The Kings Of Madison Avenue: Bob Schmetterer - Stefano Hatfield talks to the New Yorker behind Euro RSCG’s meteoric rise as a network

Euro RSCG is downtown. Way down in the bowels of Manhattan where Hudson meets Houston. It is not entirely alone; Saatchi & Saatchi is diagonally across the street - not that, in typical New York style, the two agencies seem particularly aware of each other’s existence.

Euro RSCG is downtown. Way down in the bowels of Manhattan where

Hudson meets Houston. It is not entirely alone; Saatchi & Saatchi is

diagonally across the street - not that, in typical New York style, the

two agencies seem particularly aware of each other’s existence.



To get to Bob Schmetterer’s office you walk through the swish foyer of

350 Hudson St, into a lift with a heart-stoppingly beautiful blonde

employee, to be disgorged on the 6th floor. Like Saatchis, it feels

different from midtown agencies. It is self-consciously modern. To be

downtown is a statement.



Chiat Day used to be downtown, Bartle Bogle Hegarty is.



Schmetterer, the worldwide chairman and chief executive officer since

April 1997, is happy to make such statements. He has a corner office,

true, but it is not like most other CEO corner offices. It is not full

of reproduction furniture or neo-country trinkets. There’s not even an

attempt to recreate a domestic living room. It’s functional and

uncluttered, a modern place of work, with possibly the most all-binging,

all-bonging e-busy computer terminal of any adland big cheese save

Martin Sorrell.



It’s deliberate, of course. Schmetterer wants to position Euro RSCG as a

modern alternative to the old guard. He is helped in this regard by the

child agency’s nine-year-old history. And the fact that what has quietly

become the fifth-largest agency network in the world is also the

second-largest by revenues from new media.



It further helps that Euro’s parent company, Havas, the world’s

seventh-largest global marketing services group, is French, not

American. Run by Schmetterer’s predecessor, Alain de Pouzilhac, from

Paris, Havas is little known in the US, let alone understood. As

recently as 1997, this lack of profile could be interpreted as a

problem, but the business context is changing so fast that today it’s

actually an opportunity. Euro RSCG has no baggage.



Nor does Schmetterer. A native New Yorker, despite being California

mellow, he joined the ad industry in the 70s, attracted by what he

describes as the idea of ’living out the revolution of the 60s in the

business environment of the 70s’. Having married and divorced young, he

lived a Studio 54 life, before marrying his second wife, Stacey, in

1987. That same year he met the business partners who were to form

Messner Vetere Berger McNamee Schmetterer, now a dollars 1.3 billion

agency.



Schmetterer joined after the first year. Together with his former

partner and good friend, Ron Berger, he introduced a more democratic

operating structure (it was founded as a partnership of 23 staffers,

much more along the lines of a legal practice than most agencies) and

embraced technology, particularly e-mail, half-a-decade or more ahead of

many of its rivals.



Clear that they wanted to be ’significant, and not just a boutique’,

MVBMS was soon bigger than its name plate, becoming the fastest-growing

agency in the US. In the early 90s, they were then attracted to the

’modern’ (that word again) feel of what was about to become the Euro

RSCG network.



They must have seen something, because to any of the outsiders present

at the initial Euro RSCG worldwide get-together at Club Med (then a

client) in Marrakech in 1992, it was more like Fred Karno’s army.



Under de Pouzilhac the network prospered despite the handicaps of

antipathy between certain senior former Eurocom and RSCG employees, the

relative weakness of key European clients such as Peugeot-Citroen in the

US, and the clunky name.



But by 1997 it was clear that de Pouzilhac would move up to run the

restructured Havas and needed a successor. It was a crucial decision to

appoint an American and then let him choose to relocate the agency’s

worldwide headquarters to the US.



It was, Berger says (with a little more enthusiasm than Paris might find

healthy), ’an important statement that this is not a French network. As

much internally as externally, Bob has brought clarity of leadership to

what was a disparate group of entrepreneurs.’



The achievement to date is already extraordinary and underrated,

particularly in Britain where despite the success of messrs Wnek and

Gosper, we probably do still regard Euro as a French network. But

notably it has been achieved without being a major Procter & Gamble

(Euro’s Jordan McGrath is on the roster), Unilever or Colgate agency,

nor GM, Ford or Daimler-Chrysler.



Surely this is a limit to Euro’s potential growth?



Mr Mellow is ready for such questions, pointing out that none of the

major P&G agencies is in the top five globally - a fact about which P&G

is concerned.



’It’s a view I understand but I think it’s very backward-looking. The

companies you name are very important and will continue to be so. But

when we look at our growth and the major clients of the new century, you

have to ask what will those categories be in the future? Perhaps FMCG,

but I’m not sure?



’Pharmaceuticals companies, technology companies, telecommunications

companies and luxury brands will definitely be there,’ he continues.

’They are categories that from a socio-dynamic standpoint have the tide

going with them. Look at how pharmaceuticals have embraced the internet

compared with FMCG. You definitely need to have clients in the

categories I’ve just talked about in order to be successful. I mean

global clients, not local.’



In the light of AOL’s merger with Time Warner, and Vodafone’s moves

towards bringing the internet to mobile phones, who are these clients on

which Euro’s future is predicated? It’s an impressive roll call.



MCI Worldcom (mostly in the US), Intel, Microsoft, Nasdaq, and Philips

head the tech list; LVMH is the luxury client; while Bristol-Myers

Squibb, SmithKline Beecham and Bayer, Rhone Poulenc and Glaxo Wellcome

fit the pharmaceuticals prescription. Meanwhile, we should not overlook

more traditional clients such as Peugeot-Citroen, Sara Lee, Kraft,

L’Oreal, Nestle and Danone.



So does Schmetterer believe that the MCIs of the world will be the

future P&Gs? He is extremely confident.



’Yeah, and we deal with lots of telecommunications companies. Part of

this growth is the freeing up of the de-regulation of media and telecoms

around the world. Fifty per cent of the people on earth still have not

made a phone call. The sociological impact of mobile telephony is

immense,’ he says.



’The need for branding has never been greater. One of the great lessons

of 1999 is recognising that the majority of work being done for those

companies is not new-media work but traditional work. What this gold

rush has done is make marketers wake up and say wherever this is going,

we better have a brand. Because that’s the centrepiece, that’s what’s

valued when these companies do IPOs, that’s what’s valued by the people

who work there, and I think it’s done a great service for shaking up in

a positive way every company in the world into recognising the power of

creating a clarity of communciation about what you do.’



Some agency heads are more evangelical about the new-media world than

others. Schmetterer is clearly one of them - as befits the CEO of the

number two agency group by new-media revenue. He is constantly being

asked to speak and write about his views. And he often says yes, a fact

that has made him the target of sniping from some of his peers, who

privately mutter about the ’hype’.



Schmetterer is undeterred: ’This is a life-changing thing. It’s an

’inflection point’ you are talking about, a fundamental change in the

way that communication happens, that business transacts, and the way

that people relate to each other and brands. It is by far the most

important change in my lifetime - more so than television.’



He is also aware of the flak he gets.



’I find myself being labelled as anything from a visionary to a zealot.

The misperception lies in trying to label the internet in a very precise

way. To say it’s a new medium is not enough. It has inspired a level of

creativity in business unlike anything I’ve witnessed. Suddenly lunches

with clients’ CEOs aren’t about golf. They are about creative thinking.

How are we going to leverage this, use this?’



He does, however, share the worries of many of his peers about how

agencies will attract and retain talent in this area. He believes it is

possible through promoting earlier and ceding operating control,

allowing younger staff to ’leapfrog years of waiting their turn’, and

migrating talent around a network.



’Agencies have never managed succession well, Schmetterer asserts.

’Ninety-eight per cent of all agencies that ever existed have gone.

Agencies have not planned long-term. The people that did were people

such as Ogilvy, which is the reason why they are alive as companies

today.’



It’s a moot point as to whether Ogilvy is alive today, if alive means

independent. Schmetterer has firm views on the difference between the

network and the holding company, and what the holding company should be

about, particularly in the context of the era of merger mania.



’The big deals that are being announced are for the benefit primarily of

shareholders, in theory that should be good for clients too. Of course,

it always says clients in the first few lines of the press release, but

it’s about shareholders if it’s a holding company deal. There’s a

continuation of consolidation among holding companies, not among

agencies. It’s an important distinction. Agency mergers have to be about

clients and advertising.’



He states categorically that Euro is a buyer, citing Havas’s plan to

double the size of its business by the end of 2001. (Schmetterer himself

made 33 acquisitions in 1999.)



’Whatever the premier league is, we need to be in a league where any

client in the world would look at us as a viable alternative. In the

holding company world the definition of the premier league is being

drawn not by clients but by investors. They are not looking for exactly

the same thing as clients. We need to have access to the financial

leverage and resources to attract people, to acquire, to invest in

technology.’



Occasionally, Schmetterer betrays traces of his former independent

entrepreneur self. He muses aloud that the desire to run things isn’t

the same. ’In both New York and London in the 80s there was an

incredible number of start-ups. Now where are they? Now is a great time

to do a start-up. Not all clients will be global, and then not all

global companies will have the same ideas about global campaigns,’ he

says.



’When you look at the top ten global networks the average age of the

names is 80 years, and all but one of those (Euro) grew primarily with

clients around the globe asking for service. Euro grew entirely through

a combination of acquisitions and mergers; I came from one of the

agencies that had been acquired. We were entrepreneurs. There’s an

energy in that that is incredibly important for our business.’



I ask whether it’s inevitable that the more successful the agency

becomes through global campaigns like Intel, the less influence those

local entrepreneurs will enjoy?



’It can happen,’ Schmetterer agrees, ’but that’s where the balance is

very important. I think we have 28 global clients now out of 3,000

(admittedly many small local businesses). There is still a tremendous

opportunity for agencies that have a clear vision in local markets.



’We have a lot of rugged individualism and a lot of strength. I want to

instill a pride about the network where from that pride comes network

cohesiveness.’



So, is changing the name a dead issue?



’What would you do, Stefano? When you grow up with a name like

Schmetterer, you have a whole different perspective on difficult names.

We have looked at all ways of modifying the name and research

and ... well, Euro has come to mean something and we shouldn’t throw

that away.’



Schmetterer is having fun. It is worth mentioning because I’m not sure

the same could be said of some of the other Kings of Madison Avenue

Campaign meets. He is revelling in the fact that de Pouzilhac gambled on

appointing an American, let him move Euro’s headquarters, and saw the

gamble pay off.



He works hard and, importantly, thinks hard, and enjoys the good life

that such dedication brings. He has a 1780s house on the Hudson River

and another in Martha’s Vineyard. His passions are old houses, the sea

and boats. He is an enthusiast, who is interested and interesting.

Euro’s entrepreneurs may still implode, Havas’s priorities may change,

but it did not seem likely in the downtown corner office. We laughed a

lot.



Berger, a long-time friend and business partner, describes Schmetterer

as ’one of the greatest shoppers of all time. He travels so much he

forgets he has things, and can buy something he likes ten times. Bob

enjoys enjoying things.’



Schmetterer himself is happy to be quoted as sharing the belief that

’living well is the best revenge’. At 56, it’s clear that the boy from

the Bronx still has a lot more scores to settle.



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