Will General Mills Follow ‘Saatchi 17’?

NEW YORK The 17 staffers who quit Saatchi & Saatchi en masse last Monday had signed a letter of agreement to join Interpublic Group by week’s end, a move that many insiders and observers saw as confirmation that the General Mills business they worked on at Saatchi would soon follow.

IPG declined comment, but sources said one scenario has the executives joining Campbell Mithun, a General Mills roster shop with a small presence in New York. Under another scenario, IPG could set up a stand-alone unit specializing in “youth, family, health and wellness” to house the new employees. But it is clear that the holding company’s interest goes beyond recruiting talent. “I don’t think you do this out of the goodness of your heart,” said one executive. “You’re doing something opportunistic, and often you are rewarded and business moves.”

Even before word of IPG’s deal surfaced, Maurice Levy, CEO of Saatchi parent Publicis Groupe, was said to be considering legal action against the staffers, even if the entire General Mills account stays at Saatchi.

“We are very happy with the relationships and behavior of General Mills, who have been very supportive during all this period. And I’m pleased to report that 100 percent of the business we have with General Mills is secured,” said Levy. “Management of [General Mills] has been fantastic, helpful and we are working on solutions to continue to deliver best-in-class work to continue our 80 years of partnership.”

The exodus, which involved a nearly equal mix of senior account and creative executives, came just three days after the exit of Saatchi vice chairman and General Mills worldwide account director Mike Burns, a 25-year Saatchi vet.

The group, dubbed the Saatchi 17, did little to avoid the perception that the resignations were orchestrated; in fact, the resignation letters from the creatives were handed over in a single envelope, said sources.

Among the brands that the group handled at Saatchi were Big G cereals such as Cheerios, Total and Wheaties, Yoplait yogurt and Betty Crocker fruit snacks, including Fruit Roll-Ups, Fruit Gushers and Fruit by the Foot.

Collectively, those brands spent about $460 million in measured media last year, according to Nielsen Monitor-Plus. That’s nearly 85 percent of the estimated $550 million in General Mills spending at Saatchi, which also handles Progresso, Pillsbury, Green Giant and Old El Paso.

Top Saatchi executives, including New York CEO Mary Baglivo, were said to be heartened by a brief statement issued by the Minneapolis client on Thursday. “We continue to be very pleased with Saatchi’s work on our behalf, and we are looking forward to continuing our 80-year relationship,” said a General Mills representative. Others simply took that to mean that if the client did reward the Saatchi 17 with business, it would leave some at Saatchi.

Saatchi issued its own statement indicating that Baglivo and New York executive creative director Tony Granger had assumed leadership duties on General Mills and that “while the recent departures are unfortunate, we remain confident in our ability to service this important client.”

Inside the agency, staffers were “scared, confused and waiting for the other shoe to drop,” said one source.

“It has been a long week,” one staffer said on Friday. “It was kind of a shocking event, and now people have absorbed that.”

In an effort to quell concerns about additional fallout, Baglivo and Granger held a brief staff meeting on Wednesday in the atrium of Saatchi’s 11th floor, reassuring employees that the agency’s relationship with General Mills was secure and asking them to step up during a difficult time.

The tumultuous week was the first big test of mettle for Baglivo, a former top executive at the New York offices of Arnold and JWT who joined Saatchi in October. (Her arrival, which coincided with Granger replacing Tod Seisser as creative chief, marked the end of a previous experiment in which multiple executives jointly managed the office. Among those executives was Burns, who at one point last year was co-CEO with Scott Gilbert.)

The day before the staff meeting, Baglivo was in Minneapolis to meet with General Mills executives in the wake of Monday’s walkout, one of a handful of meetings she has had with the client.

The apparently synchronized exit of the Saatchi 17 and talk of potential legal action was reminiscent of at least two memorable episodes in advertising history: the shift of Mercedes-Benz’s account from IPG’s Lowe to Omnicom Group’s Merkley Newman Harty in 1999, and the walkout of top executives and clients from WPP Group’s Lord, Geller, Federico, Einstein in 1988.

The Mercedes shift triggered a drawn-out legal battle between IPG and former Lowe chairman Marvin Sloves, whom IPG accused of causing the business to move through “tortious interference.” In the end, an arbitration panel found IPG’s claims unpersuasive, the business stayed at Merkley, and the two sides settled out of court.

The IBM case, in which WPP CEO Martin Sorrell sued the Lord, Geller defectors who left to start their own agency, was a different story. Sorrell got a state judge to block the executives from taking clients, and despite a countersuit, the principals (and then-independent Young & Rubicam, which bankrolled the new shop) had to pay WPP $7 million to settle out of court.

How the General Mills saga will play out is anyone’s guess. Sources said if the Saatchi 17 acted in concert in part to shake loose business, Levy may have a claim for breach of fiduciary responsibility. Levy declined comment.

Then again, any General Mills business still remaining at Saatchi and sister shop Zenith Media, which handles the bulk of the client’s media duties, may give Levy pause to pursue legal action.

“The real issue here is what General Mills wants, since it’s extremely difficult for an agency or holding company to prevent the client from using the agency that it wants,” said Rick Kurnit, a partner at Frankfurt, Kurnit, Klein & Selz in New York, who is not representing any of the executives. “However this ends up, will be largely determined by General Mills.”

—with Kathleen Sampey and Noreen O’Leary