So, you want to run a big multinational advertising agency. Not too many years ago, the path to such a high-powered job was obvious: Get a job in the ad business. Work your way up through the ranks. Hitch your wagon to a major client. Or start your own shop, win a lot of new business, get bought and find yourself in line for a leadership position at the mother ship. The basics were the same: Learn the business, schmooze the client, manage the talent, create the work. Do all of that well and you could rise to the top.
As demonstrated by Martin Sorrell's May hire of packaged-goods veteran Ann Fudge to run WPP's Young & Rubicam, however, agency experience is no longer a prerequisite for agency leadership. Familiarity with the sometimes chaotic workings of a creative culture has been trumped by what Sorrell calls the "in-depth understanding of the marketing opportunities and challenges facing clients," which he says only an ex-client like Fudge can bring.
Also last month, Pharmacia executive vice president and chief financial officer Christopher Coughlin was appointed chief operating officer at troubled Interpublic Group. At Y&R, Fudge was preceded by Mike Dolan, who had never been anywhere near the creation of an ad campaign when he was named chief financial officer in 1996; a veteran of clients including PepsiCo and Snack Ventures Europe, Dolan rose to agency CEO in 2000.
But while some say leaders who come from a pure agency background now seem too parochial in a rapidly changing global business, there aren't too many examples of executives who have successfully crossed the chasm from client culture to agency culture. The most famous cautionary tale may be the brief tenure of McKinsey & Co. consultant Rick Hadala as North American CEO of Ammirati Puris Lintas in 1998. Within six months, he was replaced by Jim Allman, who had come up in the agency business the old-fashioned way.
Agencies, after all, are in the business of coming up with ideas; they are creative enterprises. Clients, on the other hand, make products and sell them. There is not a lot of creativity associated with the development of, say, Crest White Strips.
"It's a very difficult transition to come to the agency side," observes Linda Fidelman, president of search consultancy ADvice & ADvisors in New York. "There have been very few who have done it successfully. You can count it on one hand."
Arthur Anderson of Morgan Anderson Consulting agrees that leaders without seasoning in the ad world usually trip up. "People from the outside do not last long," he says. "That's a cultural and organization issue, and not a talent issue. It's different skills. I think it's apples and oranges."
One can't blame WPP or IPG for trying a new tack. As the media landscape changed during the '90s, and marketers' faith in the television commercial as the ultimate selling tool faded, executives with a client background were seen as potential salvation: They look at business from a more global perspective and are less likely to privilege one form of marketing communications over another. In hiring Fudge, Sorrell said he was attracted not only to her experience at General Mills and Kraft, but also to her presence on the boards of companies such as General Electric, Honeywell and Marriott—duties that have given her an Olympian view of diverse businesses.
Fudge says her mission is to use her experience with "all the elements of building a brand" to "help clients with their total business" in a way that the traditional agency executive, bred on the power of the advertising campaign, presumably cannot do.
There are some in the ad business who welcome an influx of clients into the top echelons of agencies at a time when shops are finding that their influence with clients is waning. Fudge's appointment "is better than hiring a consultant," says Richard Roth of the search consultancy Roth Associates in New York. "The agency business needs intelligent, business-oriented executives."
But no matter how intelligent, these executives must adapt to an altogether different environment. Instead of creative departments, clients rely on research and development. And the people who run client companies rarely come from these ranks; more commonly they are experts in finance and process. Another notable difference is that between providing service and being served.
"We're not the protagonists," says Ed Ney, vice chairman and former CEO of Y&R, of the agency business. "We're a service company. We've got to know that."
Clients, by contrast, are used to being kowtowed to by multiple outside vendors and thus tend to have a "my way or the highway" mentality. And because vendors are paid to do clients' bidding, managers on the client side need not work to inspire the troops. The troops perform—or else. So even if a client-side exec has the same title as an agency exec, the former is often higher in the pecking order, with more authority. For example, as a division president, Fudge had two agencies working for her: Ogilvy & Mather on Maxwell House and Post Cereals, and Y&R on General Foods International Coffees.
The most significant challenge for client executives who migrate to the agency world lies in the creative character of the agency business. Kevin Roberts, worldwide chairman and CEO of Saatchi & Saatchi and widely acknowledged as a crossover success, points out that most clients are taught to manage, and most creatives don't respond to traditional management techniques. "Unfortunately, creatives don't respond to either management or leadership," he notes. "Great creatives are not followers."
Moreover, agencies thrive on a certain amount of chaos, he notes. "When you go into an agency, most everything is out of control." Client environments, by contrast, are far more predictable and process-driven.
For kibbitzers questioning Fudge's ability to bring a more global client perspective to Y&R, Roberts' testimony is telling. He says he owes his success more to his ability to adapt to Saatchi's culture than to any determination to transform it based on his experience at Gillette, Pepsi, Procter & Gamble and, most recently, as chief operating officer at Lion Nathan breweries in New Zealand. "I never tossed out what was good," he says. "I never brought one guy with me."
During Roberts' six-year tenure, Saatchi has heightened its focus on existing clients, P&G chief among them. That strategy has paid off handsomely. With P&G, for example, the agency now handles seven of its 10 top global brands.
Roberts says his approach toward managing the agency was, "I'm just going to inspire you now." Roberts also made it his business to build a sold partnership with his worldwide creative director, Bob Isherwood. "I think Isherwood is the best creative director in the world," he says. "I don't [make a move] without talking to Bob Isherwood first."
Unlike client businesses, where the CEO works with a team, agencies are structured according to dyads: copywriters teaming with art directors, CEOs with creative chiefs. And as with every couple, the key to making a partnership work is chemistry. Indeed, those who are most skeptical about Fudge's appointment at Y&R can't see her and worldwide creative director Michael Patti as a happy couple. According to these doubters, Jell-O and Pepsi just don't mix.
While clients traditionally have had difficulties moving to the agency side, agency veterans generally have enjoyed success on the client side. After spending almost 20 years at shops such as Ammirati & Puris and Geer, Dubois, John Hayes has prospered for almost a decade at American Express, where he is executive vice president of global advertising and brand management. Dawn Hudson, a veteran of the late D'Arcy Masius Benton & Bowles, has risen in the ranks of PepsiCo, where she is president of North America. And Steve Heyer has made the transition from COO of Y&R to COO of Coca-Cola.
Notes Roberts, "It's a much easier transition, because what they take over from the agency side is emotional feel, emotional skills and empathy. You're adding yin to an already well-established yang."
In other words, infecting the orderly corporate world with a little bit of chaos and a lot of knowledge about how the creative process works is easier than bringing the more hierarchical management style of clients to agencies.
In her first month on the job, Y&R insiders say, Fudge has shown an eagerness to get to know agency culture, holding a series of town hall meetings at offices worldwide and promising, for example, to answer every e-mail. Staffers have embraced the openness, even those who question whether she can succeed in her new environment.
Sorrell's appointment of Fudge to the top post of the agency network may yet create a revolution from above in the advertising business.