Earlier this year, Peter Mead, the chairman of Abbott Mead Vickers PLC, ventured from his Old Marylebone offices to the leafy green stretch of Berkeley Square, in the ritzy heart of London’s Mayfair. It was an extraordinary sight-the tall, stately Mead carrying a sandwich, winding his way through the pigeons and squirrels in pursuit of an empty bench. He is more at home lunching at the landmark Connaught Hotel, comfortably fitting in amid its dark-wood power dining rooms.
Mead was searching for a spot to mark a milestone: AMV had recently, and quietly, surpassed Saatchi & Saatchi’s Charlotte Street agency as the U.K.’s largest shop. It was an event Mead could not have foreseen when, as a 16-year-old, he applied for his first advertising job at J. Walter Thompson, a local landmark. A snobby JWT personnel director offered Mead a position but told him that at his salary, he shouldn’t expect to eat at the staff canteen. She suggested that he could take his lunch bag out to Berkeley Square instead. Mead was stung by the harsh encounter, and it taught him a lesson about the treatment of employees that he would carry with him throughout his career.
But Mead’s personal experience was not the only reason Berkeley Square was a fitting spot to celebrate AMV’s new-found supremacy in the U.K. On one side of the park were JWT’s tony offices, a testament to a time when the Madison Avenue bulwark was London’s premier agency. The former headquarters of Saatchi & Saatchi Co. PLC, the high- flying British company that in the 1980s took over JWT’s dominance, occupied the other end. In the middle stood Mead, staking out an alternative position. It was familiar ground, as it has been for the agency he helped found two decades ago in an unusually close partnership with David Abbott and Adrian Vickers.
Few would have predicted AMV’s rise to the No. 1 ranking in one of the most influential advertising markets in the world. Its success, in fact, stands in sharp contrast to the agency it has supplanted, Saatchi & Saatchi’s flagship office. Only a decade ago, S&S was judged the epitome of a new British advertising empire. Charles and Maurice Saatchi, in a deal-making binge, colonized a global industry, preaching the virtue of size for its own sake. But the brothers lost control of their empire almost as soon as they had finished putting it together. AMV worked from a decidedly different model. In an era when corporate upheaval has become the hallmark of many leading players in the advertising business, the conservative, publicly held AMV has focused on creating distinctive core values in its London office. Even when AMV took its most bold global step, it did so in a measured way-selling 23.9 percent to BBDO in 1991, a stake that has grown to 26.5 percent. AMV was formally renamed Abbott Mead Vickers BBDO and now serves as the U.S. agency’s London office.
“During the ’80s, when everyone was doing a lot of acquisitions, Abbott Mead was seen as lackluster. The perception was they were being left behind,” says Terry Bannister, the Warman & Bannister principal who was a co-CEO of Saatchi & Saatchi Worldwide’s communications group at its peak. “This just goes to show that he who laughs last, laughs loudest.”
Today, AMV has proven to be one of the industry’s most successful stock-market performers in the U.K. It has lodged above-average margins of more than 16 percent, despite adhering to unpopular investor ideas like a strict “no layoffs” policy. This year, analysts expect AMV’s first-half profits to be $9.8 million, a 30 percent increase over a year ago. Through acquisitions, the agency has built a formidable network of successful below-the-line businesses, and more than half of group revenues now come from non-advertising units. What’s more, the past two years have seen AMV, long noted for its creative work, prove its prowess as the U.K.’s top new-business performer. Just a few months ago, Volvo, after fierce competition among its roster of blue-chip agencies, picked AMV for the $100 million global introduction of a new sedan.
AMV creates advertising for some of the best-known brands in the U.K.-including BT, The Economist, food retailer J Sainsbury and Weetabix. Some top multinational clients, many of which came to the agency through association with BBDO, include Pepsi-Cola, Apple Computer, Bayer, Gillette, Mars, Wrangler, Prudential and Pizza Hut.
Now, as AMV prepares to celebrate its 20th anniversary in November, the agency faces new challenges.
For one, a generational change is in store. The three founding partners-Mead, agency chairman and creative head Abbott and group deputy director Vickers-are all in their late 50s. One of the partnership’s hallmarks has been its constancy. The friendships among Abbott, Mead and Vickers have largely set the tone for AMV’s work environment. While Mead says he has no immediate plans to retire, Abbott, one of the industry’s most admired copywriters, next year turns 60-a point at which he says he may consider leaving the business. The founders have put in place a team of successors, and the U.K. advertising world will be watching closely how the agency, so well-known for its stability, handles the eventual transition.
The coming years also could put to a test AMV’s deliberate approach to growth, particularly as the agency edges further out onto the international stage. Close observers say some members of AMV’s second generation of managers would like to see BBDO buy out the remainder of AMV to provide greater international opportunities. At the same time, the company’s relationship with BBDO may cause it to re-evaluate its relationship with one of its most important advertising affiliates: Leagas Delaney, London. The well-regarded outfit has become a Coca-Cola roster shop, posing a potential conflict with BBDO client Pepsi. Some insiders believe the situation could eventually fuel Leagas Delaney’s separation from the group. And AMV’s strongest ties to the U.S., apart from parent BBDO, continues to be McCabe & Co., which has yet to show the promise of its founding six years ago. (See “Through Thick and Thin,” page 32.) Yet none of that has tarnished industry acclaim for AMV, as it readies to move into a new marble high-rise, 250 yards down the road from current quarters in London. Earlier this year, the U.K. magazine Campaign broke with tradition and named Abbott Mead “agency of the year” for the second year in a row. The praise makes the partners proud-and just a little nervous.
“It’s amazing how big you can get if you’re not overly concerned with how big you can get,” Mead says, cautiously.
If Mead, as chairman, is the partner most responsible for steering the AMV corporate group in new directions, Abbott has long been the agency’s dominating influence. “Peter runs an agency very much in the form of David. It’s very civilized, very well run,” says Tim Delaney, a principal at Leagas Delaney. “There’s a quiet thoughtfulness that produces very good, intelligent work. The fact that they’ve become No. 1 is a great symbolic statement. Abbott Mead has succeeded by not doing all the things account guys in the business want.”
Abbott’s shop has always been regarded as one of the best print agencies in the business. This spring, AMV was selected by the British TV Advertising Awards as the industry’s best, the first time a single agency had been so honored. Abbott’s graceful prose and often literary ads have helped define the agency’s profile. “We don’t have big media budgets, but they’ve given us excellent return on our money,” says Andrew McGregor, marketing director at The Economist. “For the last 10 years, we’ve been growing our readership. Just prior to hiring the agency, circulation had slipped.”
Immaculate in dress and manner, Abbott is a well-liked figure in London agency circles. Some afternoons, he escapes to the palm court of a nearby hotel to read. Colleagues say they have arrived for an early breakfast meeting only to find Abbott already there, his nose in a book, usually fiction or texts on two of his favorite subjects: history and gardening.
But even as Abbott contemplates his exit from advertising, he’s putting himself closer to the work. This year, he stepped down-or as he describes it, “was liberated”-as AMV’s group chairman so he could spend more time writing ads. “I rather like being reduced to a copywriter again,” Abbott says. “But a year from October I’ll be 60, and I’ve always said I’ll review the situation at that point. If I still like what I’m doing, I’ll stay.”
The agency got a taste of life without Abbott this summer, when he took three months off to travel in France and Italy and spend time with his beloved garden at his house in the country. He was missed, but the absence didn’t seem to adversely affect the agency’s operations. It was during this time that AMV won the creative shootout for Volvo.
For the past two years, Abbott has worked closely with his hand-picked successor, Peter Souter, who came to the agency five years ago. While Souter, who is in his mid-30s, does not yet have Abbott’s star quality, he has gained notice for his work on Volvo and The Economist, among others. Last week, Abbott formally turned over the creative director’s title to Souter.
While the AMV partnership is nearly 20 years old, the partners’ friendships stretch back much further.
Vickers and Abbott met in college in the 1960s. Vickers, who was learning law, and Abbott, a history student, grew close while hanging out together in Oxford coffeehouses. Vickers then met Mead at his first job at SH Benson, and Abbott would work with Mead shortly thereafter at Doyle Dane Bernbach. When Vickers and Mead started their own agency, they began wooing a then-unhappy Abbott-at French Gold Abbott-over a series of Indian meals. Eventually, Abbott decided he had enough curries and signed on.
Today, the three men remain close. They are godfathers to each other’s children; one partner will easily grab the arm of another in affection. “They’re a unique combination of three people who have given themselves the room to complement each other’s strengths and weaknesses,” says Pat Fallon, chairman of Fallon McElligott. “They’re secure enough that they can bring in other people and allow them to flourish.”
Vickers, who will skip an industry black-tie dinner to take his children to McDonald’s, reflects, “It’s rather simple really. We believe consensus rather than conflict is a better way to reach solutions.”
As tight as the three partners are, they have allowed a few others into their circle. Eleven years ago, they hired Michael Baulk, then managing director at Ogilvy & Mather, London, as agency chief executive and managing director. Then, in 1995, they tapped 35-year-old Andrew Robertson, formerly CEO of WCRS, London, as AMV’s managing director. Mirroring the first wave of management, Robertson and Baulk are godfathers to each other’s children, having been close since earlier working days at O&M.
“It’s always been easy for me to accept that [Abbott, Mead and Vickers] are the brand and my job is to manage that brand,” says Baulk. The agency’s leaders divide the work overseeing the business side. Baulk focuses on the nuts and bolts of the agency’s profitability, while Mead is the expansion architect and liaison with investors. Vickers has long-standing client relationships. Robertson, 20 years their junior, is being positioned as the heir apparent to lead AMV. “He’s wheeled into analysts meetings along with the other senior guys,” notes Lorna Tilbian, a financial analyst at London’s Panmure Gordon. “He’s a chip off the old Peter-Mead block.”
For all AMV’s high profile in the agency business, its expansion has focused on nontraditional advertising services.
In recent years, the AMV group has broadened its portfolio of non-advertising companies. In July, the agency added London’s Aurelia Public Relations, a specialty shop with fashion and luxury-goods clients, including Salvatore Ferragamo and Gianni Versace. Aurelia joins the group’s 14 other subsidiaries in areas such as direct marketing, promotions, custom publishing, brand development, corporate identity and Internet marketing. The agency’s weakest link has been media buying. So last year, AMV broke new industry ground when it bought Pattison Horswell Durden, a $148 million company known as the “thinking man’s media independent.” AMV became the first agency to transfer its media department to an outside firm, named New PHD. In doing so, the agency gains negotiating clout in the marketplace and deepens its buying expertise.
While AMV has not made its acquisitions on the cheap, says financial analyst Tilbian, “they’ve won the support of the management at their acquisitions, and as a result, they’ve done very well.”
The diversification efforts also receive praise at Omnicom-the holding company that owns AMV’s partner, BBDO. “They’ve built an excellent business that in some ways mirrors Omnicom in its split between advertising and non-advertising businesses,” says Omnicom chief executive John Wren. “We’re very happy with the association.”
It has long been understood that Omnicom has wanted to buy the rest of AMV. The run-up in share price may have placed too dear a premium on such a purchase, however. Before stock splits, an Abbott Mead share valued at $2.80 when the company went public in 1985 is now worth an equivalent $22.40. Wren says there are no current plans to bid for the rest of Abbott Mead Vickers.
“In part, it’s Omnicom’s own fault,” says one knowledgeable observer of the London advertising scene. “When they bought the AMV stake, they made an announcement they eventually would buy 29.9 percent. So of course that helped drive up the stock price.” Under laws that govern public companies in the U.K., once an entity owns 29.9 percent of another company it is required to bid for the rest of the shares.
If there is any strain between AMV and Omnicom, it doesn’t seem to affect how they work together. A full one-third of AMV’s clients are shared relationships with BBDO, such as Pepsi, Gillette, Bayer and DuPont. In addition, AMV increasingly is landing pan-European assignments for such clients. Abbott is a director of BBDO’s worldwide board, and Baulk sits on its European board. AMV and BBDO often share resources, when necessary. Earlier this year, for instance, AMV helped to create the pitch to hold onto Delta Air Lines, before BBDO withdrew from the review.
“Our history in the U.K. was certainly not a distinguished one. Our relationships [with other agencies] were not successful,” says BBDO chief Allen Rosenshine. “But our relationship with Abbott Mead is successful because we respect their dedication to good creative work and I think they feel that way about us as well.” For AMV’s part, the 6-year-old association with BBDO has brought financial enhancement with a fair amount of independence.
Mead, between puffs of an ever-present cigarette, knocks the lacquered black tabletop beneath his teacup when discussing his agency’s success. He doesn’t appear to take himself too seriously and describes the bottom feeders and sharks in his built-in office fish tank as appropriate accessories for an account man. But when it comes to AMV’s loyal staffers, his tone changes. The founders, he says, wanted to create a climate in which employees would not stay awake nights fearing for their jobs after the agency loses an account. Even during the recession, when the London advertising industry laid off nearly a quarter of its staffers, AMV didn’t let go a single employee. To retain staff, the principals cut other operating expenses and their own bonuses-and then went out to stir up new business to offset reduced client rolls. “Our stock actually rose after we broke the news [about not laying off staff] to the City,” says Baulk. “They believed we had a strategy for riding out the recession.”
Looking forward, some AMV insiders worry that Robertson and Baulk, with their backgrounds at big advertising agencies, will overlook the founding ideals originally hatched by the partners over Indian dinners. “We’ll have to see about things like not laying off people when times get bad,” says one skeptical group executive. “They come out of the Ferraris end of the business.”
Robertson counters with the right degree of reassurance, however. “In the future, the big challenge will be to make sure our priorities don’t change,” he says. “The key is to depoliticize things-try to take all that stuff out of the mix and let people concentrate on doing their best work. That gets harder as you get bigger because you’re a bigger fish in a bigger pond and it’s not easy to find the right people.” But Robertson also says he does not see the agency, which today employs about 1,000 people, getting much larger.
Sounding a lot like one of AMV’s founders, Robertson adds, “In the end, growth matters-size doesn’t.”
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