Initiative: U.S. Media AOY ’08

It wasn’t long ago that Interpublic Group’s Initiative had, by many accounts, completely lost its way. By the end of 2005, the 14-year-old shop hadn’t won a major U.S. media-only pitch in more than three years and it was reeling from client defections, including the $320 million Bank of America account, Six Flags ($75 million), Maybelline and Pennzoil-Quaker State (both $50 million). Many of its tech clients had lost faith and departed, too, including prestige brands like Yahoo, Gateway — now back in the fold — and Nextel (a combined $400 million in billings).

The widespread perception was that Initiative was a big and proficient buyer of traditional media, but was falling behind as the media universe was becoming more complex. Its planning offering was thought to be sub par and its digital practice was lagging to the extent that most major clients went elsewhere for those services.

Those rough years now feel like an eternity ago.

“Four years ago, we weren’t even on the map,” acknowledges Tim Spengler, who was promoted to president of Initiative USA from chief activation officer last February.

A lot has changed. Competitors would kill for a year like Initiative had in 2008. It won close to $1.5 billion in new U.S. billings, most of it from three clients in showcase categories: Korean carmaker Hyundai/Kia ($800 million), brewer MillerCoors ($400 million) and soft-drink marketer Dr Pepper Snapple Group ($140 million). It also defended key pieces of business, impressing existing clients as well as new ones with improvements to its offering.
New business and organic growth combined to boost revenue in the U.S. by 22 percent to $345 million, all after the agency installed new global and U.S. leaders early in the year. Billings were up 12 percent to $13.1 billion, according to Adweek research, which factors in double-digit spending increases from clients such as Lionsgate Films, S.C. Johnson, Kao Brands and Best Western.

For a transformation that made believers out of new clients and reaffirmed the faith of existing ones, a smooth management transition, innovative campaigns and substantial revenue growth, Adweek has named Initiative its 2008 U.S. Media Agency of the Year.

This past year, Spengler says, might have been the shop’s best ever. The reengineering that took place from the end of 2005 through 2008, he says, was about “taking the long-term view and changing the agency for good.”

Richard Beaven, who joined as North American CEO in September 2006 and was elevated to worldwide CEO in January 2008, succeeding Alec Gerster, was instrumental in making that happen. Viewed by colleagues as analytical, tireless and an executive who leads by example, Beaven set a key goal for the shop: to significantly enhance the agency’s planning capabilities. To help do so, he recruited Sarah Power, svp, director, strategy, from MPG in 2007.

In February 2007, Initiative added planning duties to buying-client Bayer’s $400 million assignment after a review.

But the biggest wins happened early in 2008. In January, Initiative captured both the Hyundai/Kia planning and buying account from Carat, and the Dr Pepper Snapple Group assignment from Mediaedge:cia, Adweek’s Global Media Agency of the Year for 2007.

Jim Sanfilippo, evp and COO of World Marketing Group, U.S. marketing arm of the Hyundai and Kia car brands, says, “Obviously this is a tough period [for the auto sector]. [Initiative is] acutely sensitive to the analytics, meaning they’re watching the economy closely [and] they’re watching the car business. … We think we’re getting the best thinking from the group collectively.”

Michael Hayes, managing director of Initiative’s digital operation, who has spent the last four years overhauling that offering, says it was only within the last 12-18 months that Initiative could handle the digital needs of a huge car account like Hyundai/Kia, which spends an estimated $75 million a year in that sector.