THE MEDIA BARONS: JACK KLUES - Starcom's chief executive may have established the brand in the US but he still has global goals

In 1967 Leo Burnett gathered together the staff from his Chicago agency and delivered a speech called 'When to take my name off the door.' It was a speech about principles. Burnett was determined that the agency he founded in 1935 must always stick to his fervent business philosophy for as long as his moniker hung above the door. And he warned that if ever the agency troops 'start giving lip service to this being a creative agency and stop really being one', then his spirit would materialise to rub out his name from every single floor in the Chicago agency.

In 1967 Leo Burnett gathered together the staff from his Chicago agency and delivered a speech called 'When to take my name off the door.' It was a speech about principles. Burnett was determined that the agency he founded in 1935 must always stick to his fervent business philosophy for as long as his moniker hung above the door. And he warned that if ever the agency troops 'start giving lip service to this being a creative agency and stop really being one', then his spirit would materialise to rub out his name from every single floor in the Chicago agency.

So perhaps it's not surprising that in the past three years Leo's name has been rubbed from seven of the 20-odd floors of his Chicago flagship. Because almost a third of the gleaming riverside headquarters is now in the business of media, not creative. And the Leo Burnett name has made way for a new one: Starcom.

But it's unlikely that the launch of Starcom will have troubled Leo's ghost much. While other media operations have hacked hungrily at the umbilical tying them to their creative agency, Starcom still sucks from the Burnett teat.

Jack Klues, Starcom's chief executive, but wearing his Burnett Lifer badge with pride, has music for the ears of the lean, mean media independents.

'We didn't form Starcom to see how fast we could grow our media business or contribute to revenues to the holding company. It was formed to ensure a superior media service to the full-service clients of the Leo Burnett company.'

Don't pinch yourself. You haven't been transported back to the mid-80s, when such statements might have been rather more commonplace. Considering we're in the 21st century, this could possibly be the least ambitious mission statement ever crafted by a media company. It's certainly got some of the newer Starcom blood outside the US homeland grinding their molars in frustration.

Anyone born into a more aggressive media environment might well find Klues' conservatism regressive. 'Our connectivity to the brand agency is a big part of our competitive advantage and we would be foolish to walk away from that,' he says, though in truth Klues never actually says things. He asks. His sentences lilt like questions, soaring upwards at the end. You wonder whether to answer.

'Of course we do have media-only assignments but we are very selective about those assignments, and very sensitive and protective of the brand agency's long-standing, full-service relationships. We could never even fathom pursuing business that would be in direct competition with our major multinationals. We only pursue business that is compatible with our principles.'All of which could easily leave the uninitiated wondering what is the point of Starcom at all.

But don't be fooled by the modest approach and the seemingly narrow scope.

Klues has driven Starcom to become one of the hottest US media agencies around. The very creation of Starcom in America was a bold and visionary manoeuvre by Klues and Burnett at a time when rival full-service agencies were still denying the inevitability of media separation.

In fact, while other media networks have been forced into bitter battles with their group creative agencies, particularly over hiving off media planning, the Starcom/Burnett mantra of 'separate to integrate' has steered the two sister operations relatively calmly through such minefields.

'You know that if I said things had gone perfectly smoothly, it wouldn't be an honest answer and I'm only going to give you honest answers,' as if I'd expect anything else from the man known affectionately by his staff as Uncle Jack. 'We've had our internal debates. They were not insurmountable, obviously.

Burnett always knew that its media department planned as well as bought.

Our aim has always been to ensure that Burnett has the best media service.

We had our squabbles on how Starcom would work rather than on the philosophy of what we were doing. Other unbundled media operations have burnt some bridges to get to where they thought they needed to be. Thank God we didn't need to go down that path.'

Well, it's not much to go on if you're itching for a fight story, but then even if there was blood hidden on carpets, Klues wouldn't be the one to pull back the obscuring furniture. Flanked by a member of the formidable Burnett PR machine, he doesn't let much slip. Despite the fact that it's bleary 8am, he's consumately corporate; the bland hotel where we're having breakfast seems strangely appropriate. But while he doesn't slap you round the face with an edgy personality, Klues is earnest, genial. A nice bloke, I'd say. He's a little uncomfortable with the Uncle Jack tag ('well, if it means I approach things in the spirit of collaboration, I guess it's OK') but it suits, particularly since his looks belie his relatively tender (in US terms at least) years: 45. And anyway, until recently he had Bob Brennan, Starcom's chief operating officer, who is now running Leo Burnett in North America, to play the bad guy.

Klues says Brennan was the shrewd businessman who knew the right path to take and pursued it aggressively. In contrast, Klues says he is the one 'with a more coach-like style, whose job is to ensure people play their best. I have a very strong belief in teamplay, that's what I want to be known for.'

Klues' mantra of separate to integrate sits happily in this context.

Such a maxim might not make for the most competitive, aggressive or, indeed, rounded media agency, but it's certainly liberated the Starcom operation to focus on the job in hand. Which explain why Starcom has netted some of the US' most coveted blue-chip media accounts, including the dollars 200 million Procter & Gamble press buying and the stunning dollars 2.9 billion General Motors media centralisation, a win which left jaws on floors round the rest of the media market.

Such successes would probably not have been possible without the creation of a separate media identity. 'I remember years of sitting in the media department writing memos requesting some investment in this piece of software or that research study. And the weeks would go by and the memos would go up the agency food chain. And, to be honest, the higher they went up the less people would know about the media market. They were making decisions weighing my requests against some creative needs or client service needs and trying to determine how best to prioritise. Now we're managing ourselves we can respond, invest properly and be accountable for that back to the company. We've become a more responsive client entity now that we manage ourselves as a business.'

Wrapped up in all this lean business machine stuff is a wholesale refurbishment of Starcom's offices. 'We're ripping out all of our corner offices,' Klues explains, from the comfort of his own impressive but clearly doomed double-aspect home. 'We just don't have room for that sort of hierarchical statement here any more, it's irrelevant.'

Instead of the willy waving office, Starcom-ers are getting pods: ugly, rather soul-less but functional, egalitarian work stations with nice high screens so that you can work all afternoon without seeing another soul. On my post-breakfast tour we spend ages searching for the systems guy. No-one knows who he is, not even the people sitting in the same row of pods. Such ego-busting is a statement of the no-nonsense business sense that is now sweeping through the media operation.

For all that gusto, though, there are very real hurdles still to overcome before this really starts to feel like a unified network. When the Leo Group and the MacManus Group merged to form B-Com3, a new holding company was launched for the media assets, Starcom and MediaVest, called, typically uncontroversially, the Starcom MediaVest Group (SMG).

The two media brands shared a number of key clients, notably P&G and Fiat, and had few competing brands. Pulled together into SMG they now enjoy fourth position in the global rankings, with billings topping dollars 13 billion, a status neither could have hoped for alone.

But the sparkle that has characterised both Starcom and MediaVest's US success has yet to be replicated throughout the new network. The structure of the network itself is still a bit of a fudge.

What were previously two weak and patchy networks are now being merged into a single entity called Starcom.

A classic case of tying two lame ducks together in a three-legged race? Media-Vest was really just a handful of successful offices and a bucket full of holes. And it's a real indictment of the Leo Burnett international media product that when it came to doing something in the crucial UK market the agency had to merge its media with its half-sibling, Motive (the media agency of Bartle Bogle Hegarty, in which Burnett has a minority stake), to achieve scale and positioning.

No global merger is ever straight-forward and this one's no different. In America, Starcom and MediaVest have historically been fierce rivals and are both well established media power-houses; there's little logic to a merger of the brands for the forseeable future at least. Two brands will be maintained in the UK, too. By merging Starcom with Motive, any chance of a subsequent merger with MediaVest was buggered.

Even merging round most of the globe, though, still leaves some holes in the network. Will Klues have to get his cheque book out and buy plugs for those gaps? 'Absolutely. Especially in Europe. That's always been our Achilles heel. There's work to do in Germany and Scandanavia. And Asia-Pacific and Australia. India, too.' That'll be a fair chunk of the world, then.

But Klues insists that in territories where it does have a flag, SMG already represents a fine combination of complimentary skills. 'MediaVest was very implementationally orientated. I don't think they were missing the strategic skills but the tools to be a strategic resource weren't always there. At the same time, there are markets where Starcom is a great planning operation but maybe a marginal buyer. The beautiful thing - and maybe you could see it as a challenge - is that these two entities, one driven by planning, one by buying, are now coming together. It's a very powerful and compelling story if you can say I've got the best of everything.'

But won't the US and UK MediaVest agencies be disenfranchised from the media network, in name at least? How committed are they, really, to the Starcom network and vice versa? 'We have to look beyond the understandable but often emotional branding issues,' Klues insists. 'I don't dismiss the branding issue, I really don't. But at the end of the day, I want folks on both sides of the fence to understand that this is about putting the best class of people in the right positions to drive the Starcom MediaVest proposition, whatever we call it in any part of the world.

'Starcom will be our lead global brand, but that does not mean that MediaVest will be less global or go away. Maybe in time, knock on wood, we'll have a third brand, because that will be a sign we're growing. They will share the same culture and backroom resources such as technology and research tools.'

Dentsu, a shareholder in B-Com3, will also be integrated into this multi-brand jigsaw. Outside Japan, Dentsu's media assets are slender, including CDP Media in the UK (a joint venture with Tempus). But Dentsu is already working with Starcom MediaVest on a number of research initiatives such as multimedia optimisation. And in Japan, the B-Com3 partners have formed Beacon, bringing together their media assets with some injection of talent and resource from Dentsu. Klues says that further collaboration around the world is under discussion and points out that 'more and more, Dentsu has directed accounts which are looking for a bigger media participation towards Starcom Media-Vest. But it's a little too strong right now to say that Starcom MediaVest Group will be Dentsu's international media partner.'

All in all, Klues is rather pleased with the way things have turned out.

Starcom has no sexy, edgy positioning, but it's proving a very comfortable option for some very nice clients. But will 'separate to integrate' really hack it once everyone's comfortable with media independence? 'What I like about media - and what sometimes I hate about it, too - is that this is an industry that doesn't encourage change, it demands it,' Klues thrills. 'You either change or get out.' Perhaps there's a radical in him yet.



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