The World: Can Y&R get back on track in the US market?

With billings losses of around $600 million since January 2004, Y&R needs to get its act together quickly, Lucy Aitken says.

It all started when the Whopper walked. The Burger King loss in January 2004 signalled the start of a Y&R business haemorrhage, a loss to date of around $600 million of billings, mostly from the US. Kraft's global rejig bumped the venerable agency off the roster; Computer Associates International departed and the US telecoms company AT&T stopped marketing to consumers. As a result, Y&R New York axed 45 jobs in January 2005.

Then, in February, it lost Sony one day and Jaguar scratched its incumbent from its pitchlist the next.

One former employee describes Y&R North America as "a wounded beast where creative is not a force to be reckoned with".

Change is already underway on Madison Avenue, according to Gord McLean, Y&R's president of global client services and the freshly promoted chief executive for North America. He has been charged with "doing the best possible work for existing clients and focusing on growth". In other words, making damn sure no further clients depart and bringing in some new ones. Fast.

McLean reports to Ann Fudge, the Y&R Brands chairman and chief executive, who declined to be interviewed. Fudge, a former client at Kraft, has been praised for introducing a more collaborative approach between Y&R's advertising, PR and branding shops. William Eccleshare, the chairman and chief executive of Y&R EMEA, says: "Ann has many strengths: she's a great people person with strong leadership skills and she has done a lot to bring companies together under Y&R Brands."

She's also very well connected, with a number of non-executive directorships and good contacts in Washington DC. But Fudge's lack of agency experience is arguably hampering her. The Irvine office in California is the biggest problem child: both Sony and Jaguar were run from there and McLean hints at job losses at Y&R on the West Coast. Reports have hinted that Fudge may be on her way out too, but McLean insists that she has support from Sir Martin Sorrell and Y&R's clients.

Y&R Advertising could have its own chief executive, an advertising supremo who could help drag the US out of the doldrums, although McLean is tight-lipped on whether such a hiring will happen: "That's for Martin and Ann to decide. Part of Ann's plan is to focus on Y&R Advertising, while I relieve her of the six North American offices reporting directly to her."

He admits: "It's been a rocky couple of weeks, but they're behind us and this is a resilient company. Before Ed Vick became the chairman of Y&R Advertising in 2000, it was in rough shape. But within a year, we were a powerhouse: we got some good wins and our work improved exponentially."

During this "rough" patch, Y&R lost almost $800 million in billings, including KFC, the US Army and the US Postal Service. Ironically, its luck changed when it picked up Computer Associates International and Jaguar.

As if demonstrating the cyclical nature of advertising, its fortunes may well be reversed when the US Army awards its $200 million account in the coming months, for which Y&R is pitching.

Fortunately, the rest of Y&R is in decent shape. Eccleshare reels off some sizeable local wins in Europe which include Telecom Italia and British Aerospace. Last year saw some US wins too - most notably Weight Watchers and Toys R Us, which, between them, account for $100 million. And in June, Y&R retained 7-Up, which is worth $25 million. The San Francisco office also picked up another Cadbury Schweppes brand, Sunkist ($7.5 million), in February.

Nevertheless, the network desperately needs a large win. It is pitching for Intel, marking the first time that it has been involved in a holding company pitch. Last year, it couldn't get within sniffing distance of HSBC or Samsung because of conflicts with Citibank and Sony. Meanwhile, its sister networks JWT and Red Cell cleaned up.

Top of Y&R's client wishlist are telecoms and pharmaceuticals, but before the new-business drive begins in earnest, McLean says he will meet with Fudge and Michael Patti, the worldwide creative director, "to look at all of our work and determine where we genuinely need to improve".

McLean is confident that Y&R's wounds will heal. "We've had a couple of temporary setbacks, but this is a strong company with remarkable talent. We're going to get back on the winning track and make it an awesome force."


May 2003: Sir Martin Sorrell hires Ann Fudge to head Young & Rubicam Inc

January 2004: Burger King ($300 million) leaves Y&R New York for

Crispin Porter & Bogusky

May 2004: Y&R New York wins Toys R Us ($60 million)

September 2004: Kraft Foods drops Y&R from its global roster

November 2004: Y&R New York wins Weight Watchers ($40 million)

December 2004: Y&R New York loses Computer Associates International

($80 million)

January 2005: Y&R New York lays off 10 per cent of its workforce: 45


February 2005: Y&R loses Sony ($100 million);

Jaguar ($100 million) drops the incumbent, Y&R, from pitch;

Y&R veteran Gord McLean named chief executive for Y&R North America