Jury Is Still Out On Fudge As Y&R CEO Nears 2-Year Mark

When Ann Fudge became worldwide CEO of Young & Rubicam in May 2003, she vowed to listen, learn and make changes where necessary in her bid to reinvigorate one of advertising’s most venerable brands. But the former division president at Kraft Foods had never worked at an agency before, and observers questioned whether she could adapt to a more service-orientated environment.

Twenty months later, with the network still struggling, many insiders and observers are still wondering whether a career client can hop the fence and successfully service clients. And some are starting to wonder how much more time WPP Group CEO Martin Sorrell will give his handpicked choice to fix Y&R.

While by most accounts smart and personable, sources said Fudge, who is also CEO of a larger group called Y&R Brands, has not been particularly plugged into client needs and has been slow in some cases to respond to client unrest. This has prompted some to conclude that Fudge is behaving more like a client executive than an agency chief. One source described it as “this imperial, distant style, as if she’s still managing a packaged-goods company.”

Fudge declined a request to discuss her tenure at Y&R, and an agency rep declined comment. When asked last week about her performance, Sorrell said, “Ann is doing fine.”

Yet, almost two years into her tenure, Y&R’s ability to compete remains a vexing problem. The agency, once a shining example of the power of the global agency network, still hasn’t regained the momentum it lost in the shuffle of an IPO, a takeover by WPP Group and top management turnover.

So far under Fudge, Y&R has lost more business than it has won in the U.S.—and its most significant ad win to date is the $120 million Toys ‘R’ Us business, a domestic account run out of New York.

And 2004 ended on a sour note, with Computer Associates International, a client of the New York office since 2000, shifting its $100 million global account to an Interpublic Group team led by Draft. And Ford Motor Co.’s Jaguar—handled out of Y&R’s Irvine, Calif. office—launched a $100 million global creative review.

The situations with CA and Jaguar illustrate Fudge’s key weakness, sources said. At both clients, a new marketing chief had arrived but Fudge was slow to reach out and solidify the agency/client relationship, according to sources.

Sources have also questioned whether the 53-year-old CEO focuses too much on processes, such as introducing staffers to the management discipline of Lean Six Sigma, which is designed to increase quality through efficiencies, more commonly in a manufacturing setting. That training process began in New York two years ago and is continuing throughout the global network. Creatives in particular have scoffed at the exercise, with some referring to it as “Sick Sigma.”

Outsiders, however, said an agency can benefit from the teachings of Six Sigma, if only to better understand clients. “It does put you on a common vocabulary base with your clients,” said Linda Fidelman of New York consultancy ADvice & ADvisors. “It goes a long way for an agency to have some accountability with clients.”

Certainly, Fudge has made her presence felt structurally. In her first major management move last July, she established a single profit-and-loss line for Y&R’s six North American offices with the goal of increasing collaboration. At the same time, she created a “catalyst team” comprised primarily of newcomers who tackle client problems and new business development.

The moves illustrate Fudge’s mantra of “One Y&R,” in which agency offices share resources and different Y&R Brands units help each other generate new business. Wunderman’s estimated $300 million Microsoft win in February 2004 was an example of that, with John Morris—a top executive at Y&R who’s part of Fudge’s catalyst team—taking on the top management role of the customer relationship management account.

From Fudge’s perspective, she oversees Wunderman, a Y&R Brands unit, and they’re all working toward the same goal. Still, it irked some who thought Fudge was hijacking credit for Wunderman’s big win.

Fudge is facing a challenge that other client-side executives have shared. Historically, the crossover from the client side to an agency has been difficult, with Saatchi & Saatchi worldwide CEO Kevin Roberts among the few who have succeeded. The main obstacles are seen as a culture that is driven by creativity—which can be chaotic at times—-and a mind-set of providing service rather than being served.

Not all clients have found Y&R’s leader unresponsive, however. “She’s a straight-shooter, very honest but very caring,” said Paul Alexander, vp of global advertising at Campbell Soup Co. in Camden, N.J., for which Y&R handles brands such as Chunky, V8, Pepperidge Farm and SpaghettiOs. Alexander, who meets with Fudge about every three months, added, “She’s done what we’ve asked her to do, which is to continue to improve the advertising by keeping our strong [creative and account management] team in place.”