Delicate Balance

Just hours earlier, Frank Lowe breezed into Interpublic Group's annual meeting wearing an outrageous paisley jacket—his nod to Lon don's swinging '60s in an airless auditorium of Connecticut suits. Now sitting in his 48th-floor New York office at One Dag Hammarskjold, his love of flourish is still very much on view. He twirls his eyeglasses, occasionally springing them across the room, and gestures excitedly as he talks about his di verse enthusiasms: architecture, sports, photography, design.



There is much going on at the moment.His good friend Sir Norman Foster, the renowned British architect, is designing a Lowe-sponsored sports academy in northwest London. Lowe's Octagon sports marketing group has just won a 15-year contract to handle Formula One racing. And Lowe is about to hold court at the Stella Artois Open, a Wimbledon preamble that he helped the brewer launch two decades ago and which is now a premier lawn-tennis event. The strawberries-and-champagne affair draws England'scaptains of industry, along with A-list celebrities, like those captured in the Herb Ritts and Dennis Hopper portraits that hang in Lowe Lintas & Partners' executive offices. They are the only images in sight; there are no ads on Frank Lowe's walls, nothing to betray his role as the head of a $9.5 billion global network.



On this particular afternoon in mid-May, his passion for advertising is also conspicuously absent. Lowe seems more at home in a world of bold-face personalities, big-idea buildings and winning sportsfigures. When his thoughts turn to the industry he has worked in for more than 35 years, he pauses and becomes noticeably subdued.



"It seems to me the advertising business has changed in the last 10 to 15 years very dramatically. The heroes of the business, the stars, have moved from being people like [Bill] Bernbach or Mary [Wells] or Jay [Chiat] or David Ogilvy to financial people," he says. "There seems to be a diminution of the creative standards in our work. People seem to be much more interested in earnings and share price and who's stolen this account and who's stolen this person than they are about the ads, and I find that very disappointing."



He must be frustrated indeed. In the two-plus years since Lowe & Partners absorbed fellow IPG agency Ammirati Puris Lintas, those concerns, the churn of accounts and executives at Lowe's U.S. flagship in New York, seem to be all anyone has talked about.



Lowe's remarks this May afternoon foreshadow news that would separate Lowe even more. Within a week, word surfaces that Lowe would turn over the day-to-day running of Lowe Lintas to longtime lieutenant Jerry Judge. In turn, Lowe would become chairman of The Partnership—a fourth global network that IPG would form alongside McCann-Erickson WorldGroup, FCB and Allied Communications Group. As part of a plan by IPG CEO John Dooner to consolidate holdings, The Partnership will align Lowe Lintas with other holding-company resources in much the same way IPG sibling Mc Cann WorldGroup is structured. While Frank Lowe has wanted to better integrate nonadvertising resources into his agency, he will not be the one to determine the means of now doing so.



In effect, Lowe is being submerged into a bigger entity, thereby cutting short the agency's efforts to create its own diversified global network. Even though Lowe is expected to sit atop the new corporate entity, his authority appears to be ambiguous since no one reports directly to him. What's more, it's another sign that Dooner, 52—who came out of McCann and took the IPG reins in January—is calling the shots.



It's an awkward time for Lowe. Even though he was recently knighted and occupies a lofty role in U.K. ad circles, his relationship with Dooner is growing more strained and he feels increasingly like a persona non grata at IPG, say sources.



While Frank Lowe's role is in flux, so is the network he built, which is trying to find its footing within IPG. To understand what the new team faces, it's necessary to understand the complicated personalities and politics of the past.



Lowe, 59, consciously built his agency in opposition to institutional machines like McCann. When he moved into New York in the late '80s, he intended to establish the kind of groundbreaking creative force—not unlike Doyle Dane Bernbach at its seminal best—where company founders become advertising icons. He already was a folk hero in London, selling clients the kind of inspired work that made Collett Dickenson Pearce a revolutionary force in the '70s before setting up his own award-winning shop, Lowe Howard-Spink, in 1981.



Now it appears the influence of the larger-than-life personality is being diluted within The Partnership structure. New CEO Judge, who's been president of Lowe Lintas' worldwide operations, takes over as another Lowe veteran, Paul Hammersley, assumes the role of U.S. CEO, working with chairman Gary Goldsmith and New York president Rob Quish. The installation of the team is the latest attempt to stabilize the agency, which has had a revolving door in its executive suite and client roster in recent years. Some top managers, including Bob Kantor, Marvin Sloves, Bruce Kelley and Lee Garfinkel, have passed through the New York office in the past 30 months.



The new U.S. operating trio say they have come to an easy consensus on the division of duties, which they believe will prevent further shifts. Hammersley, 38, concentrates on new business and general business strategy. Goldsmith, 46, focuses on Lowe's operating philosophy and creative standards. Quish, 40, handles the daily running of the agency. All will have responsibility for individual clients and be involved in generating new business.



While Lowe has offset the loss of Dell and UPS this year with a $300-400 million windfall from Verizon Communications, the agency's reputation is still bruised by the pummeling it took after its 1999 merger. This spring, agency executives were disheartened after IPG told analysts it blamed an unanticipated "hangover" from the APL/ Lowe transaction for the company's less-than-stellar first quarter.



Dooner makes no secret of his concern that Lowe move ahead, or of his impatience to see it happen quickly. "We're in the world of 'It is.' We have to get away from the excuses of yesterday—'what was,' " he says. "In the past, this industry had occasions when it was held hostage by crazy creative personalities. What's needed today is to put together strong business propositions for our clients. Clearly, clients come first."



Judge appears to have heard Dooner's cry. He's moving his family from London to the States so he can play a more hands-on role at an agency where the events of the past will not be mentioned in the context of future developments. "We never want to talk about the merger again," Judge says. Still, between puffs on a series of Silk Cut Extras, he says the agency's problem is one of perception, not reality.



Up to now, Judge has focused on Lowe Lintas' far-flung international operations, allowing his U.S. managers a fair amount of breathing space. (He phones for permission to visit the agency before coming down from the executive floor, relays Quish.) In the contentious relationship between Frank Lowe and IPG, Judge may have initially been seen by some as a surrogate for the English adman. But he has quickly gained the trust of his bosses and won praise from key IPG clients Nestlé, Coca-Cola and Unilever.



Once a child actor, Judge fancies himself an Irish storyteller and raconteur. Above all, he is known as a brilliant salesman. Peers like John Hegarty of London's Bartle Bogle Hegarty, where Judge spent most of his early career, stand in awe of such persuasive gifts, recalling the time Judge sold a print ad to a BBH client without ever showing it. Judge, 51, comes across as an approachable, down-to-earth executive who walks to work and stops in daily at St. Patrick's Cathedral.



While Dooner and Judge are trying to bury the merger's difficult domestic start, the transaction helped propel Hammersley's rising star within IPG. As CEO of Lowe Lintas in London, he guided the agency through one of its best years in 2000. Around the London agency, he's known as Buzz Lightyear, the astronaut character from Toy Story, because of his square-jawed American looks and attitude.



Sipping a Budweiser inside a midtown Manhattan restaurant, Hammersley recalls that his father, an executive at Clark's shoes, was a CDP client when Lowe was an executive there. Arriving for a meeting at Clark's office, the self-styled adman made a dramatic entrance, descending from a helicopter in full polo-player gear. Like Judge, Hammersley recites the agency mantra of "We have an unfair share of talent and the best management team in the business," but his Yankee brand of optimism goes only so far. He's also a pragmatist, and he knows there's no substitute for winning business.



This is his second tour of duty at Lowe, New York. From 1993-97, he was a respected account handler, known for his prowess on the Diet Coke business. While Hammersley was mulling the offer to return to America, WPP wooed him for a top job at Young & Rubicam. When Lowe execs learned of WPP's overture, word of Hammersley's U.S. promotion appeared in Campaign, ostensibly forcing his decision.



It was Goldsmith's combination of leadership skills and creative acumen—and the possibility of his jumping ship—that would swing former IPG CEO Phil Geier and Frank Lowe to back Goldsmith over Garfinkel last year. Garfinkel then departed in January. Still, it wasn't long ago that Goldsmith and Garfinkel provided a united front as they confidently introduced an earlier Lowe management team. In May 1999, the two put forth Quish as New York president and Kelley, a former Lowe general manager, as president of North America.



Quish, or Global Rob as colleagues at APL dubbed the oft-traveling exec, described himself as a team player, albeit an impatient and openly ambitious one. Kelley, then a 50-year-old seasoned account man, had left Lowe in 1997 to join the fledgling—and ultimately unsuccessful—National Mall Network. He was coming home to what he hoped would be a less political place to work. In 19 months, however, he would be out again, after his role on the Burger King ac count was reduced to fireman. While politics again contributed to his demise, his North American job became obsolete with the closing of the Chicago office and the planned elimination of the San Francisco office, which occurred this year.



Quish would fare better. Despite his youthful looks, the Connecticut native has logged years at a variety of shops, most recently six at APL. He rose to worldwide account director on Iridium and acted as APL boss Martin Puris' chief of staff. He was also a close friend of Goldsmith's, with whom he shared a passion for golf, and the two participated in outings in lush locations. (When asked once about Quish's strengths, Goldsmith deadpanned, "His short game.") The APL/Lowe merger was announced just five months after Quish joined Lowe—reuniting him with the disgruntled clients and management problems he thought he'd left behind.



While IPG hailed the combination as a way to give the agencies the scale to compete effectively, the underlying rationale of the merger was strikingly similar to that of the ill-fated pairing of Ammirati & Puris with Lintas in 1994. A&P was a creatively driven New York boutique with international ambitions (A&P founder Puris, like Lowe, was a strident defender of the shop's work who didn't hesitate to fire a client over creative differences). Lintas was a drab, if durable, global network dominated by Unilever. IPG was betting that the smaller Lowe's culture could invigorate APL, even after the A&P/Lintas merger ultimately dulled the former's creative edge.



APL's subsequent turmoil has obscured initial results that suggest IPG had the right idea. "Some people now say the merger of Ammirati & Puris with Lintas was a failure," says former president Steve Gardner, a principal at The Gardner-Nelson Proj ect. "But in the first three years after the merger, [APL] won Com paq's global ac count, GMC Trucks, Ameritech, Irid ium, Epson, Enron, Ragu, Am trak and Florida Citrus. That's a failure rate most agencies would covet."



While APL entered 1996 seemingly unaffected by the merger, it wasn't long before cracks began to appear. By the fall, the agency's chief creative officer, Helayne Spivak, an A&P star of the late '80s, left rather than assume a less hands-on role. By 1998, APL had lost its Sara Lee media and MasterCard International accounts, each estimated to be worth close to $100 million, as well as Johnson & Johnson's Acuvue. The crowning blow came when APL lost Compaq, a $200 million client, which was devastating emotionally and financially.



The shop raced to replace billings, pitching four large accounts and winning one, Dell. By then, Puris was spending most of his time traveling to APL's overseas offices, and the agency was grinding through top executives, including Duncan Pollock, Gardner and Mike Lotito.



APL's fate was sealed when IPG brought in former McKinsey & Co. consultant Rick Hadala as New York chairman and CEO in the fall of 1998. The decision to appoint an executive with no advertising experience roiled APL with management changes. After Hadala's firing in April 1999, he sued IPG for more than $300 million over his contract, a dispute that was settled but nonetheless caused more agency drama.



"It turned out to be a failure, although the concept of bringing in [Hadala] was a good one," says Geier. "The problem was, he was more of a business type of person. But advertising is a communications strategy, not a pure business strategy."



Hadala declines to talk specifically about his experience at APL other than to say that cultural differences between Lintas and A&P made it difficult to get anything done. He believes the financial pressures of being part of a publicly held company got in the way of making the changes necessary to improve the agency's situation.



Puris, who now runs the New York venture capital company New Things, declined comment.



In hindsight, Geier, 66, says his decision not to make management changes at APL earlier was one of the biggest mistakes of his career.



"People say I was soft. Our policy was that the managers of each of the companies were to run their businesses and be accountable. When it isn't working, action should be taken," Geier says, gripping a signature cigar. "I made a mistake. I should have been more forceful earlier in demanding that a COO be put in place to operate the business, leaving the creative responsibility to the chairman. Even six months earlier it probably would have helped, but it would not have solved the long-term problem that the merger would solve."



While Geier was considering the options at APL, Lowe was trying to spring back from its setbacks in the spring of '99. The agency was still stinging from the May loss of Mercedes, which triggered bitter, protracted litigation with former chairman Sloves, whom IPG accused of interfering with the car maker's relationship with the agency. It wasn't just the loss of $125 million in billings that was at stake; the showcase account had raised the shop's profile.



Within weeks of Hadala's departure, Geier was on the phone to Lowe. At the time, The Lowe Group (which also includes The Martin Agency, Dailey & Associates and Mullen) had 3,500 employees in 41 countries with billings of about $4 billion. APL had 9,800 employees in 78 countries with billings of almost $7.7 billion. But while APL had nearly twice the billings, it generated a fraction of Lowe's profit, according to sources. Geier's rationale for the merger was logical: combine the professionalism of APL and its global clients with the creative strength of Lowe, providing a stronger worldwide resource to the clients. Sure, there were conflicts—APL's Dell, Unilever and Rolling Rock accounts, for example, vs. Lowe's Sun, Henkel and Heineken businesses—but Geier knew he'd have to risk conflict fallout if he was to bolster the two shops.



"Both agencies had strengths and weaknesses. Neither was large enough to really compete in the global marketplace," Geier says. What's more, he says, "both agencies, under their management, had problems with very low internal growth."



For his part, Frank Lowe was intrigued with the merger prospect but needed time to weigh the pros and cons. For all his eccentric dress, speech and behavior, and his positioning as a suit who champions creative work, Lowe has a razor's-edge understanding of the financial underpinnings of any situation, say sources. "I was trying to weigh the balance of Lowe having a global network, which was absolutely vital—and what we'd been working toward and what was very hard to achieve—and the problems Lintas had," he says. "I felt in the end, for clients, the idea of having the global network outweighed the difficulties of the merger."



By the end of the summer of '99, Lowe had decided to go forward, and the deal was announced in October. Like the A&P/Lintas merger, there would be no ambiguity about the surviving culture. Puris said he'd leave the company immediately; Lowe's senior management and creatives would be installed at the top. Michael Sennott, vice chairman at McCann-Erickson—a man who shares Frank Lowe's love of books and travel—became his No. 2.



Sennott, now 59, was far from thrilled."I didn't jump up and down. Phil's mandate to me was 'Fix it,' " he says. "Lowe's relationship with McCann is called sibling rivalry for a good reason." (A longtime high flyer within McCann and a close ally of Dooner's, Sennott's standing appears to have slipped after his tour of duty at Lowe, sources say. In the proposed management hierarchy for The Partnership, he is given the ever-curious industry title of vice chairman, a role that often comes with vague responsibilities.)



Lowe now concedes that going into the merger, he didn't fully grasp the troubled state of some APL clients, particularly global ones like Unilever. Not that he would have shied away from the transaction. "I don't know if I would have thought differently about it, because people in advertising always think they can jump higher," he observes dryly.



Beyond Unilever, there was tension with important clients such as General Motors, UPS, Johnson & Johnson and Burger King. Account losses, some caused by post-merger conflict issues, would grow to include Goldman Sachs, KPMG and Denny's.



One of the most difficult losses last year was Burger King. The client complained that ads were failing to drive sales, and in a late-summer effort to save the business, Lowe and Judge joined Garfinkel and Kelley for a creative meeting with new BK North American president Mikel Durham, a 30-something transplant from British parent Diageo. But the attempt to smooth things over faltered as Lowe sketched on paper the relationship between a brand and its consumers for Durham, an exercise some attendees felt was condescending. About two weeks later, BK launched a review.



While salvaging the account appeared impossible, management agreed to try. Lowe Lintas pitched a single campaign and was cut before the final round in the review, which McCann won. It was a sign of the times at Lowe. Faced with a demoralizing, losing proposition, executives nonetheless stayed the course so they could collect revenue and make the shop's profit margin.



This was a year in which keeping a client was equated with a win—a rationale that hasn't played well with IPG. "That's when you're down on your heels, not when you're on your toes," says Dooner. It was also a year in which actual wins, such as 3Com and RCN, a client for only a few months, were rare.



The story was much different in London and other parts of the world, where there were fewer culture and client clashes. Led by Hammersley and managing director Chris Thomas, Lon don won a string of plum accounts last year, including Priceline and the telco Orange. It also landed a new joint venture between HSBC Corp. and Merrill Lynch. Billings in London grew 30 percent to $450 million last year. The office also shined creatively, winning the Press and Poster Grand Prix at the International Advertising Festival in Cannes for Stella Artois.



The U.S., meanwhile, continued to grapple with client difficulties. Adding to that tension was the deteriorating relationship between Garfinkel and Goldsmith, who had promised each other they would work closely to guide the shop through the rocky transition.



It had begun as a strong working partnership. They were both well-regarded creative directors in New York. It was Garfinkel who helped engineer the acquisition of Goldsmith/Jeffrey in 1996, reinforcing Lowe with the small agency's talent. While the two shared the same creative standards, each had taken a different route to his current position. Garfinkel, 46, a one-time standup comic from the Bronx, came from creatively driven agencies like Levine, Huntley, Schmidt & Beaver and BBDO, where the copywriter became a star via client Pepsi. Goldsmith also started out at solid creative shops, including DDB and Chiat/Day, before opening Goldsmith/Jeffrey. It became known for sophisticated, intelligent work for clients like Everlast, EDS and JP Morgan. The tall, impeccably turned-out Texan was trained as an art director, but he is also an accomplished writer who—unlike Gar fin kel— deals easily with clients and the nuts and bolts of running a company.



Increasingly last year, Goldsmith, then vice chairman, executive creative director, found himself drifting from Garfinkel, chairman and chief creative officer. Garfinkel was regarded by many as an indecisive manager who was be coming more aloof, sources say, even as he got increasingly aggressive in his requests for more power and money. (Gar finkel suggests that his reputation as indecisive stems, in part, from his un willingness to make deep, sweeping staff cuts.) He de nies he was not accessible to staffers last summer. "After eight years of re building Lowe, being the mediator between Frank and Mar vin, helping to or chestrate the largest merger in advertising history and continuing to write commercials, I did something un ex pected," Gar fin kel says sarcastically. "I took a vacation."



Some date the beginnings of Garfinkel's demands for more clout to 1999, a full year before the APL/Lowe merger. Lowe had begun to flourish, and as Sloves neared retirement, Garfinkel's ambitions grew. With the departure of Sloves, he wanted to be the public face of the new guard. He wanted his name on the door; he wanted more money. Garfinkel asked for and received a hefty compensation package, which could pay him up to $2.5 million a year. Lowe declines to comment on that pay scale. Garfinkel says "rumors" about his compensation package are exaggerated.



Staffers say Goldsmith began shouldering more of Garfinkel's management responsibilities as he struggled to steady client relationships and boost staff morale. Garfinkel sees it differently. "I don't think anyone could have done a better job getting the agency and our clients through the merger," he says. "I built up a lot of credibility with a lot of staffers and a lot of clients to keep this thing all together."



Just married in the spring of 2000, Goldsmith was working nights and weekends and becoming increasingly frustrated. When J. Walter Thompson of fered him its top worldwide creative job, he considered the offer carefully and finally said yes, say sources. The contract was drawn and plans for the announcement readied when Geier heard about the move. Geier and Lowe, sensing Goldsmith's simmering resentment, pledged their commitment to him. Consequently, Goldsmith was elevated to co-chief creative officer and co-chairman. Garfinkel then asked for and got the U.S. CEO title to send the message that he was the top guy. He began spending a disproportionate amount of time on a single client, Heineken, sources say. "I spent a lot of time on Heineken," admits Garfinkel. "I also spent a lot of time on General Motors, Century 21, 3Com and Valvoline—all my clients."



By late summer, it was clear to senior management that Goldsmith was rising to the top while Garfinkel was being phased out. Goldsmith says that whatever differences developed between the two, it was virtually never over the work. "Lee and I had a great partnership and friendship—nothing but respect for each other, creatively and otherwise," he says. "With a merger that size, the roles we were required to play were different from what we were each used to. I'm not sure Lee was ever comfortable with some of the changes that were necessary."



Despite the tension, creative standards have remained high. Clients such as GMC, Unilever and J&J, which were dissatisfied a year ago, now give the agency high marks. The "We are professional grade" campaign Garfinkel helped launch for GMC is enteringa second phase, with fewer copy points and softer images. Opportunistic work for Unilever brands such as Wisk enabled the agency to go from worst to first in the client's annual evaluation of roster shops, according to Lowe.



By December 2000, following the loss of BK, the agency saw 37 layoffs and the departure of Bruce Kelley. Those developments, coupled with speculation about Garfinkel's future, created an air of un certainty. It was a tough end to a trying year, a period rated by an optimistic agency exec as a 4 on a scale of 1 to 10. To raise spirits, execs asked each department to create a spot that personified its staff, tagline and all. The clips were woven into a video montage shown at the shop's annual holiday party, at Manhattan's Chelsea Piers.



After the video, Garfinkel and Gold smith played 10 spots, including work for Heineken, 3Com, RCA, UPS and Sprite. They hoped to send the message that despite the trials and tribulations of the year after the merger, the work remained great. Reaction from the 700-800 staffers was positive. But the mood changed when a visibly ex hausted Lowe took the floor. (He'd boarded some 130 flights last year, flying around the globe six times.)



Holding a drink in one hand and a cigar in another, Lowe launched into a 35-minute monologue. It started out upbeat but degenerated into cracks about IPG's board and Garfinkel, whom Lowe addressed as a "little mouse." Some called it British humor; others attributed it to alcohol. Lowe himself cited a blocked ventricle—which reduced the flow of oxygen to his brain—that required surgery days later. Regardless, what was meant to be a feel-good morale booster left a sour taste in many staffers' mouths.



Meanwhile, Judge and his new team are committed to returning clients, luster and energy to a dejected Lowe Lintas. After 27 years in advertising, Judge still has a childlike enthusiasm for his work. Colleagues say he doesn't let the heavy stuff get to him. He possesses the ability to lighten even the bleakest of scenarios. On the day Mercedes fired the agency, for instance, Judge corralled Garfinkel and Goldsmith and took them to the venerable Manhattan steakhouse Ben Benson's, where they drowned their blues in red meat and red wine. It's those human, and at times paternalistic, instincts that have endeared Judge to his colleagues.



Quite the antithesis to Lowe, whose performance at the holiday party underscored the complexities of his personality: Sometimes he appears arrogant, other times childlike. He has begun supporting Britain's Labor Party not because of political convictions but because of Labor's firm commitment to changing U.K. quarantine laws, which would allow Lowe's dogs to travel freely between his homes in Switz erland and England. No one is quite sure just how much of his eccentricity is contrived. He in vokes unquestioned loyalty from those who work closely with him, with their explanation typically centering on his "brilliance."



But Lowe's strong will and outspokenness may have contributed to his current distancing from day-to-day operations at his agency. He has always been outspoken in his criticisms of what institutions like McCann represent within the agency world. And, he's been vocal about interference and directives sent down from IPG. "I'm interested in Frank Lowe doing his job well," Dooner says. "I do not have time for the bullshit," he adds, referring to the grousing by agency executives over post-merger ills. In a more conciliatory note, he says, "The reality is he is a good businessman and has a passion for the creative product. And that's good."



As the U.S. agency scrambles to replace billings, it has to find a way to combine bottom-line prerogatives with the need to bring in the kind of sexy clients—like Mercedes, Sprite and Heineken—that have elevated Lowe's creative profile and attracted talent.



Dooner believes Judge and partners are able to maintain the agency's award-winning pedigree while meeting IPG financial directives. "They're cycling out of a revenue loss, they're practicing cost containment. I think they're on track now," he says.



The current tough marketplace and client-spending cutbacks aren't making it easy for any agency to stay the course. While Lowe has been skillful in its attempts to avoid significant layoffs, more may be necessary soon. Accustomed to changes in the executive wing, staffers' current worries center on whether Lowe's client defections are over. Inside the agency, staffers worry about the stability of Western Union.



Layoffs or not, Lowe is in the midst of reshaping its foundations—including a possible name change to distance itself from the Lintas past. As one of the last big agencies to reflect the hands-on influence of its charismatic founder, Lowe must find a way to institutionalize that sensibility within IPG parameters. Since the agency was built in defiance of such system-dominated companies, it's not clear what the results will be. Or if Frank Lowe will help guide that transition.



Judge believes it can be done. "Since January, we've been adjusting our cost base very carefully. We'll do OK financially this year, but if we have to reshape the agency at some point, we will," he says. "In a year from now, you'll see a worldwide agency operating like a traditional worldwide agency, but with the quality of creative work you'd expect of small networks or local shops."



That's a promise that is easier said than done, as other creatively driven shops have collapsed under the weight of global ambitions.