Behind the elegant facade of 285 Madison Avenue sits a
Inside, at the headquarters of the Young & Rubicam global network,
things are anything but elegant. From debilitating merger speculation,
damagingly divided loyalties, staff redundancies and a record number of
clients walking, it's been a tough few years at the world's
fifth-largest advertising agency.
And it's up to Mike Dolan, the chairman and chief executive of Y&R
Group, to sort it out.
Dolan is the man briefed to breathe new life into the flailing agency,
injecting strategy and direction where for too long there has been none.
His first hurdle is to establish business as usual following WPP's
$4.7 billion takeover of Y&R in October last year. Once the ship
has steadied, the real challenge will be to grow the business and get to
grips with an agency that is a prisoner of its own history.
Described as a charming yet resilient leader, the genial Dolan cuts an
unusual figure among chief executives - not least for his habit of
courting employee opinion and then acting on it. To many, Dolan is the
fresh air that the agency so desperately needs. Although his previous
incarnation as the vice-chairman and chief financial officer of Y&R will
mark him as a money man rather than an ad man for some time yet, Dolan
has an impressive history in general management - experience that he
will need to bring into play as he rolls up his sleeves in the
Starting life at JP Morgan, he became a partner at Booz, Allen &
Hamilton, then joined the construction and mining conglomerate Peter
By 1991 he had taken the president and chief executive seat at Snack
Ventures Europe, the joint venture between PepsiCo Foods International
and General Mills. He joined Y&R in 1996.
Which means Dolan was in place when the rot started to set. Dolan
believes the train of events leading to Y&R's downfall can be traced
back to 1997, when a recapitalisation of the company with Hellman &
Friedman, the San Francisco-based private equity investment company,
facilitated a stock buy-back. Although it was denied at the time, this
represented a first step to taking the company public.
It was also a deal which fostered an unhealthy management culture, Dolan
now admits. 'The recapitalisation meant that a whole bunch of very
senior people who would have otherwise retired decided to hang on. We
didn't anticipate the number who'd wait and opt for retirement once
they'd gotten the gain they were looking for.'
Following the IPO in 1997 came further distractions when WPP's
intentions to buy the company were revealed. The deal was inevitable, as
without the backing of such a substantial player Y&R was in danger of
being trampled in the fast-consolidating communications market. Still,
aside from the top echelons of the company, the multibillion-dollar deal
was not widely well received.
'There was a paranoia among employees of what would happen when the ink
dried,' Dolan recalls. 'They seemed to think Martin (Sorrell, WPP's
group chief executive) would come running in with a sledgehammer. They
thought there was a secret plan to try and break Y&R apart.'
The immediate lay-off of 100 staff in a bid to streamline operations
went some way to explaining - and justifying - this mistrust. And,
seeing the agency's eye had been taken firmly off the ball, clients
showed their dissatisfaction by taking their business elsewhere. When
the year closed, the agency had suffered the high-profile loss of
flagship blue-chip clients including the $175 million KFC
creative account, the US Postal Service, the US Army business worth
$100 million, and most of the $50 million Kraft Foods
business. Plus United Airlines consolidated its global account into
Fallon, and Ford decided to centralise its European business into Ogilvy
& Mather. This, along with other casualties such as the $120
Citibank account, cost the agency almost $800 million in
Speculators have also cited dissent in the higher ranks and distraction
with the newfound wealth from attractive stock options following the
takeover as triggers for the client exodus. And things weren't helped
when the agency did not present a united front. 'Ed Vick (Y&R's former
chairman and chief creative officer and now the chief executive of Y&R
Advertising) was unwise to be so uncandid in print about people getting
rich post-sale,' one insider says of Vick's notorious comments.
Peter Georgescu, the former chairman and chief executive of Y&R Inc, who
had been opposed to a takeover, and Tom Bell, the former chief executive
of Y&R, whose ambivalence about the deal was well known, both left the
agency, while Vick is the only figurehead from the old rat pack
The departures brought a series of problems. One senior Y&R source says:
'Mike's a really nice guy but he's been propelled into this position.
Tom Bell wasn't going to share power with Martin (Sorrell), so now
Mike's the boss and he's got people reporting to him who didn't before,
like Ed Vick.' In addition to the obvious politics, the management
upheaval has left the US office, the lynchpin for the whole company,
wobbling. However, he needs someone with a fresh perspective and rumours
are circling that he's looking overseas to find such a saviour to help
turn the tide.
While Dolan is teeing up to be a strong leader with vision, there are
certain observers who are questioning where the inspirational leadership
for a global agency brand is going to come from. A high-profile team of
heavy hitters is needed to reinvigorate the network and New York in
particular needs a heavyweight to turn fortunes around. 'It'll need a
changing of the guard in the New York office of quite substantial
proportions,' one WPP observer says.
And Dolan has got to be surrounded by good advisors. 'He's got too many
people in his ear,' the insider adds.
Dolan,though, insists he has the right people around him to make it
'We've got a very strong group of people in New York at the working
level,' he says, adding: 'We need to attract the best people and build
from the next levels down. This is our most important task.'
But the agency is still missing a worldwide creative director. 'The
global creative head is less of an issue than getting it right across
the network,' Dolan responds. At the moment Jim Ferguson, the flamboyant
Texan, is running the New York office but Dolan admits: 'We need to
regain a much more prominent role on creative leadership.'
One of Dolan's key tasks will be to drive home Y&R's integrated
positioning, historically its raison d'etre but a positioning that
observers point out has not been much in evidence recently.
Sorrell says that Dolan, who is now one of the four Y&R representatives
on the WPP board, is well placed to push ahead with this. 'Mike is a
first-class operator who is making tremendous progress with Y&R's
differentiation as a truly integrated advertising and marketing services
company - spanning advertising, direct and interactive, public affairs
and public relations, corporate identity and healthcare
Dolan, though, admits: 'We've got a long way to go to see it to
fruition. Y&R was known for its intellectual product and point of view.
Now we have to take a much more prominent stand on this.'
While Y&R Advertising has had its troubles, so have its sister
Parts of the Y&R portfolio, which include Y&R Advertising, The Media
Edge, 2.1, Impiric, Burson-Marsteller, Landor Associates and Cohn &
Wolfe, have suffered a direction crisis of late. Impiric, formerly
Wunderman Cato Johnson, has borne the brunt, culminating in the removal
last December of the worldwide chairman and chief executive, Jay Bingle.
'Impiric was flat in the water before,' says Dolan, who was seen as a
staunch advocate of Bingle's bid to make one of the world's biggest
direct marketing companies more contemporary by bringing it into the
multimedia age with controversial moves such as the infamous name
Dolan is reticent about whether what Bingle was proposing was too much
too soon. 'We were just a little bit out in front of where the market
was,' he counters. But the Wunderman name was an institution and many
believe it was a mistake to get rid of it; Dolan won't rule out a
reversion to the old name.
As observers wait to see if the changes at the top of Impiric are having
a positive effect, it's likely we'll see a similar approach to the other
strands within the Y&R group. It's clear now that Dolan is in the hot
seat, he's looking to give the company a well-needed spring clean. His
next stop looks set to be the network's conflicting media issues.
'We've identified media as one of the biggest areas of synergy within
the group,' he says. 'We want to leverage our strong position in North
America and strengthen it elsewhere,' he adds, indicating Y&R has plans
to strengthen Media Edge in Europe, where it is seen as a weaker player.
Mounting speculation has Media Edge's back offices combined with
MindShare, but Dolan is emphatic that no details have been finalised
yet, and he's leaving the matter in the hands of his experts. 'We've
asked Irwin Gottlieb (the chief of MindShare Worldwide) and Beth Gordon
(the chief of TME) to think about what's the best way to capture those
synergies. We need to make sure that if we put the back offices
together, they've got extra clout. But there's no burning deck issue
In many markets Y&R is still a formidable player. Seventy five per cent
of Y&R offices are in the top five. But what effect have the changes had
in the UK? Dolan, the man responsible for major acquisitions in his
finance days, was instrumental in engineering the Rainey Kelly Campbell
Roalfe deal. 'The thing I like about them is that they operate as a
team,' Dolan says. 'It's like a puzzle where the pieces fit together.'
This kind of model infrastructure is what is missing in the New York
office, but is clearly the kind of creative synergy Dolan is looking to
emulate elsewhere in the network. 'We've got to get our pieces to work
together as a team seamlessly,' Dolan agrees. But the London agency is
still feeling the aftershocks from the tremors of the flagship office
and until issues over the Atlantic are resolved, RKCR/Y&R needs to
concentrate on staying true to its potent brand and let New York ride
out the storm.
A clear Dolan mission is to convince clients of the agency's ongoing
commitment to their business. He's implemented a scheme where clients
now have someone at the top of the company to partner those who handle
their business on a daily basis. Dolan's personal remit covers Colgate,
AT&T and Ford, and he goes to client meetings along with the account
team. 'We'd lost that client contact, and now we're getting it back,' he
says resolutely. This approach seems to be making inroads. 'He's been
making the right noises, and keeping everyone focused on their
responsibilities to clients, which has to be the priority for the agency
at a time like this,' a Y&R insider says.
But how does Dolan intend to court new business? 'A lot of the client
losses relate to problems we had in terms of managing accounts over the
last couple of years,' he says. But in the aftermath, he believes,
'we're beginning to get our game back'. The approach is going to entail
starting with existing clients, but he's under no illusions, saying:
'We've got to prove our way back in.'
He is philosophical about Ford's decision to return lead status in
Europe to O&M. 'We were very disappointed because the clients we dealt
with were very pleased with the work, and puzzled with the decision, as
were we. They felt there was a benefit to align it into one network. The
regions have to live with those decisions,' he says, while others cite
an inability to crack the brief as the real reason why the account moved
'We've got to go out with deeds, not words, and aim to replenish the
bench,' Dolan adds, and the changes in Impiric look set to be a model by
which to rebuild the creative business. His rallying cry is typical of
the enthusiasm he displays for his task, but it's too early to see what
results such rousing words will bring. The early signs are good. Dolan
seems to be dedicated to his cause, and believes the morale of the group
is better than it was. 'They feel it's the beginning of the turn,' Dolan
says - although a Y&R insider counters: 'Morale is no better. There's
nothing to indicate they've turned the corner yet.'
But positive signs have come in the shape of the $100 million
Computer Associates International and $75 million Land Rover
new-business wins, with Jaguar tipped to follow. And the Media Edge has
recently taken on the global media responsibilities for Chanel and won
the rebranding of Andersen Consulting as Accenture.
Gradually, the clients are coming back. Now Dolan must now convert the
dribble to a flood if he is to turn the tide at 285 Madison Avenue.