Walking into Grey Global Group's Manhattan offices is like entering a time capsule. Grey has been housed in the same indistinguishable black-glass skyscraper on Third Avenue since the mid-1960s. In fact, its location used to set it apart from its competitors, most of which resided on Madison Avenue. Now, after several decades of industry consolidation, Grey stands apart for being the last strong independent global advertising network.
Grey's lobby looks much the same today as it did back in 1988. I know because I worked there back then. This is not a place where you'll find the intentional industrialism of a Deutsch or the red-carpeted glitz of an Ogilvy & Mather. The unassuming feeling extends all the way up to the executive suite on the 12th floor. Vice chairman Bob Berenson, a 39-year Grey veteran, still sits at the rolltop desk in the corner of his average-sized office. And occupying the same string of rooms accented by green marble is chairman, CEO and president Edward H. Meyer, who has run the company since 1970 and who casts one of the longest shadows in advertising.
One imagines that the native New Yorker must have changed in the past decade or so. His industry, which once comprised a plethora of big global agency networks like his, has dwindled to a precious few large holding companies. Mass media has fractured. Agency fees have been squeezed. But possible experimentation with Grecian Formula aside, it seems he hasn't changed much at all. It's eight days after his 75th birthday, and Meyer has the same vigor and focus he had decades ago. It makes The Big Question—what will happen to Grey after he leaves?—particularly hard to ask.
Ed, who is known for his acerbic humor, would rather joke about retirement, while at the same time jabbing at a competitor. "Somebody said to me—and I love this—the other day, 'You know, Ed, when they ask you about succession, you ought to say, Why are you asking me about it? The agency's doing fine. Go ask IPG. They really ought to be thinking about succession.' "
There are some signs of change at Grey. Employees get off the elevators on floors designated as Buzz Grey, earl Grey, Fresh Grey—evidence of the agencies-within-an-agency "villages" that New York president Steve Blamer has created within the estimated $3.5 billion headquarters of Grey Worldwide, the group's ad agency unit. (In the $8.5 billion universe of Grey Worldwide, it is by far the largest office.) But the changes only go so far. Even though on this day he is willing to talk a little about succession, it's clear that, barring an act of God, Meyer intends to occupy this suite of offices for a long time to come. His current contract runs through the end of 2004, and even then, no one expects him to pack it in.
"He'll be in that office till he's 90," says former Interpublic Group chairman Phil Geier.
He certainly has the stamina. The stories of Meyer stepping off the red-eye and into breakfast meetings refreshed and on-the-ball are legion.
It's hard to imagine Grey without Ed at the helm. He joined the agency in 1956, just after it won its first small assignment from Procter & Gamble, for Lilt home permanent. At the time, his boss promised Meyer stewardship of all of Grey's packaged-goods accounts if he could improve the shop's presence in the category. Almost 50 years later, Ed is still working on it. In November, Grey survived as one of only two global holding companies still handling advertising for P&G after the company pulled its last brands out of Havas' Arnold McGrath and deposited them at Publicis Groupe shops and Grey. "He's an advertising legend in his own right," says Geier. "He's a consummate account man."
After more than 40 years as a senior Grey executive, Ed has amassed an inordinate amount of control over the company he runs. He exercises voting control over some 70 percent of Grey Global Group's shares. The stock is currently valued at more than $600 per share. "I view him as similar to Warren Buffett," says John Miller, a senior vice president of portfolio management at Ariel Capital Management, a Chicago-based fund manager that, as of the end of January, owned 27.1 percent of the holding company's common stock.
In describing the reign of Ed Meyer, it's easy to slip into descriptors reserved for the top captains of industry—or long-distance runners. Meyer has been running advertising's marathon, and he has the stats to prove it:
• He has served on the Grey board since 1961.
• He became president of the agency in 1968 and CEO two years later.
• His Grey holdings, including options, are worth about $165 million.
• He has worked on Procter & Gamble business for 47 years (he was assigned to the account when Omnicom Group CEO John Wren was 4 years old).
It's no wonder, then, that many people think of Ed Meyer and Grey as one and the same. But that's not quite the case. "Ed is Grey and Grey is Ed, but it's an incredibly deep bench," says Jim Stengel, P&G's global marketing officer.
Ed's list of the next generation of Grey leaders is lengthy. It includes Blamer, 46; Carolyn Carter, 48; Joe Celia, 44; Neil Kreisberg, 57; and Eric Rosenkranz, 50—all longtime Grey executives responsible for huge chunks of Grey's $1.2 billion in worldwide revenue.
They'd better be a patient lot. Sure, Ed thinks about succession now and again, but the subject doesn't seem to hold his interest as much as it does other people's. "The thing that gets in the way of it," he says of retirement, "is the belief that there's so much more to be done." His to-do list includes improving Grey's reputation in a number of countries around the world, upgrading its creative product and building on its integrated capabilities.
Much of that work will be done by the next generation. For instance, Meyer recently named Joe Celia president of a new unit, Grey Synchronized Partners, that incorporates Grey Interactive, Grey Direct, integrated marketing unit G2 and Market Data Solutions. But Ed still brings home a boatload of reading every night, and he's known for quizzing staffers about every aspect of their clients' business. When that happens, "you'd better know your stuff," says Carter, a 25-year Grey veteran and Grey Global president of Europe, Africa and the Middle East.
Ed's curiosity is relentless. Rosenkranz, president of Grey Global's Asia-Pacific operations, tells a story about heading out with Ed to meet a client for cocktails in Beijing about a year ago. As their car passed a supermarket, Rosenkranz suggested they stop in to look around. "His eyes light up," Rosenkranz recalls, "and we stop the limo, and we're now doing a store check in downtown Beijing."
Meyer bought a bag of products made by competitors of the client, and the cocktail chat became an intense talk about whether the client's strategy matched the needs of the consumer.
Ed inspires awe in staffers of every rank. Jonathan Rodgers, who joined from BBDO last year as a managing partner in creative, has met Ed twice and admits, "I think I did call him sir." He also inspires fear. When Ed would get in the elevator, everyone shut up, says one former Grey middle manager, who also recalls seeing colleagues visibly trembling as they waited outside Ed's office for a meeting to start.
Unfailingly gracious in an interview, Ed admits he's not running a country club. "I just tend to think I'm not benevolent," he says. "But everybody says, 'Boy, he admires brains, he loves people who get it done. If you can match those criteria, you've got it made at Grey.' "
If Ed still has the same exacting, uncompromising standards he did at the beginning of his career, what's more impressive is that he has the same philosophy about how communications companies should be managed. It's in discussing that topic that one realizes how unlikely it is that Grey will make headlines soon for being an acquirer on the scale of WPP Group, IPG or Omnicom—or an acquiree of them. True, virtually every competitor has expressed interest in Grey. Meyer won't admit to being tempted, but will acknowledge occasional self-doubt about his insistence on independence. "I must say, every time another one of these things happened, I'd go back and spend another couple of hours saying, 'Now, am I right? Is this the right way to go?' " he says.
Others say the temptation was there—especially with IPG, although Havas and Publicis have all also fed the rumor mill as potential suitors. Still, one wonders why Ed would pull the trigger on a deal now if he's avoided doing so for more than 30 years. And the logistics of constructing such a deal—particularly considering a client conflict the size of IPG's Unilever Group and his beloved P&G—make the possibility that much more remote.
One explanation floated by some for Grey's stubborn independence is that Ed's price tag is too high. Another is that despite its strong ties to clients like P&G and Mars, the agency's margins aren't what many imagine them to be. (For the nine months ended Sept. 30, Grey posted an operating margin of 2.3 percent. Omnicom was at 14.5 percent, and IPG at 14.5 percent.)
While stressing that seeing the company acquired is not his fund's ultimate goal, Ariel's Miller believes the relatively low margins could make Grey more attractive to an acquirer bent on improving them. He also sees the low margins as a by-product of Grey's fiscal conservatism. "There's no aggressive accounting taking place," he says.
One ex-Grey executive offers another possibility for Meyer's reluctance to sell: "It was all a big game to Ed. And Ed is going to stay there until someone takes it away from him."
For those who think that to cash out, Ed would be required to sell to some outside entity, as executives at some other agencies have over the years, well, Ed has thought of that, too. In an unusual clause, the proxy states that he can cash out without having to sell to an outsider. If he leaves for any reason, he has the option to sell both the common stock and the Class B stock back to Grey at its market value. Thus, the stock wouldn't tank, and it would be up to the next generation of Grey executives to decide the company's fate.
In any case, Ed is now basking in the glow of avoiding the consolidation craze. A key moment came at a board meeting on Nov. 20, around the time IPG's financial woes were beginning to snowball. "I walked in and everybody clapped. I felt like I was being vindicated," Meyer says.
It was an endorsement of his longtime mantra: "If it isn't good for clients, it isn't worth doing."
The classic assumption about Ed Meyer is that his workaholism—his life is an almost nonstop succession of meetings and business-related social events—leaves him little room for outside interests. Wrong. A voracious reader, he says he always has a thick stack of books on his nightstand. The current crop includes Roy Jenkins' biography of Winston Churchill; the third volume of Robert Caro's biography of Lyndon Johnson; Take on the Street, a memoir by former SEC chairman and longtime friend Arthur Levitt; and, get this, Markets, Mobs & Mayhem, by Robert Menschel, a book about the crowd behavior that Meyer has so meticulously avoided (the book examines, among other things, the tulip-bulb mania of the 1600s). Though he loves history, he's also reading Middlesex, the latest novel from Jeffrey Eugenides, which is about a hermaphrodite. On top of that, he's out on the town just about every night, at client dinners and museum openings. He's also an avid theatergoer, moviegoer and tennis player.
It's not as though retirement would leave him with little to do.
Still, one day there will be life after Ed at Grey. And though he still wields enormous power at the agency, Meyer has carefully and deliberately seeded the next generation with the values he has always worked by. How carefully? Consider this: Carter, Celia and Kreisberg, who is a group evp and the global head on P&G, have never worked anywhere else. All they know is Ed's way of doing business. Talk to them for even a short amount of time and you'll get the same passionate speech, espousing the virtues of remaining independent, focusing on clients and building their businesses. If there are truly radical ways of looking at Grey's future, one won't find them by picking the brains of Grey's upper management.
"I'm busy arranging the pieces, but no management is one person. Not even me," Meyer says. "So what you've got to do is figure out who the small group is and the parts they play, and I've got to keep a lot of people in the group so I'll have enough to fill the chairs."
One thing you can practically count on: The process will unfold gradually. By the time outsiders know who the new de facto leader of Grey is, it will be old news within the agency. Kreisberg, who joined Grey in 1966, tells the story of his ascension to the chief account job on P&G in 1995, following the retirement of Hunter Yager. When Meyer told John Pepper, then P&G's CEO, about the shift, Pepper is said to have replied, "I thought he was doing that already."
More pointedly, it took Meyer 25 years to relinquish the president's title, and even that he did in stages—naming Berenson president of New York in 1993, and only later president of Grey North America. Carter says a similar process is going on now. "There's a natural evolution taking place," she says. "Over time, each of us is getting more responsibility, and we're working more and more together."
The most tangible evidence of this dynamic was the April 2000 creation of Grey Global Group, now a $12.1 billion holding company, which could manage both the ad agency and the growing below-the-line operations. The restructuring gave other senior executives more responsibility for their individual domains.
Despite his reputation for being deeply involved in every aspect of the business, Ed has in fact sold clients and investors on the strengths of his managers—and has also let them do the selling themselves. "It is the culture of the company. That's what we bought into," explains Richard Smucker, CEO of the J.M. Smucker food company, citing Grey's overall management stability as a key selling point.
Smucker awarded its business to Grey last year after a number of low-key but persistent phone calls from Blamer. The New York president not only salvaged the Jif and Crisco brands, which P&G has sold to Smucker, he also snagged the main Smucker's line of products. The culture that drew him in, Smucker says, will continue "whether Ed Meyer is there or not."
Agrees John Ziegler, president of consumer healthcare at GlaxoSmithKline, "There's probably more volatility on [our] brand side than at Grey."
The prospect of Ed's eventual departure doesn't even trouble Ariel Capital Management, which bought its first position in Grey in 1999. "I'm quite confident that the talent is there," Miller says. In fact, he thinks Grey stock is grossly undervalued and should be priced at $900 per share.
The lack of angst over the eventual end of Ed's reign might seem surprising. But then, Ed has always made sure he has relatively few constituencies to please. Rather than amass a gaggle of ad agencies, promotion companies and direct marketing firms, he has, for the most part, kept Grey's holdings to one company for each marketing discipline. "Our view was that we could proceed with a singularity of purpose to design a company that had one of everything," he says.
This philosophy of keeping things simple and streamlined carries over to the board—there are only three other members—and to the shareholders. (It's possible that the yet-to-be-implemented rules of the Sarbanes-Oxley Act of 2002 will require some changes to the audit committee. Grey said in a statement that it is monitoring the act's requirements and "will continue to be in compliance with all such regulations as they become applicable.")
Fully 86-87 percent of Grey's common stock is held by entities listed in the proxy, and of course, Ed controls the majority of the votes anyway. He says the lack of outside scrutiny has released Grey from "the whip on our back to continually show growth," and will also give the company stability after he departs. "[The next leaders] will be in very good shape," he says, "because I own a great deal of the stock, and therefore I can protect them to some degree from people who want to do bad things to them."
With so much power concentrated in one person, it's no wonder that The Big Question is so pressing. But right now it would be foolish to pick a leading candidate for a successor. "The mystery of Grey is that you can't get inside Ed Meyer's head," says review consultant Dick Roth, a colleague of Ed's at Grey in the 1960s.
Ariel's Miller jokes about the existence of a succession envelope ("probably yellow now, in a drawer"), and George Wiedemann, one of the few senior Grey executives who has left the company, recalls a mid-1990s succession plan that he's sure now has dust on it.
More recently, Ed has briefed P&G on the issue of succession. Though the plan isn't detailed, P&G's Stengel says, "I'm very comfortable with how he's thinking about it."
But a plan is just that until it's implemented. In a 1993 interview with Adweek, Meyer said his next generation of management included Berenson, then 53, and John Shannon, then 56 and serving as executive regional chairman/CEO of Europe, Africa and the Middle East and a member of the board. Shannon left the board in 2001 and retired as president of Grey International late last year. If Berenson were to retire at 65 when his current contract expires at the end of next year, Meyer will have outlasted both members of his previous succession plan.
These days, the names Blamer and Carter figure most prominently in talk about who will lead Grey in the future.
"I think that the future of Grey is going to be teamwork that works, and I hope to be part of that team," Carter says when asked what she would like to be doing for Grey in five years.
Carolyn Carter is a head turner. An air of breezy confidence follows her down the hall, and her voice is smooth and assured, with a touch of worldliness that feels a long way from the Midwest, where she grew up and earned a bachelor's and master's degree from Northwestern University.
Having just come in from Europe, and with what she admits is an almost perpetual state of jet lag, she sips water constantly. But jet lag or not, Carter is here with a mission: to show that Grey, the perpetual poster child for poor creative work, is building a strong creative product in Europe, where her focus now primarily lies.
"I'm really proud of our European reel," she says. And she's brought the evidence to prove it. The work includes a wonderfully spare, funny campaign for the Mars bar and a campaign for P&G's Lenor detergent in which a man removes the air freshener from his car's rearview mirror and replaces it with a newly washed sock.
It's clear that Carter didn't go to Europe to escape the bustle of the New York office. She's installed new management in Italy and Madrid, identified the next rung of management in Germany and hired a new CEO in London.
"I think I have the best job in the company," she says. "And it's not just because the London theater scene is my TV."
As some people have washed out of Grey, Carter says she has been drawn to the agency and to Ed's intensity for the entire 25 years of her career.
If Carter comes across as a female Ed Meyer, Blamer, who was named president in New York in 2000, seems like the anti-Meyer. It has nothing to do with his brain power or his focus: He talks excitedly about what he's built at Grey and what he'd like to build. When I first see him, he comes wheeling out of the elevator on Grey's 12th floor, reel in hand, wearing a button-down shirt (no tie) and khaki slacks. It may be a Tuesday morning, but for Blamer it's casual Friday. He stops to joke with a couple of more formally dressed colleagues and heads off to a meeting with the person he calls The Man.
Surely Blamer is the only senior Grey executive who refers to Ed that way. And he's certainly the newest, having been at the agency for only 14 years and in New York for less than three.
Later, in an interview, Blamer says, "The brilliance or the frustration of Ed putting me in this position has probably been about the fact that I don't see it the way that everybody who grew up here [does]." Grey New York, with its dominance of the worldwide agency and holding company, almost has a culture unto itself. Blamer, unlike Carter, Kreisberg and Celia, didn't walk its halls for 20 years, and is the rare headquarters outsider.
Like Carter, Blamer wants to prove he has improved the creative product. But unlike Carter, he wraps the presentation in a distinctive package designed to demonstrate the merits of the village system, itself a triumph of packaging and the biggest re-engineering effort Grey has ever seen.
After experimenting with the system in London, Blamer introduced villages to New York in 2001, splitting the office into eight divisions, each led by an account person, a creative and an account planner. Each group was given the freedom to name its village, decorate its floor and generally adopt the feel of a smaller, specialized agency.
It appears to be working. The New York office posted a 21 percent gain in gross revenue in turbulent 2002, and some new creative hires—including Rodgers from BBDO —indicate the villages may have finally brought Grey some creative karma.
As most New York ad people know, Blamer has been involved in a long, quixotic search for a New York creative director to further improve the product. He wants someone, he says, who wouldn't mind sitting at his dining room table and discussing how to make Grey a better agency. When I ask if what he wants is a partner, he replies, "No, I mean a friend."
One could never picture Ed going on a search for his ad-land soul mate.
Whatever happens after Ed, Grey will be different, even if Ed's imprint almost guarantees it will still be seen as the aggressive, take-no-prisoners company it has been for decades. But why think about that now? It took Ed 47 years to get here. And he isn't about to leave.