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
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
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
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
'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.'
i 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
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
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
'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
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
Schmetterer is having fun, lots of fun, and it's obvious for all to see.
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
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 genuine enthusiast, who is interested and
interesting. Euro's entrepreneurs may still implode, Havas's priorities
may change, but it did not seem likely in that 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.
- This article appeared in January 2000.