Last Man Standing

Even in the alphabet soup of Madison Avenue, the name Euro RSCG MVBMS Partners is a lot to chew on. Yet it is shorter than the previous incarnation, which was the butt of more than a few jokes. A receptionist once won $1,000 from the principals for a phone-greeting gag: “Good morning, Messner Vetere Berger McNamee Schmetterer Euro RSCG, good afternoon.” And one call for entries for the O’Toole Awards showed a trophy engraver saying, “I don’t care who wins. As long as it’s not Messner Vetere Berger McNamee Schmetterer Euro RSCG.”

The New York agency has now taken the next step, dropping “MVBMS” from its name. It has nothing to do with the jokes. For the Euro RSCG network, under new CEO Jim Heekin, it’s part of an attempt to project a more unified image. And for New York CEO Ron Berger, it carries a more personal weight: It signals the next rite of passage—a relaunch —for the shop he co-founded 17 years ago with Tom Messner, Barry Vetere, Louise McNamee and Bob Schmetterer.

That relaunch brings a unique challenge: How does an agency reinvent itself after losing four of five co-founders who defined the company’s culture and dictated its very structure? And how does it not only manage such a transition but continue to lead the way for a network also in flux under a struggling holding-company parent?

Berger is confident it can be done. Five years ago, as his partners stepped back from day-to-day operations (Schmetterer moved up to become worldwide CEO of Euro RSCG), Berger became the New York agency’s first CEO, and he has spent the last two years carefully assembling a team to replace the founders. That team now has a mandate to overhaul the shop’s entrepreneurial culture.

Berger found his No. 2 in John Berg, who helped recruit executive creative director Kevin Roddy from Fallon, New York. While Roddy’s influence is apparent in the latest work for Volvo and Evian, Berg’s impact has been harder to ascertain. Two weeks ago, he resigned from the agency to start his own marketing-services shop. Berger sounds nonplussed about Berg’s exit and has no immediate plans to replace him.

“When someone has this in him, it doesn’t matter if you agree, disagree or are shocked to find out. You show support and wish him luck. I did the same thing [in starting a company],” says Berger. “It’s not about an individual driving success; it’s the team. I don’t think it’s that difficult to build a team: Once you believe you know what it takes to succeed, you identify people who buy into the idea.”

Berg was not in the recent high-profile Old Navy pitch, in which the shop advanced to the finals. A Stouffer’s pitch was happening simultaneously, and “Ron and I decided to divide and conquer,” Berg says. But one agency insider says Berg was left out because the shop “had lost faith in his ability to lead.”

Both Berger and Heekin deny that and voice support for Berg. And flagship client Volvo had become close to him, particularly in the wake of Schmetterer’s unexpected resignation in January. “John Berg was a terrific asset on our business, giving us very, very good access,” says James Borsh, Volvo’s national ad manger. “But we’re confident in our discussions with Jim Heekin that service levels won’t drop.” (Heekin, who has run accounts such as Chrysler and General Motors’ Opal brand overseas, is expected to fill the void.)

“John’s done a terrific job managing the right balance in identifying what needs to change,” Berger says.

“Hopefully, people will recognize I’m not bailing out,” Berg says. “The only thing I can do is go out and succeed, and then people will say, ‘Maybe that was a good idea.’ “

Whatever the circumstances, Berg’s sudden departure underscores the risks of Berger’s reinvention. To shake up the agency’s culture—which by his own admission may have become complacent—Berger looked beyond its boundaries to recruit his team and installed a traditional management hierarchy in a place used to a partnership democracy. Adding to that challenge is the agency’s tradition of having powerful fiefdoms.

“Everybody here admits the agency, to date, is not what it was. The place has become incredibly comfortable, or maybe it just went to sleep,” says Roddy. “It’s not just the creative department—every department is saying, ‘Tell me what we’re doing, where we’re going.’ ”

Berger distances himself from the term fiefdoms, saying it has “negative connotations.” However, he allows that “Kevin [Roddy] is the appropriate person to get people to work across the business in a lot of ways.”

Berger explains the need for groups of agency talent to focus exclusively on single clients: “MCI, at one point, was like a midsize agency in and of itself, and we’ve had three or four other accounts like that. Part of this goes back to the partners having responsibility in a horizontal structure.”

That has been a key point of difference for an agency that has always boasted a flat structure, akin to a law firm. Its entrepreneurial partners divided up roster responsibility, with each focused on his or her own clients. For MCI, Tom Messner and Barry Vetere used their experience on political campaigns to wage battle in the then-fierce telecom deregulation wars. Louise McNamee oversaw accounts such as Nestlé at an agency whose creative profile belied its packaged-goods expertise.

Five years ago, as Messner, Vetere and McNamee began stepping back and Schmetterer climbed the corporate ladder, Berger faced the challenge of replacing, in a single generation, the founders whose personal involvement formed the essence of the agency. More than an orderly transition is at stake: Euro RSCG’s flagship New York office, 550 employees strong, is critical to struggling Havas: The Euro RSCG network, with 233 offices in 75 countries, accounts for 70 percent of Havas’ revenue, according to the Paris-based holding company.

Long run as an autonomous agency, New York is being repositioned as a global beachhead for a network in the process of its own reinvention under Heekin. Three of Euro RSCG’s five largest clients are New York’s: Intel, MCI and Volvo. “By its very entrepreneurial nature, the Euro RSCG network is a baby, only 12 years old. The nature of a network requires connective tissue,” says Heekin. “It starts with a common vision that needs to be defined, implemented, embraced. New York is a big part of that. The founding members of the agency were like an NBA All-Star team, but after they left, the agency didn’t hit a trough, it continued to grow. In the last six months, we’ve seen the agency step up in a major way to realize its ambitions to be the very best.”

That more people haven’t noticed that growth is a matter of no small frustration for Berger. Last year, he says, the agency added $250-300 million in new business. (Adweek and TNS Media Intelligence/CMR reports confirm that number.) The business came from Cap Gemini Ernst & Young; GlaxoSmithKline’s Vesicare female-incontinence drug; Aventis’ Lantus diabetes drug; Remy Amerique’s Mount Gay rum; Polaroid; Stryker Howmedica Osteonics artificial joint-replacement products; and Yahoo! en Español. The shop picked up MCI’s corporate brand relaunch in the wake of WorldCom’s public meltdown, and also began working again on MCI Neighborhood, rebuilding the relationship on a $50 million piece of business that had moved to Deutsch.

The agency says its annual revenue is $150 million.

Considering the founders’ tradition of hands-on account service, Berger has done a fairly good job of keeping clients, many of which have been on board for 10 years or more. Last year, the agency did lose Subway, which was billed as a $220 million account in the media, although Berger insists it generated only $4.5 million in revenue for the agency, which did not handle media. This year it lost Stouffer’s $35 million Red Box account, which in part led to the layoffs of 20 staffers.

Berger, 54, sees himself as much as an agent of change as the last link to MVBMS’ roots. “When I became CEO, my focus was how to begin to move the company ahead. It’s difficult, because a big part of this industry is the fact that it is personality dominated,” he says. “All of the agencies in our competitive set in the first seven to 10 years in business—Ammirati & Puris, Scali, Levine Huntley and Ally & Gargano—are gone. Just because you’ve done well for the first 12 years, in the midst of those disappearing agencies, doesn’t mean you shouldn’t embrace change. We have to lay the groundwork for the next generation.”

Berg, 42, his first big hire, was quick to consolidate his power base: He brought in former DDB executives to run two of the biggest accounts: Christopher Ross is the new global account leader on Volvo, while Steve O’Farrell has become Intel’s global account director.

Last July, after a year’s search, Berger and Berg recruited Roddy, known for his work on Timberland and Starbucks, to lead the creative charge. Mark Sitley, former head of production at Fallon, signed on at the same time.

Change was in order: Even as the New York agency managed to bring in business in recent years, it felt like a place that had lost momentum and creative direction.

MVBMS first grabbed attention when, over four months in late 1990 and early 1991, it won Volvo and MCI. Soon Intel joined as well. The agency had wowed competitors with its strategic savvy for MCI, being the first in the industry to offer group-marketing programs such as Friends and Family and dial-around long-distance codes. In the ’90s, MVBMS had also made its mark with beautiful, heartfelt advertising like the “Survivors” campaign for Volvo, in which accident survivors credited the car maker. The agency turned MCI into a creative showcase and early proponent of Internet integration with the “Gramercy Press” campaign, in which TV viewers, intrigued by the ambiguous, quirky workings of the fictional publishing house, logged on to the Web to learn more about the characters.

In cinematically stunning spots for MCI, Academy Award-winning actress Anna Paquin talked about how information travels at the speed of light, enabling MCI to make people more interconnected. Those are the standards by which Berger judges the agency’s potential.

“The [more recent] work was good, but it didn’t have the greatness in areas we had in prior years,” he acknowledges. “The agency got too comfortable in doing good, smart work. Now we have to be known for doing great, smart work.”

Berger, a one-time Ally & Gargano copywriter, says it was necessary to look beyond his agency’s ranks for someone like Roddy: “All agencies have peaks and valleys in creative strengths. I went outside to pick Kevin because it takes a different level of star to take our clients, our people, to another level of greatness. I felt we had the right people in place to do the right things every day but also felt we needed something more.”

This year, Berger, stressing that “creativity has to be as strong across every discipline,” is in the process of setting up a larger “office of the creative director” to foster a more seamless, integrated approach. Included in the small group is Roddy, ecd for advertising, Sitley, who holds the same title for production, and Michael Lee, for integration. Richard Notarianni, a DDB executive brought over by Berg, is sitting in as ecd of media. Other key members of the New York team are Marian Salzman and Ira Matathia, a trend-consulting team, who work on strategy and new business.

“Other agencies experiment with this, but it takes a different kind of agency to execute on it,” says Notarianni. “To create a really innovative way to come up with an idea outside advertising often means giving revenue away. Do that too often and you lose your job. Sometimes advertising is secondary, tertiary around here.”

“Ron’s vision is that New York is a great agency town, and yet there are no great agencies here,” Salzman says. “His ambition is to create a great agency, one that does great, very smart advertising, that’s very electronically sophispticated and uses things like buzz in a media-neutral environment.”

While most agencies pay lip service to integration, nearly two years ago Euro RSCG began signaling its seriousness about making it work: It kicked off its “Power of One” worldwide integration efforts, which combined disparate agency offices and below-the-line holdings into single Euro RSCG entities, each of which—most significantly—shared a single P&L. (While the New York agency says it has billings of $1.2 billion, the integrated business unit, which reports to Berger, claims billings of $2.4 billion.) Euro RSCG MVBMS credits the “Power of One” strategy for its winning global accounts such as $50 million Polaroid last October.

“The agency’s integrated strategy is absolutely one of the chief reasons we selected them, particularly ‘Power of One’ and the management structure around it,” says Bernice Cramer, vp of brand development and market intelligence at Polaroid. “The usual way at ad agencies is for each discipline to have its own P&L. Even though people say there is no penalty, human nature being what it is, they push their own discipline. [At Euro RSCG], the brand strategy group is not going to be penalized for not pushing advertising.”

Euro RSCG’s integration efforts received added heft last fall when Havas announced a restructuring. The network picked up 17 more companies, including direct marketing firm Brann Worldwide, which is coming under the New York umbrella. San Francisco holdings such as MVBMS, Black Rocket and Magnet are being combined into a single Euro RSCG office that will report to Berger. (MVBMS Amsterdam also reports in to New York.) Euro RSCG recently launched a new global marketing-services company, Euro RSCG 4D, combining data management, digital and direct marketing entities under a single brand.

“Power of One” was an initiative rolled out by Schmetterer, who was replaced by Heekin at the top of Euro RSCG in January. Some inside the company say the network’s poor performance led to the Havas COO’s departure. Others say the 60-year-old came out on the losing end of a power struggle with Havas chairman and CEO Alain de Pouzilhac. By some accounts, Schmetterer was planning a palace coup, which was discovered, triggering his ouster. Reportedly backing him in a bid for de Pouzilhac’s job was Media Planning Group’s CEO, Fernando Rodes Vila—a large shareholder as a result of MPG’s sale to Havas. De Pouzilhac denies that, as does Rodes, through a spokesperson. Schmetterer did not respond to interview requests.

Whatever the circumstances surrounding his departure, company insiders say Schmetterer was struggling against the Euro RSCG network’s entrepreneurial culture. “Euro is trying to step up to the next level and become a global player,” says one. “But the network was built with agencies that like their local autonomy, their local business. They deliver their numbers, and that’s it. Contributing to the greater global good is not something anyone at Euro RSCG [operating companies] really understands.”

Heekin, former CEO of McCann Erickson WorldGroup, shrugs off such pessimism. “It’s not rocket science,” he says. “You need things like a common strategic process, common vocabulary, common vision and tools in branding.”

The New York office is Euro RSCG’s biggest test of maintaining the entrepreneurial vitality while institutionalizing such common values. Berger is obviously a key part of that. Perhaps befitting his Brooklyn roots, he can be opinionated and blunt—sometimes offensively so, some say—and given to outbursts of temper. “He’s always been difficult, but in a larger democracy of other partners, it wasn’t so bad,” says a former staffer. “We could deal with the other partners. Now it’s just him.”

Some outside the agency share that perception: “New-business consultants are used to being pandered to. Ron burnt a lot of bridges with them,” says one former MVBMS executive, echoing some New York new-business consultants. “Ron doesn’t mince words. He’s not good at hiding emotion. Before, the partnership provided more of a balance to his personality.”

Berger makes no apologies. “Our agency has always had a ‘business first’ attitude. None of us has ever minced words. Some of us may mince words less than others,” he says. “Clients, consultants need to understand more about who we are, what we do. It’s a style thing.”

And Berger has his defenders. “It’s accurate that Ron can be difficult to work with,” says Berg, “but people who work closely with him have a respect for him, and that respect mitigates the difficulty.”

After a recent period where he seemed less engaged, Berger is back and enthusiastic, insiders say. “Everything around here is feeling kind of positive, and I give credit to Ron,” says one staffer. “In some ways he really seems to be back the last couple of months. The new people have energized him. His new role as the head of the 4A’s [American Association of Advertising Agencies] has energized him.”

The laid-back Roddy seems to be doing the same for the creative department. After arriving in August, he gave himself until the end of the year to get to know the staffers, clients and brands. He has begun bringing in new creative talent but was also pleased with what he found already there: “There are some incredibly smart, talented people here,” he says. “I need their help in making this a great creative agency. It’s too big a job to do alone.”

Admits creative director Rocky Pena, a 10-year veteran of the agency: “There’s always some nervousness when there’s change under way. But the place has been feeling a little stale. It’s time to get people motivated again. Something has to had to change around here.”

It’s too early in the process to guess how the reinvention will turn out. Berger is not willing to even guess how long it will take. “It’s a rolling process,” he says. “What worked yesterday won’t work tomorrow. But one of the benefits we have is that we’re not weighed down by all those traditions [of older networks]. With the new people and the [office of the creative director], we’ve found the right ideas, but it’s very much a work in progress.”

Other observers are taking a wait-and-see attitude of a rather more pessimistic nature. Says one New York-based agency consultant: “The jury’s out on whether the new team will work. Heekin and Berger are so different from the people who had been there, it will be either good or bad. Plus, you have a whole new team of people in the agency that are very different from anything in the Messner or Euro culture.”

Adds one new-business consultant: “The luster is off. They don’t know who they are. At one point, Bob Schmetterer promised the law-firm model. If they made a lot of noise, they made a lot of noise about something that doesn’t exist anymore.”

Some who know Schmetterer and Berger say there was no love lost between them, so relations between the network and New York may only improve with Heekin’s arrival.

The good news is that flagship marketers say they aren’t concerned by shifts in New York’s management suite. “As a client, I don’t feel those changes in particular,” says Pam Pollace, vp, director of corporate marketing at Intel. “I still see the founding spirit in the people we deal with. That’s what’s important, and that’s what keeps the pace going and one of the reasons we stay with them.”

It may also help that it is Berger who has worked closely with Intel through the years.

Tom Messner feels that even while the MVBMS legacy is fading, the founders’ spirit is reflected in the next generation of managers, even as they try to reinvent its culture.

“The only idea that continues, I think, from the old days is that the people who run the agency today are, at the same time, leaders, managers and workers,” Messner said. “You have to miss Vetere’s genius, Schmetterer’s and McNamee’s business acumen and flair, and the whole group’s ability to work together. But the new people have the opportunity to start all over, except instead of schlepping around town trying to survive like we did, they have the opportunity to do advertising for some of the world’s great companies and brands in an environment that rewards results and is impatient with posturing.”