Y&R Creates Digital Unit

NEW YORK Young & Rubicam is creating an in-house interactive unit that it hopes will help the agency evolve with the digital age.

Y&R hopes to grow interactive from 3 percent of revenue today to 15 percent in three years as its roster of packaged-goods advertisers like Colgate-Palmolive, Campbell’s and Cadbury Schweppes begins to move away from traditional media.

“Any agency needs to have a digital offering as part of its services,” said Y&R global CEO Hamish McLennan. “We recognize this is going to be a huge part of our business around the world.”

The new unit, which is still unnamed but will carry the Y&R brand, brings together about 250 agency employees currently working in interactive. McLennan allows the agency’s capabilities are “inconsistent” in its 165 offices worldwide.

Tarik Sedky is returning to the WPP Group agency in the new role of chief digital officer. He is tasked with building Y&R’s interactive ranks through recruitment, retraining and new hires, he said, with initial emphasis on North America. The model is what McLennan accomplished in Australia, which began embedding interactive capabilities three years ago during his tenure before he assumed the global CEO role last June. Interactive now accounts for 15 percent of the revenue there.

“We created a better business on a whole by building a strong [digital] offering,” McLennan said. “We ended up with better quality relationships.”

Eventually, McLennan sees Y&R’s digital unit functioning much like Tribal DDB, which retains its own clients but works closely with DDB on large accounts like McDonald’s and Philips. As a standalone unit, it will be better able to attract digital talent, he added. Unlike Tribal, however, Y&R has no plans to develop large cadres of Flash developers and coders, instead relying on partners like WPP-owned digital shop VML while Y&R focuses on digital strategy and creative.

Asked if it was late to begin building a digital unit in 2007, McLennan said, “The bigger the business the harder it is to build a resource consistently.” Yet, he added, “the great thing about our business is you can reinvent your business pretty quickly.”

The move comes amid signs that many clients are unhappy with their agencies’ grasp of digital media. Nike sent tremors through the industry by moving its running shoe account from longtime partner Wieden + Kennedy to Crispin Porter + Bogusky, in large part because it felt Wieden lacked digital capabilities. A Forrester Research study released in February found half of clients felt their agencies weren’t suited to help them with the changes in digital media.

“The reality is there’s a strong appetite for these services,” McLennan said. “The onus is on agencies to continue to reinvent themselves.”

In Sedky, 41, McLennan chose a seasoned agency executive, rather than simply a digital specialist. Sedky worked at Y&R from 1995 to 2000 as a managing director and two years at mcgarrybowen in the same role. He also has held interactive ad roles, spent three years as head of new media at Accenture and, most recently, worked for a little more than a year as managing director of client services at Atmosphere BBDO, an Omnicom Web shop.