The biggest creative account shift of 2003—Royal Philips Electronics' consolidation of its $600 million business at DDB—was set in motion over dinner at Fresco in Manhattan last summer. Philips' chief marketing officer, Andrea Ragnetti, flew in from Amsterdam to meet with DDB worldwide CEO Ken Kaess. The restaurant, three blocks from the Omnicom Group network's New York office, was the rendezvous point.
Philips CEO Gerard Kleisterlee was pushing to integrate the company's divisions under a "One Philips" banner. Ragnetti had been wooed from Italy's largest telecom six months earlier to make it happen.
"This was not just Procter & Gamble reassigning some of its business," says Ragnetti. "This was a main step into making marketing a protagonist in the life of this company. It was a revolutionary move"—one that included a consolidation of business split between DDB, which handled consumer electronics, and Publicis Groupe's Leo Burnett, Chicago, which had domestic appliances and personal-care products. (Philips owns Norelco and Sonicare.)
After a half year of mulling his options and comparing the two networks' strengths and weaknesses, Ragnetti decided the "overriding consideration was creativity. That's why I want an advertising agency, because that's something I don't have internally."
He wanted DDB.
But Kaess didn't know that as he headed to Fresco. Of course, he and his DDB colleagues—particularly Michael Bray, president of Europe and Asia—were far from unaware of the "One Philips" initiative and had pondered what opportunities that might bring. But the purpose of this meeting was unclear. Kaess had just been told to show up—and keep the meeting a secret.
Kaess, 49, known as a friendly, well-liked, hands-on account man—"a real human being," Ragnetti calls him—arrived early at Fresco. He spotted his ExxonMobil client, Stew McHie, dining with DDB's worldwide account leader on the business, Paul Price. The fuel marketer "is probably one of our best examples of a global relationship," says Kaess. "It must have been a good-luck charm."
Or at least a positive sign. "I told him, 'Listen, there is a chance we can expand our relationship and you can have the whole account,' " Ragnetti recalls. The switch would add about $300 million in advertising and marketing-services billings to DDB. Within days, the deal was sealed. Says Ragnetti: "I told Ken, 'This is probably the first time in your career that you got handed such a huge piece of business over pasta.' "
In a challenging environment, DDB's worldwide network hummed with that kind of opportunity-meets-preparedness in 2003. Wins across three continents helped the agency grow worldwide billings by $1 billion, or 5 percent, to an estimated $21 billion. Revenue also grew 5 percent, to an estimated $2.7 billion. The increase is particularly impressive given DDB's growth the year before, when it added $1 billion in billings over 2001.
The network also excelled at keeping business in 2003. It retained 99 percent of existing billings and did not lose a single client worth more than $10 million in any of its 206 offices in 96 countries. That startling statistic represents a remarkable turnaround from 2001, when it lost more than $300 million in business, including Energizer, Vodafone, Michelin and General Mills (a client on the roster for 39 years and worth $90 million).
But, not coincidentally, 2001 was the year Kaess was elevated from president to worldwide CEO and began to put his stamp on the network. "In 2003, DDB's performance was a testament to the strength of its management team led by Ken Kaess, sound client relationships and a remarkably consistent creative product throughout the world," says Omnicom CEO John Wren.
The last of these cannot be underestimated. Simply put, DDB's reel is the best among the global agency networks. At the International Advertising Festival in Cannes in June, the agency won eight Lions in film—more than any other global agency network and second overall behind independent Wieden + Kennedy, which won 10. The winning work came from Paris, London, Chicago and Canada. Canada took home three Lions, including DDB's only gold—for a Bud Light campaign out of DDB Downtown in Toronto that included the hilarious "History" spot that touts the contributions to male freedom made by the fictitious "Bud Light Institute."
As if that wasn't enough, DDB was also presented with a special 50th anniversary Lion for winning the most Grand Prix awards in the half-century history of the festival. And for the third straight year it was named Network of the Year at the Clio Awards. (The Clios are owned by Adweek parent VNU.)
Creativity was the catalyst for DDB's victory in one of 2003's highest-profile pitches: McDonald's search for a new global branding campaign. And nowhere was the efficacy of DDB's global network more apparent.
A creative jump ball (a process DDB is intimately familiar with, based on its annual submission of Super Bowl spots to Anheuser-Busch) pitted DDB agency Heye & Partner in Unterhaching, Germany, against all the McDonald's roster shops—including DDB Chicago (lead shop on the $700 million-plus U.S. business) and DDB Sydney, another longtime McDonald's shop. Heye, a McDonald's agency for three decades, pitched the winning concept, "I'm lovin' it." But after that was chosen as the new global positioning, the three offices united with at least a dozen other outposts, says North America CEO Dick Rogers, to produce the first six spots in more than a dozen languages. Interactive arm Tribal DDB also got into the act, launching "I'm lovin' it" in cyberspace in the U.S., Germany, Austria, the Netherlands, Denmark and Australia.
Heye also worked with DDB Switzerland to land McDonald's there, adding one more to the 20-plus European countries in which it handles the fast-food company's advertising.
In addition to fast food, DDB was loving computers and cars. Adding to the agency's Dell business, BMP DDB in London won the Pan-European account, and DM9DDB in São Paulo added Brazil, for a total of $160 million in new billings. DDB Germany's new management team, led by Tonio Kroger and Amir Kassaei, won existing client Volkswagen's corporate account in that market. And DDB Melbourne replaced TBWA Paris on the Michelin worldwide motorsport business—the first time the French company has gone to a foreign agency for a global campaign.
The U.S. was busy, too. The $1.3 billion Chicago office, DDB's biggest, got even more muscular, adding $160 million combined from OfficeMax, Midas and Alltel. Dallas won an assignment from Nokia, then was invited to pitch the creative account. (That review is ongoing.) And in New York, former D'Arcy Masius Benton & Bowles creative chief Lee Garfinkel joined in March and began to realize one of Kaess' key goals: to reinvigorate the $650 million headquarters.
Kaess hired Garfinkel to take the office "to the next level, like a rocket ship." Garfinkel, 48, who worked on Heineken at D'Arcy, was able to stock that rocket ship with beer. He earned New York its first taste of Anheuser-Busch: the $30 million Michelob Amber Bock business. And he led the winning team in the $20 million Cotton Inc. review, outdueling Bartle Bogle Hegarty, Deutsch, Fallon, Ogilvy & Mather and Wieden + Kennedy.
The emphasis on existing clients was deliberate. "First, we focused on the clients we had," says Rogers, 54, "to find opportunities where we could grow and maybe be more selective than the general market was. When the DDB managers got together at the beginning of the year, we agreed that just going after everything wouldn't serve anybody well."
"You can't sit and wait for economic recovery," says DDB chairman Keith Reinhard, who is stepping back from day-to-day operations (he says he will devote 50 percent of his time to DDB in 2004, down from 85-90 percent in 2003) but remains, according to Kaess, the "creative conscience of the agency." "You have to create your own recovery when you're working in an industry that's flat-to-negative growth," adds Reinhard, 68. "There's only two ways to do that. One is to increase your engagement with existing clients and try and sell more services to them, and the other is to take business from the competition while keeping the existing account base happy."
A good example of the former is with ExxonMobil, which DDB won in a 2000 consolidation after 36-year client Mobil merged with Exxon. In 2003, DDB created a single marketing-service practice for the company, orchestrated globally. It developed a global brand positioning for ExxonMobil's convenience store chain, On the Run; launched a global Web site via Tribal DDB; rebranded the client's coffee products and in-store merchandising in the U.S. via DDB unit Karacters Design Group; and redesigned the brand image of stations in Norway as "Driver Centres," among other initiatives.
ExxonMobil has outsourced virtually its entire marketing effort to DDB, notes McHie, global marketing officer. "We don't consider DDB to be an ad agency," he says. "We utilize them as a marketing-services agency that encompasses a whole lot of things, including below-the-line work. We're not big TV advertisers, but as a retailer, we do a lot of radio, out-of-home and innovation at the stores themselves. DDB has the competency to engage all of those assignments. To be an integrated agency doesn't mean simply gathering a lot of [sibling] companies together. We expect and pay them to manage the integration for us. When I'm in a room and there's eight or 10 folks in there, to me it's just DDB, even though they may represent three or four different agencies within the Omnicom family."
Though creativity was the primary driver in the Philips consolidation, DDB's ability to move nimbly as a network was also a factor, Ragnetti says. "The very bulk of both above- and below-the-line business ... will go to DDB," he says. "They have shown with other businesses like ExxonMobil that they can do it."
All this in a year of evolution for DDB in its strategy of having creative entrepreneurs run local offices—what has come to be known as its "federalist system." For example, unlike most global agency networks, DDB has no worldwide creative director, though it does have a North America creative director: Chicago-based Bob Scarpelli. There is a worldwide director of multinational accounts: Greg Taucher. In addition, each of the multimarket clients has its own global account manager.
Still, the DDB brand needed bolstering in 2003, Kaess says. "There's no one-size-fits-all. It's not a command-and-control network," he says. "We look at client needs and build an appropriate network for them." And yet, he says, "we need to evolve that federalism to independence with accountability. Yes, we never want to lose our core DNA of being strong in local markets, but we have to have consistency and communications. That starts with guys at the regional level. ... We took a good hard look at our businesses to see how we operate as a network. DDB [offices] are always solid creative entrepreneurs in their markets—we didn't want to lose that—but [we had] to find ways we could work together as a seamless network. That was certainly a challenge going into 2003."
The most visible result of this process became formal on Jan. 1 of this year, when DDB's many dual-branded shops in all markets around the world (BMP DDB in the U.K., DM9DDB in Brazil, etc.) officially adopted the unadorned DDB name. (Separately branded units such as Heye & Partner and Downtown Partners in London will retain their names, as will specialist shops like multicultural unit Spike DDB.)
The goal is to better communicate that DDB's offices collaborate on all sorts of multinational business, from Anheuser-Busch, Clorox, Johnson & Johnson and Volkswagen to McDonald's, Philips, Dell and ExxonMobil.
"We know we're a real network internally, but if you look at the awareness levels of DDB as a brand, they're not as high as our competition in certain regions," explains Kaess. "That's an opportunity to do what we tell our clients to do, which is focus on your brand. Obviously, there will be more of a transition in certain markets [with historically strong DDB-owned agency brands], like London or Canada or Brazil. We have to show that just because the name is now DDB, there's still the inherent value of those agencies—that the value that Frank Palmer [chairman and CEO of DDB Group Canada] has in Canada is consistent with the DDB network, just like the values of Needham Harper Steers didn't leave Chicago when we dropped the [Needham] name."
In addition to communicating the capabilities it already has, DDB is also expanding. The network launched DDB Healthcare in Europe in 2003, combining the assets of several continental specialty shops and linking more closely with Omnicom's Diversified Agency Services siblings. Jonathan Hoare, managing director of Burkitt DDB in London, was tapped to run the new unit. DDB Healthcare will debut in the U.S. this year.
And like its management approach, much of the agency's creative last year was evolutionary. Its "Real Men of Genius" campaign for Bud Light made an unusual transition from radio to TV in the U.S. after doing the same in the U.K.—at the suggestion of August Busch III. The American effort includes humorous spots about wrestling-costume designers and other loony "real men." New work in A-B's "True" campaign, including hilariously truthful football referees and an egotistical player named Leon, was among the most talked-about advertising of 2003.
"I'm lovin' it," while not a huge departure for fast food, does zero in on the youth target McDonald's is seeking and appears to be slowly building what Scarpelli calls "talk value." Scarpelli, 51, relates a story about being at a Bears game when three kids behind him began singing the music when a McDonald's ad flashed on the stadium screen—proof, he says, that "you're seeing the campaign have a good impact and starting to evolve."
There were flashes of brilliance, including two spots from DDB Norway in which an old woman times the cooking of her eggs by the Norway Bussekspress buses that roar past her home. Another highlight: a public-service spot, part of the "Relax. It's just a game" campaign for the Canadian Hockey Association from DDB Vancouver, in which an angelic blonde girl exhorts her mother to avenge perceived slights from fellow supermarket shoppers.
In terms of personnel, Garfinkel was a coup, although his hire begged the question of how he would work with New York chairman and president Bob Kuperman. "When D'Arcy was closed down, the first two calls I got were from Scarpelli and Kupe saying we have to get Lee in here," says Kaess. "Bob gave up his title as chairman to get Lee in here."
The two will not work together much this year. Reinhard says Kuperman, 62, test- marketed a "Bill Bernbach creative seminar" for staffers in Asia in the fourth quarter and will be taking the course to DDB offices around the world for most of this year.
And yet the agency's leaders continue to express a healthy dissatisfaction with the creative. "All over the network, I think we felt we could do better," says Bray, 53. "Europe and the U.S. were pretty good, but [the work was] not as exceptional as it should be."
This year, for the first time, submissions to DDB's internal creative award, Pinnacles, will be mandatory for all offices. Work will be judged online by 25 of the network's top creative directors. The agency also instituted a creative audit worldwide in 2003. "We really want to make sure we're shooting for best in category and be ranked in the top three in every market and we're not," says Scarpelli, head of the Pinnacles jury. "We're holding everyone accountable for their financial performance, but are we doing the same for their creative performance, which is more important, really? A little bit of peer pressure never hurt, either."
All to keep the Doyle Dane Bernbach legacy intact. And to make sure the agency is ready for that next dinner at Fresco.
Up 5 percent to $21 billion (est.)
Up 5 percent to $2.7 billion (est.)
WIN/LOSS PITCH RATIO
7 out of 18 (accounts above $25 million)
ACCOUNTS WON/MEDIA BUDGET*
Royal Philips Electronics, global/$300 million†
Dell, Europe and Brazil/$160 million
TUI, Europe/$100 million
Alltel, U.S./$80 million
Kinder (Ferraro), France/$50 million
Midas, U.S./$40 million
OfficeMax, U.S./$40 million
Michelob Amber Bock, U.S./$30 million
ACCOUNTS LOST/MEDIA BUDGET*
Goodman Fielder, Australia/$8 million
British Gas, U.K./$7 million
Barclaycard, U.K./$6 million
• $1 billion billings increase and eight Lions at Cannes, both tops among global agency networks
• Won global roster-shop shootouts for Philips creative, McDonald's worldwide branding campaign
• Honored as most-awarded agency in 50 years of International Advertising Festival
• Most offices moved to DDB brand name