Damn, damn, damn. Campaign's first face-to-face interview with Roy
Bostock in ten years and no revelations to report. There was a highly
promising moment as he veered towards talk of 'deal-making within the
next three years but not before the end of this one' but that was the
nearest we ever got to a scoop.
Of course, the chairman and chief executive of New York's MacManus Group
is clever enough to head off all attempts to needle him into saying
anything. In fact, I suspect he deliberately spins his corporate-speak
not to elucidate but to daze and confuse.
But there is a good reason: he is up for a deal. While the bigger
advertising groups must acquire smaller players in order to boost
earnings and satisfy their clients' wish to globalise, mid-sized players
like MacManus are the likely targets.
The trigger for this mating mania came in January when Procter & Gamble
loosened its conflict policy, allowing holding companies to handle rival
brands at sibling networks and freeing roster networks to handle
competitors' brands in other categories - Unilever and other arch rivals
excluded, of course. MacManus is the subject of the rumours because its
flagship network is DMB&B. Recently renamed D'Arcy, it is one of P&G's
four global shops.
Privately owned MacManus, which Bostock has headed since 1997, is the
holding company of D'Arcy (key clients: Coca-Cola, General Motors, P&G,
Mars, Fiat) and of NW Ayer & Partners. Other subsidiaries are Medicus
(healthcare marketing), Clarion (marketing services) and Manning Selvage
& Lee (PR). MediaVest Worldwide, formed in February, houses the
consolidated media buying operations of D'Arcy, Ayer, TeleVest and
MediaVest in Europe.
Two years ago, TeleVest won the largest media buying account in history:
P&G's US TV buying, worth dollars 1.2 billion.
According to Advertising Age, MacManus is the 12th largest advertising
group in the world, with dollars 859.2 million gross income and dollars
7,643.4 million billings in 1998. With only 2 per cent income growth in
1998 - the company blames the economies of Asia and Russia - it is one
of the slower performers in the top 15; only Dentsu, Hakuhodo and
Cordiant fared worse. By way of unfair comparison, Omnicom, Interpublic
and WPP shine at 12, 13 and 15 per cent respectively. Even smaller
comparable groups like Grey and Leo Burnett show around 8 per cent
Almost ten years ago, Bostock said that the group's below-the-line
operations would account for 50 per cent of its revenue by now. 'We're a
little short of that, at 40 per cent,' he concedes. 'But I'm committed
to developing our business in new technologies, in internet and database
management.' Bostock also wants to create a global direct marketing
brand, although it is unclear whether it will take its lead from IMP,
D'Arcy's European network, or from Clarion, the US-based network. 'We'll
bring those interests together,' he says.
Bostock's most recent foray into the deal-making arena was unsuccessful.
The idea was to merge the MacManus media buying interests with those of
Leo Burnett under a common brand. The deal, instigated by Burnett,
reflected the need for both parties to raise their international media
stature. The fact that the two agencies have P&G media business in a
number of markets, most crucially the US, made it an enticing prospect
all round. But it all fell apart in November last year. 'Conceptually it
was a very good thing but there were fundamental philosophical
differences in terms of organisation,' Bostock says.
Meaning people? 'No, it got down to people, but the first level of
disagreement was the philosophy, the structure of the operation,
particularly in the US. We pursued it from a buying perspective, through
TeleVest, and Leo Burnett pursued it from a planning perspective. In
their opinion, planning was the lead thing and all the other disciplines
served the planner.' Couldn't they see such differences coming? 'Yeah,'
he admits. 'One of the mistakes we made was to leave various things to
resolve in due course. We should have surfaced those issues right up
Bostock denies that the discussions veered towards a full
MacManus/Burnett merger: 'Er ... no ... they never got to any other
level ... they just never did. I understand the speculation and, had we
come together on the media front, we might have taken things
He says the experience taught him not to let momentum carry an idea
It is a lesson he and the man he describes as his closest adviser, the
MacManus finance supremo, Craig Brown, will apply to future deals. 'The
MacManus group is really only Craig and me; I believe in a lean
organisation!' he laughs.
He also admits that the philosophical barriers that developed between
MacManus and Burnett do not exist with Grey - or, for that matter, with
other media organisations. 'We backed out of the arena when the Burnett
thing fell down,' he says. 'But we might reopen those discussions with
Bostock's opinions - 'London is a small market that thinks it's big',
'Brits can't get over the scale of the US market' etc - bear witness to
one of the charges that UK media players lay at the feet of their US
counterparts. Namely, that the US (total adspend dollars 201 billion)
has a backward, volume-driven view of media buying; that if everything
is all right in the US, the UK (total adspend pounds 14.3 billion) can
whistle for it. Bostock counters: 'You gotta understand that volume is
crucial in US negotiating, and the quality component depends on the
product you are advertising.' Some people would say it depends on the
market: 'I'm not sure I agree with that,' he says.
Bostock's take on the relaxation of P&G's conflict policy is that it
raises possibilities that weren't there before, but he argues that it's
simplistic to say that rapid consolidation will result. In any case, he
needs to serve up a better set of figures before entering MacManus into
any sort of deal, whether it be flotation, merger or sale.
'P&G's decision opens up additional avenues of consolidation for the
industry,' he says. 'But I think the speculation is far, far ahead of
the facts. We've been part of the speculation, with Interpublic, but
there have been no discussions between us.' Not even on media? 'Nope,
no, absolutely no discussions, period.'
In fact, Bostock sees few benefits in being absorbed by a larger group:
'What's more likely to happen is that some of the groups in the second
tier - ourselves, Grey, Publicis, Euro RSCG, Saatchis - will merge to
form top-tier agencies that can compete with the top three-and-a- half
groups.' (He classes Young & Rubicam as the half, although he's
complimentary about its recent flotation: 'It's rejuvenated and
refocused the agency, it's been done superbly.')
How soon will P&G start applying its softer, kinder conflict rules and
turn to non-roster agencies? 'I have no idea,' he replies, somewhat
'As long as the four core P&G agencies perform well, they will be the
four core agencies.' Does P&G have another appointment in mind? 'Yes,'
he says. 'But they are looking more at the area of emerging
Let's suppose that P&G does look outside its current roster. Would it
hire a mistress or a wife? A number of smaller creative agencies
(mirroring Unilever) or another grown-up network? 'Grown-up network,' he
replies, without hesitation. 'Going to a small agency is not consistent
with the way P&G views advertising development. Some people at other P&G
shops view this as a threat, but I don't. We can compete with
MacManus recently agreed to consolidate all its P&G business out of
Ayer, which it acquired in 1996, and into D'Arcy. In theory, this could
free Ayer to seek other fmcg business, even though it is not a serious
player outside the US. (Ayer is 'headed' over here by its president of
Europe, Julian Boulding, who is based in the D'Arcy London building.
'Ayer Europe is a one man and a dog operation,' one observer
Undeterred, Bostock has a vision for his smaller network: 'We want to
take Ayer in a creative direction and into product and service areas
that are not traditional fmcg categories. If anything, we're taking the
company away from P&G territory,' he says.
How? 'We need to bring in a good creative leader to continue doing good
creative and to sell the creative product. We haven't done that since we
absorbed Ayer, but I look on it as going back to Ayer's roots (founded
in 1869, it is the oldest US agency) when it specialised in what they
call human contact advertising - 'be all you can be' for the Army,
'diamonds are forever' for De Beers, that kind of work. It's very hard
to change the culture of an organisation in this business. Unless a
catastrophic event forces change, it's better to be true to the core
And so to the question that invariably sends Kings of Madison Avenue
into a spin: name your favourite ad. Even though he claims that his
involvement in client issues can go all the way down to final cuts of
commercials, Bostock is no exception. He is, for once, lost for words.
'Eughh! Ha ha ha, that's a tricky one! My favourite ad? ... I think ...
probably ... um ... I think of advertising in terms of its
effectiveness, that's my God. So I'd pick the Mars bar advertising we've
done in the UK as my favourite, starting with 'work rest and play' and
the migration of that campaign. Plus the Crest advertising starting with
'Look mum, no cavities' all the way to the present stuff.'
A sprightly 58, Bostock is fairly easy to categorise in image terms.
He's the all-American jock turned inscrutable, hard-ass New York
He's said to work hard but not in the frantic
God-will-strike-me-dead-if-I'm-idle manner of some of his rivals.
Gleaming from his designer specs to his lacquered toecaps by way of his
crisp monogrammed shirt, he has the air of a man who's big on grooming.
In a typically cavalier riposte to any remotely personal question, he
says that his motivation is 'liking what I do, I really enjoy it, plus
my wife would kill me if I was home too much'.
Actually, the young Bostock wanted to be a linebacker for the New York
Giants. At 18 he won a football scholarship to Duke University, North
Carolina, but after business school at Harvard he developed a taste for
He originally went to Harvard as an English Literature major, clueless
about business until he met Theodore Levitt, who was teaching global
marketing theories before the concept had come into being. Levitt
advised him to try advertising, he joined Benton & Bowles and 35 years
later he is still there, having survived the merger of Benton & Bowles
with D'Arcy MacManus & Masius in 1985, and clawed his way to the top
Everyone speculates as to how much of the group he owns. 'Not even my
wife knows, but nobody has ever had double-digit ownership in this
company' is all he will offer. But it's always fun to work out how rich
someone like Bostock could be if he cashed in tomorrow. The same applies
to Brown, who is thought to own at least as many shares as Bostock.
Insiders, who report marked pressure to improve profit levels over the
past year, suspect a desire to cash in sooner rather than later. If
Bostock sold his shares internally he would make substantially less, so
he probably wants to sell or float.
Advertising groups are usually valued on a multiple of post-tax profits,
but we don't have that information for private groups like MacManus. So
let's assume that he owns 8 per cent and apply a conservative valuation
of one times gross income of dollars 859.2 million in 1998. That earns
him dollars 67.8 million, while an upbeat valuation of 1.5 times gross
income would earn him dollars 103.1 million.
Not bad for a holding company that's treading water.
And so to the delicate topic of retirement and succession. 'You guys
think 55, we think 65 and over,' he says, promising to stick around for
at least another three years. 'And I've never had an heir apparent at
any stage in my career. We have four or five people who could move into
the top role.'
Insiders suggest that the list of potential successors is headed by
D'Arcy's 55-year-old chairman and chief executive, Artie Selkowitz, who
would do well to look out for John Farrell.
Described by insiders as 'Roy's chosen son', Farrell heads D'Arcy's new
transatlantic region which combines North America, Europe, the Middle
East and Africa. Outside chances also go to three other heavy-hitters:
Lou Capozzi, chairman of Manning Selvage & Lee; Paulo Salles, head of
D'Arcy's Americas region; and Gary Titterton, recently appointed from
McCann-Erickson to head D'Arcy's Asia Pacific region.
This could all be academic, of course. If MacManus is sold it may not
exist as a holding company. So for Bostock's likely successor, take your
pick from Ed Meyer, Phil Geier, Maurice Levy, Alain de Pouzilhac. Who
- Since this article was written in July 1999, the MacManus Group merged
with another private advertising group, the Leo Group, as a result of
the consolidation trend in the advertising industry. The Chicago-based
group is called Bcom3 and Bostock is its chairman.