IPG has a pretty dire record on big agency mergers. We’ll soon find out whether the SCJ loss is the jolt required to stop this union going the same way, or proof that it already has.
When Interpublic Group merged Draft and FCB back in 2006, IPG's boss, Michael Roth, enthused that the result would be "the agency of the future". Five years later, it doesn't feel that way.