On the right Foote By Betsy Sharke

It's a classic Levis Dockers dawn -- drenched in shades of gray, caught somewhere between the lingering night and the sharp edges of a new day. Bruce Mason powers his sleek black

But unlike the morning aerial trek, Foote, Cone’s move into tomorrow is neither assured nor without turbulence. Indeed, a pressing question confronts Mason and FCB these days: Have they come too late to the party?
When Mason took over as chairman in May 1991, he inherited a slumbering giant in desperate need of a wakeup call. For the last decade, the agency world has been increasingly dominated by formidable agency holding companies like Interpublic Group and Omnicom. And Foote, Cone, despite its $2.4 billion in billings in 1992 ($6.1 billion when its affiliation with European giant Publicis is counted), remains largely faceless and undefined. For years, it was an agency without a clear mission. One Wall Street analyst contends FCB’s stock is a good buy because the company’s lack of visibility has made it undervalued and cheap, at least for now. Another dubs it advertising’s “ugly duckling.”
Mason, whose conservative, Mid-western mien masks a fierce drive, is not content to let the agency lumber along. “We’re now in a full-court press,” he says from his corner office on the 20th floor of the glass tower on Erie Street that is FCB’s home. Unadorned and understated, the beige interior offers only one clue to the mindset of the man who runs the largest single agency in the U.S.: a high- end Macintosh within arm’s length of his desk. Here, Mason is constructing what he has dubbed the “virtual agency,” one he hopes will be as fluid as he expects the 21st Century to be. “In two-and- a-half years, if this agency isn’t dramatically different,” he says, “I will be very disappointed.”
There is a measure of irony in the fact that Foote, Cone & Belding is even undergoing a major retooling. It has never been an agency in serious trouble, like the British holding companies. Its financial performance has been a rollercoaster ride at times, with abrupt dips offsetting the upswings. Its revenues of $353 million in 1992, while considerable, were below its 1988 performance. And although FCB led all U.S. agencies in new business gains last year- -reaping $300 million from account wins like Louis Rich and MGM– its domestic billings remained flat. Still, analysts say they are encouraged by the five consecutive quarters of growth under Mason. The first months of ’93 have brought more encouraging news–another $180-million plus in new billings, from a blend of international and domestic accounts.
What’s more, Foote, Cone has a tradition of keeping the clients it wins. Dozens of its high-profile relationships, including Clorox, Kraft, Citicorp, Mazda and Levi Strauss, are more than a quarter century old. Most of the people who comprise the current management team, including Mason, have spent the bulk of their careers at FCB.
But Foote, Cone’s strength has also been its weakness. For years the agency has played its hand as it has since 1942, when Albert Lasker turned over what was then Lord & Thomas to three young managers, Emerson Foote, Fairfax Cone and Don Belding. Rather than a single agency, FCB operated as essentially three independent shops, with Foote in New York, Cone in Chicago and Belding in Los Angeles. Finance linked them, but little else did. Authority was divided three ways. The result was regional strength, national weakness. Even as each of the agency’s namesakes faded into history, the operating structure remained.
That sort of decentralized thinking meant FCB has never run with the big-agency pack–a proud point of difference that began to show its downside in the ’80s. When virtually the entire field of major U.S. advertising firms began merging and then forming multi-layered networks under holding company umbrellas, Foote, Cone & Belding held back. As its competitors raced to expand globally, again FCB held back until a key client, Colgate-Palmolive, nudged the agency in that direction.
More troubling, Foote Cone’s creative reputation never was firmly established beyond its San Francisco office. On both the creative and financial fronts, San Francisco has been the model FCB has tried to replicate. It has long been the largest West Coast agency, and with nearly $600 million in billings, it’s unlikely to concede that position. But by the time the ’90s rolled around, West Coast rivals Chiat/Day and Hal Riney & Partners had turned extraordinary creative into a saleable commodity, a brand identity. Even smaller agencies like Weiden & Kennedy and Goodby, Berlin & Silverstein leveraged their creativity into a national profile and an expanded billings base. Although Foote, Cone’s San Francisco office could compete toe-to-toe with the best, the agency overall was unable to achieve a broad-based creative cachet. The shortcoming was most notable in New York, where a merger with Leber Katz did not turn the agency into a Madison Avenue player, as management had hoped.
Mason’s predecessor, Norman Brown, retired at age 60, leaving behind a series of loose national and international alliances and acquisitions that lacked focus. Craig Wiggins, chairman of FCB International, was considered to be in the running for the top spot, but Mason was the heir apparent. A former Army tank commander and philosophy major, he had been on a fast track at Foote, Cone since joining the agency in 1969 as an account executive. Following a series of promotions, he was named general manager of the Chicago office in 1981, then president of Chicago in ’85. Chicago’s billings tripled under his management. By 1988, FCB had run out of titles, and Mason was named to a new position, chairman of FCB’s North American operations group. He was said to be the clear choice of the board of directors for ceo. “With Bruce, they put someone in place who had a reputation internally for his ability to turn a profit,” says one FCB insider.
Accountability is a Mason trait. When asked what he does in his leisure time, he glances around his office and says “this is my life.” Even the helicopter he learned to fly soon after he took the chairman’s post was a business decision, not a hobby. It cut a commute of 90 minutes down to 20, putting him in the office that much earlier. Mason is famous for his daily racquetball games, which he plays hard and to win. And while colleagues are quick to point to his human side, even there Mason is driven. He has compiled a data base of employee anniversaries worldwide and sends notes to staff members when they reach 5-year service milestones. The notes are handwritten, personal and always on time.
When he took over, Mason put everything about FCB on the table. As he saw it, the creative product needed substantial improvement, the agency’s financial profile needed more consistency, technology required a complete overhaul, international expansion had to accelerate and conflict problems made the acquisition of a second network of agencies a vital necessity. Change became a corporate tenet.
“Cultures, people resist change,” says Mason. “Our feeling was that, if we were going to make some changes, the best time to make them was right away. We knew that there were a couple of areas that were good, but we had to get a heck of a lot better.” And the dynamics of the marketplace demanded urgency. Major multinational clients are in the process of deciding which of their brands will be global, which will be regional, and which will no longer exist at all. “Right now they are also consolidating down to a shortlist of global agencies. Nestle’s gone from 56 agencies to five,” notes Mason. FCB is a Nestle agency. “They’re all determining which horses they’re going to ride around the world on. It’s going to be a one-lap sprint.”
To run that race, Mason started to forge stronger bonds among agency heads. This despite the fact he would be based in Chicago and Jack Balousek, who became the agency’s president/coo in 1991, would continue to operate from San Francisco, where he has been instrumental in building the office into a powerhouse. Brendan Ryan, an Ogilvy & Mather veteran, was brought in to reshape New York. Eric Weber was wooed away from Young & Rubicam to take on Chicago’s creative department. Brian Dale was put in charge of Philadelphia. Dave Haan took over Toronto. A management board of eight executives, drawn from different disciplines and geographic regions, was formed.
“Because we are decentralized, we have on the ground more critical mass in most major markets than any of our competitors,” Mason says. “Now the challenge is to meld that into a singular vision.” Each fall Mason spirits his management team off to a remote locale for three days. “One night we went to the top of a mountain,” says Balousek of their retreat last October in Beaver Creek, Colo. “There was this rustic old cabin, surrounded by snow, and the only heat in the place was from this roaring fire. We had dinner there by firelight. It’s amazing how being in another place and time can impact your thinking.”
One of the first priorities was to put FCB’s financial house in order. FCB had a reputation on Wall Street that Paine Webber analyst Alan Gottesman describes in these terms: “Every couple of years some dead rabbit would pop out of the hat. Everything would look fine, then kaboom, you were constantly looking over your shoulder.”
Mason figured the honeymoon Wall Street would grant the new management would be a short one. “We wanted to take advantage of that to put an end to all the ‘black holes’ that we had,” he says. Within the first six months, FCB decided to take one of the biggest writedowns in the company’s history–a $42 million hit to earnings. Much of that was to take care of the drain from the money-losing direct mail subsidiary of Krupp/Taylor, which was reorganized and a new president, Patrick Coll, brought onboard.
Krupp/Taylor was a classic example of the kind of missteps the agency had made in the past. It was acquired at a peak market price in 1987, with a huge staff and spacious offices. In addition to basic direct mail service, much of its profits were tied to production of mailers. As the economy slid and demand withered, people and facilities often sat idle. “Financially, it became a bottomless pit,” says one FCB executive. “Under Norman, a lot of open sores were allowed to bleed. There was a lot for Bruce to clean up.”
Mason recruited Terry Ashwill, who had been the chief financial officer of Minneapolis-based Carlson Companies (known for the Radisson Hotel chain and TGI Friday’s restaurants) to help shore up the company’s balance sheet. Ashwill was teamed with Balousek to pare down Krupp/Taylor and other problem areas, which included an overstaffed New York shop. “Terry’s strength is his ability to see what will and won’t fit strategically in the operation and cut the fat in ways that didn’t seem possible,” says one FCB insider. “Jack understands how to establish financial controls and develop realistic business projections.”
Along with the writedown, the agency revamped its internal financial procedures. Capital spending was reined in, excess real estate leases reworked or bought out, and overhead watched more closely. A number of incentives for employees were added, including an stock plan that awards everyone at FCB a share of stock for each quarter of earnings growth each year. (Almost one-quarter of the agency’s stock is in the hands of its 3,600 staffers.) Perhaps symbolic of the importance Mason attaches to the link between performance and earnings growth, he declined any incentive bonus for himself in ’91.
As important as the financial side was, Mason attacked the creative product with equal vigor. “I’m not a creative person, so I can’t lead the charge,” he says, “but I have taste buds. I never felt we were nearly as good as we should be. I was jealous of some of the other agencies. I’m very aware of what agencies like Chiat/Day are doing.”
Initially, the agency tried to export the talent of Mike Koelker, creative director of FCB/San Francisco and the spiritual guru for 25 years on the Levis account. Koelker, whose groundbreaking work for Levis has had a significant impact on the bottom line of both agency and client, was given the title of worldwide creative director. But the title and the task never quite fit.
The 54-year-old Koelker is a quiet, intense, introspective, almost reclusive man who still prefers writing a line of copy to attending meetings. His idea of a good hire is a creative who won’t ever require his attention. Arguably one of a handful of advertising’s creative royalty, Koelker found the process of trying to nurture talent in San Francisco, much less the rest of an increasingly far-flung agency, painful at best.
“I tried writing to people,” he says. “I’d write them as letters.” The “Dear Al” letters became legendary, as much for putting Koelker’s isolation in sharp focus as for their creative insights. For his part, Koelker became frustrated that others in the agency didn’t take the ideas and philosophy to heart. He retreated once again to the Levis work and stopped writing letters.
The process of trying something and being willing to drop it and take a new tack is what Balousek calls “managing messiness” and Mason describes as “living with chaos.” Both believe that if the agency is to produce unconventional advertising, it must be willing to treat its creative talent in unconventional ways. For instance, Koelker and his art directing partner for the last 12 years, Leslie Caldwell, spent eight months in ’92 out of the office. They traveled from San Francisco to Morocco and innumerable places in between to shoot two years of ad campaigns for various Levis product lines. Back at home, Balousek and Mason were hit with unsigned memos from some agency staffers complaining about the void of creative leadership in Koelker’s absence, as well as the personal and professional relationship that linked Koelker and Caldwell. As one memo put it, “It’s all getting to be very demoralizing, and the people who work in the trenches are very angry and wonder who is steering this Lusitania.” Some creatives put their books on the street, others left. But the ship didn’t sink. The new Dockers work won awards, Levis’ sales increased, and the client’s ad budget increased. Mason allows that he’ll carry Koelker’s bags if that’s what’s needed.
“Truly world class creative talent doesn’t easily thrive in a linear, logical, well-organized, regimented way,” says Mason. “We have to be flexible in how we feed somebody’s strength and manage around their weakness.” Balousek says they continue to learn about the process: “We are tinkering with it, experimenting, questioning, testing the limits of our ability to manage it.”
The tests at times have been substantial, and some in the agency argue the costs of an absentee creative director are too dear. Nevertheless, FCB allowed Koelker to pull back from any wide- ranging corporate responsibilities so he could focus on doing the work he chooses. He works out of the office more than in it, with many of the traditional duties of a creative director in San Francisco turned over to Geoff Thompson. And the creative directors in other FCB offices– notably Weber, who heads Chicago’s creative department; Ted Littleford, New York’s creative director; and Larry Kopald, the L.A.-based creative chief on the Mazda account–operate with complete independence.
Koelker’s case is not unique within FCB. A few years ago Neal Sellman, until recently the lead creative on the Taco Bell business, was vacationing in the Philippines when he put in a call to San Francisco’s financial chief. “Neal said, `I’m in the Philippines. I’ve married a mail-order bride. She doesn’t speak English. I don’t have any money. She doesn’t have a green card. Can you help us get back?'” relates one agency insider. The agency got them back, then built a small office next to Sellman’s for his new wife when life in the U.S. proved daunting. She attends meetings with him, sitting at his side. And when Sellman burned out on the high churn of the $111-million Taco Bell account–some 1,200 commercials in four years–FCB began sorting through other options for him. Earlier this month, the agency announced it would dispatch Sellman to its Brentwood office in Los Angeles, where he will handle Mattel.
That move may help solve another problem that is a result of trying to accommodate a certain level of chaos. Not long after Rich Edler was named head of the Brentwood office in July 1991, it became clear he and creative director Kopald were unlikely to develop much of a partnership. Philosophically, the two come at life from very different points of view. But Kopald was critical to Mazda’s $250-million account. To allow enough breathing room for both, Kopald’s base of operation was shifted from Brentwood 30 miles south, to the Irvine service office the agency had set up in Mazda’s neighborhood. Brentwood has been without a creative chief ever since. Insiders say Sellman could become a potent force in new business pitches, enough so that the Brentwood office might take on a shape not unlike San Francisco.
“We live and die by that talent,” says Mason. “We have to work hard at creating an environment where that talent can fly.” And while there is some internal discontent–“Mike Koelker could have, by taking charge in a tangible way, turned the creative product of this agency around almost overnight,” says one creative-Mason argues the one thing he learned quickly as ceo is that no one within the agency can mandate change. And if exporting Koelker wasn’t the answer, that didn’t mean there wasn’t another solution.
“We will be known and judged as much for the marginal work we tolerate, as we will be for the best work we do,” says Mason. “We are trying, as humanely as possible, not to tolerate much.” That attitude is beginning to permeate the entire agency. In New York, Brendan Ryan, who joined FCB after Stanley Katz’s retirement in ’91, began by shifting the culture from Leber Katz’s heavy retail emphasis to a more image-oriented, creatively driven approach. Ryan came from Ogilvy, where he had been head of worldwide client services, overseeing blue-chip accounts like American Express and Kraft General Foods.
Under Ryan, the average age of the New York staff has dropped by at least 10 years as new people have been brought on. While Katz was all marble and mahogany, Ryan is a hardwood floors kind of guy, preferring to display the agency’s creative on the walls. He works with his shirtsleeves rolled up, reviewing every storyboard before it leaves the office.
At the same time, Ryan has given creative director Littleford a free hand to experiment. The only mandate–make it better. Littleford restructured the creative department, doing away with excess management layers and bringing in several new creative teams. The work the $550-million office has produced in the last 12 months for clients like Oreos, Lifesavers and Milkbone has begun to garner it attention. “We’re trying to force as much of the budget as we can into creative,” says Ryan. “The agency that’s going to win is going to be the one with the best people.” Despite a solid client lineup, Ryan continues to fight an uphill battle in getting FCB/Leber Katz considered an A-list contender for new business. “It’s not so much that we carry the baggage of being an agency based in the Midwest,” he says, “it’s that we’re not on the baggage cart.”
To date, Mason says he’s seen a significant change in the creative process. In Chicago, Eric Weber has gone through a rough 18 months, with a high kill rate on campaigns as he upgrades the work. And while Mason is a long way from satisfied, he intends to build FCB’s stature as a global network on the back of creative. Clients–and potential ones–are starting to take note. Ernest Gallo recently handed Koelker a project, sources say, because he was intrigued by the work being done for Levis and by the company’s need to reach a new generation of wine drinkers.
The reassessment of Foote, Cone’s traditional methods extends to all areas, from the completion of a global computer system that links the agency’s more than 180 offices across 46 countries in real time to a proposal to certain clients to share ownership of creative ideas. Much of FCB’s ability to be nimble, though, will hang on Mason’s ability to put at least a second network of agencies in place. Mason sees the agency’s relationship with Paris- based Publicis as a model. The 1989 affiliation-in which FCB took a 49% share of the Publicis joint venture and Publicis in turn took a 26% stake in FCB–propelled the agency from an also-ran in Europe to the No. 2 position. “Initially they missed the boat in Europe,” says Gottesman. “But that was then. They seem to have this solved.” After some rocky early moments, sources says the working relationship is running smoothly– ever since Mason and Maurice Levy, Publicis chief executive, made it clear they were going to function as a team and that everyone else better fall in line. “Bruce manages to effect relatively dramatic change in subtle ways by putting himself on the front line,” says one agency source.
When FCB bought Chiat/Day’s Australian operation, Mojo, late last year, there was talk that not only was FCB increasing its global reach, but that Chiat/Day itself might become the second network Mason wants. Mason dismisses that scenario, since the conflict between each agency’s biggest account–Nissan at Chiat and Mazda at FCB–was deemed insurmountable. One person close to the discussions says that Mazda could accept a second agency network that handled a U.S. automaker, but a Japanese competitor was unacceptable. Consideration was reportedly given to spinning off either the Nissan or Mazda account and the attached agency staff, setting it up as a separate entity.
Although nothing happened, the rationale for having a second network was driven home. “Being as big as we are, there aren’t many categories where we don’t have a major client,” says Mason. “That means if we’re going to continue to grow, we need a second branch. If you look at Omnicom and IPG, they have a good model for continuing to grow, satisfying client concerns about conflicts with separate networks.”
While Mason looks globally, Balousek is scouting the U.S. for acquisitions. Earlier this year, he gave up the coo title and line responsibility for everything but the West Coast offices to concentrate on developing the second network. At the same time, sources both inside and outside the agency say his shift was a strategic move to protect FCB’s strongest flank, the $1 billion West Coast operations. “Brentwood continues to be a problem,” says one insider. Taking Kopald and Mazda out of the mix weakened it further. Others suggest that Richard Ward, who was named general manager of San Francisco when Balousek took on the role of president, was not yet up to the job there. “Only good things can happen with Jack back,” says one executive. “He and Mike (Koelker) have a certain level of competition going, but they can work together and they are on equal footing.”
Both Balousek and Mason contend there is no subtext to Balousek’s realigned duties. Besides, the challenge of doing deals is thorny enough. Most of the major national agencies were snapped up in the ’80s, and IPG and Omnicom remain the networks of choice for many of the free agents left. In its favor, FCB has one of the lowest debt ratios in the industry, and the economy has made this a buyer’s market.
The next two to three years will be defining ones for FCB, as its multinational clients sort out their agency roster and agency alliances fill out their dance cards. If Mason and his management team can make the pieces fit, Foote, Cone & Belding could emerge as a top global operation. If the puzzle proves too complex, the dynamics of the business too unwieldy, the largest agency in the U.S. will likely be relegated to second-tier status. Perhaps one critical factor in the equation is what makes Bruce Mason run. “I’m a sore loser,” he says. “The pain of losing is always greater for me than the joy of winning?’ And this is one game that Mason does not intend to lose.
Copyright Adweek L.P. (1993)