The Path From Madison Avenue to Corporate CEO

How Eric Hirshberg and others made the transition

Since 2010, Eric Hirshberg has been CEO of one of the giants of the video game industry, Santa Monica, Calif.-based Activision Publishing. But everything he needed to know about how to succeed running the place—home to time sucks like Call of Duty and Angry Birds—he learned in the top ranks of Madison Avenue.

“In my life in advertising, I got very used to the pressure that comes from having to choose the right creative ideas,” says Hirshberg, who spent 13 years at Deutsch LA, ultimately rising to co-CEO and chief creative officer. “Your success and the success of the company depends on your ability to get the right ideas out of people, to make those ideas better and, ultimately, to identify the ones you’re going to bet on. So in that regard, my experience in advertising equipped me very well for being a corporate CEO. The difference is scale—the bets are just so much bigger.”

It is a rare breed of advertising leaders who have made the transition to chief executive of a company of considerable size and importance outside the agency world—and some have clearly been more successful than others. And yet, recruiters contend that their increasingly multifaceted, digitally focused and brand-centric skill set make these prospects more attractive today.

“Agency people are in a world of constant change, and they’re an adaptable breed,” says Steve Cannon, president and CEO of Mercedes-Benz USA since December 2011, who moved up from the vp of marketing spot he assumed there after serving as a principal at The Richards Group from 2002-07.

Cannon notes that, given the intense churn in media and marketing over the past decade, agency leaders have had to become more adept at solving problems across disparate departments—creative, production, personnel, finance, client service—compared to many of their counterparts outside the industry.

David Kenny, The Weather Co.’s CEO and chairman since January 2012 and a former leader at Publicis units Digitas and VivaKi, agrees. Today’s agencies “aren’t just billing out hours,” he points out. Running one, he says, “is much more complex in terms of having a bigger set of skills than even just a few years ago. It becomes more true as digital is part of the mix and agencies go public or become parts of public companies.”

And yet, while it is not so unusual for a senior agency executive to transition to CMO of a business outside of advertising, or for an agency leader to sit on a corporate board, the mantle of CEO has proved largely elusive. “The club is so small,” concedes Cannon, as agencies traditionally are “the last place you go looking” for a corporate boss.

Ironically, agency executives tend to suffer from, of all things, “a branding problem,” according to Renée Richardson Gosline, assistant marketing professor at MIT’s Sloan School of Management. She says recruiters and corporate boards have long perceived agencies as second-tier organizations—useful and interesting enterprises but relatively frivolous and not on par with producers of durable goods and global services. By extension, agency heads are sometimes perceived—fairly or not—as lacking the gravitas and business skills to run a large corporation.

Leaders of even highly respected agencies aren’t always a shoo-in for a corporate CEO gig—not surprising when one considers that traditional media including television, radio and print are notoriously difficult to measure in terms of driving client success.

“There is a certain artistic fluidity that makes it very difficult to apply hard and fast business metrics,” says Steve Hall, publisher of the blog Adrants. “The creative itself is not easy to quantify in hard terms. And because of that, agency CEOs develop a skill set that matches this fluidity more than it does hard and fast KPI-style ROI metrics.”

And when recruiting a CEO, corporations tend to be risk-aversive, favoring candidates from consulting or finance (Bain, McKinsey) or those with deep (some would say “siloed”) experience in specific categories.

Of course, in recent years agencies have transformed into more tech-centric, ROI-focused organizations with a reputation for helping clients of all shapes and sizes solve the most complex business problems. Today, ad shops are more akin to highly specialized consultancies—hardly fitting the three-martini-lunch cliché. “Does the Mad Men model even exist anymore?” asks Cannon.

As ad shops have become more data-driven and results-oriented, businesses outside advertising have leveraged digital communications to build consumer loyalty and drive sales over the long haul. Energy drink Red Bull’s assertion that it is, in fact, a media company speaks to the sea change, underscoring that marketing is being encoded into corporate DNA from the top down, with CEOs at companies of all stripes ultimately finding themselves in the media business.

“It’s happening right now—the role of marketing is coming closer to what a CEO would understand and have to grapple with,” notes Catharine Hays, executive director of the Future of Advertising program at the University of Pennsylvania’s Wharton School. Hays believes agency leaders are particularly well-suited for CEO roles in this emerging landscape, as they are media-savvy and understand how communications drive the sales cycle.

Following that, agency execs are in tune with another reality of business: the acceptance that consumers, not brands, are in control. “They tend to be closer to the consumer because they’ve managed teams striving to communicate the benefits of various client brands to potential customers,” Hays says.

If consumers are in the driver’s seat, she adds, it makes sense, then, for companies to seek out senior leaders who appreciate the deeper meaning of products in people’s lives and strive to instill those values company-wide—and that’s no job for a marketing director. It takes an inspirational leader—an enlightened, brand-savvy and charismatic CEO of which Steve Jobs is the iconic example.

Hirshberg has adopted that mission at Activision, his overarching philosophy being that while consumers purchase products they also “buy into brands,” requiring a lifestyle pitch that drives loyalty and builds sales over the long term. The thinking directly stems from his agency experience and informs the CEO’s views on video game development as well as marketing.

Hirshberg’s hire was initially viewed as an oddball experiment. Not only was he an agency boss but he had come up on the creative side. Many believed he was out of his league in the CEO job. “I was looking for a chief creative officer for Activision Publishing and I thought he would make a great one,” Hirshberg’s boss, Activision Blizzard president and CEO Bobby Kotick, recalls. “However, after getting to know Eric, I realized that he had leadership potential on a greater scale.” Hirshberg had, after all, helped to build Deutsch LA from a handful of employees to about 425 during his tenure. Kotick gambled that he would be a perfect fit for Activision—a creative enterprise that, like an ad agency, is fueled by innovative ideas and executions that resonate with consumers.

Hirshberg rose to the challenge, shepherding key extensions like Call of Duty’s Black Ops and Modern Warfare 3 and, in a risky move for a notoriously fickle category, launching a new franchise in Skylanders, a video game that includes its own line of action figures. (Skylanders has generated more than $1 billion in worldwide sales since its October 2011 debut.)

Given his agency background, it’s not surprising that Hirshberg takes an active role, along with CMO Tim Ellis, in crafting Activision’s campaigns. “He has a fluency with pop culture and an expertise in advertising that you just don’t find in other CEOs,” says Matt Jarvis, a former colleague of Hirshberg’s at Deutsch LA and now a partner at 72andSunny, which Hirshberg selected as Activision’s lead agency a year after coming aboard.

Efforts of note include the recent Grand Effie-winning “The Vet and the n00b” push for Call of Duty: Modern Warfare 3, which stars Sam Worthington and Jonah Hill in an intense battleground scenario. Trading on his “games-are-brands” philosophy, Hirshberg also created the Call of Duty Elite social network, which initially was met with some skepticism but which ultimately grew to more than 12 million members.

The Weather Co.’s Kenny has taken a similarly consumer-focused, brand-centric route. In 18 months at the helm, he has orchestrated both product and marketing pushes, all with the aim of connecting more intimately with consumers while generating ad revenue for the company’s cable and online properties. Kenny led the July 2012 acquisition of rival Weather Underground, which provides forecast data for the weather app of Yahoo, where Kenny serves on the board.

Kenny is also known for The Weather Channel’s controversial decision to assign names to winter storms, a move that generated criticism this past February when Nemo hit the East Coast. Gossip site Gawker called it “stupid, flawed, and possibly even dangerous.” Kenny defends the policy as more than just a marketing ploy, claiming consumers would share more storm data via social media if they were named. Underscoring Kenny’s argument, Nemo generated some 800 million photos and Tweets at its apex.

At Mercedes-Benz, agency expat Steve Cannon has been just as determined to put consumers at the center of the brand experience. The exec is a big believer in event advertising, which explains the automaker’s extravagant 2013 Super Bowl commercial starring a devilish Willem Dafoe along with Kate Upton and Usher. The contest was played in New Orleans’ Mercedes-Benz-branded Superdome­­—a move that backfired when the lights went out in the third quarter. Cannon led the stadium-naming push in 2010 when he was still marketing head and shortly before his elevation to chief executive. There have been solidly tangible results for the brand under his leadership: Mercedes-Benz USA has enjoyed double-digit sales growth for three years running and reported its best performance ever in 2012, with 305,072 vehicles sold, up 15 percent versus 2011.

Not all agency execs have been able to move so seamlessly to the world outside Madison Avenue. Two significant examples are individuals who happen to have been tapped to helm media properties, each with the expectation that his or her agency background would help the company navigate the waves of change in the marketplace. Laura Lang—like The Weather Co.’s Kenny, a former Digitas CEO—was named chief executive of Time Inc. at the beginning of last year, while Baba Shetty, who served as both media and strategy chief at Hill Holliday and managing director of Fallon, was tapped as CEO of Newsweek Daily Beast last October. Despite the initial fanfare, neither has been able to have a positive impact on their organizations in any meaningful way. And just last week, Shetty resigned from Newsweek, days after parent IAC/InterActiveCorp confirmed it is seeking to dump the old media/new media mashup.

At Time Inc., Lang did roll out some new digital products and made several key hires, but the long-troubled media colossus has continued to suffer revenue declines, layoffs and low morale under her watch, and she is scheduled to depart once the unit’s spinoff from Time Warner is complete.

It could be argued, of course, that neither Lang nor Shetty had enough time to bring their respective creative problem-solving skills to their problem-ridden companies. Or, the challenges may well be too much for any one person to solve no matter how much time he or she was given.

No one ever said the transition from agency macher to corporate chief was easy—but it’s clearly a more gentle path for some than others. “If you ask the right questions, surround yourself with the right subject matter experts, be rigorous and thorough and yet still stay in touch with your gut, then making an ad is not all that different than running a huge company,” Activision’s Hirshberg insists. “It’s more complex for sure, but companies win when they out-create their competition—just like agencies do.”