Roth Puts Price Tag on Draft’s Reputation

NEW YORK IPG CEO Michael Roth has calculated the cost of an agency’s reputation—and he’s priced it at around 40 million bucks.

That’s how much IPG’s The Martin Agency stands to gain should it prevail in this increasingly ridiculous review for Wal-Mart’s $570 million ad account.

But by allowing Martin to proceed after Wal-Mart dumped IPG’s winning shop, DraftFCB, Roth does nothing to dispel mounting industry speculation that something far more sinister than a fancy dinner, a fast car and flirtatious execs tore apart agency and client.

Let’s recap.

We all know DraftFCB spent big bucks on a sushi dinner attended by Wal-Mart’s Julie Roehm and a bevy of consultants. A mistake, for sure. And yes, Tony Weisman, Draft’s chief growth officer, provided a seat for Roehm in the form of his lap. A bigger mistake. Weisman, who is also the guy who offered up the ill-advised idea to invite Roehm to speak on behalf of DraftFCB at the now infamous AdForum event, is now gone from the agency.

Didn’t Ogilvy spend a pretty penny on a celebration attended by Roehm as well? Perhaps the WPP agency’s outdoorsy gathering is more in line with Wal-Mart “values” than the pricey sushi soiree. Point is, contenders other than DraftFCB disregarded Wal-Mart’s strict graft policies, especially the company’s very own Roehm.

In the days after Wal-Mart threw over DraftFCB along with its cavorting CMO and her buddy Sean Womack, the retailer has been telling IPG that it had discovered something naughty that renders DraftFCB ineligible to participate in the “do-over” review with the other finalists.

But, in a remarkable display of arrogance (should any of us be surprised?), Wal-Mart doesn’t feel obliged to inform IPG exactly, or even vaguely, what it discovered.

Wal-Mart execs could have said DraftFCB ran afoul of the company’s policies. They could have said they realized they picked the wrong agency. But by saying nothing, the client implies that Draft, the agency and the man, is guilty of much more than a lapse in judgment (Nobu 57 and lap sitting) and taste (the Cannes ad). It looks even more scandalous than what has been reported and that’s pretty friggin’ hard to do.

What’s not hard to believe is that the pairing of Wal-Mart and DraftFCB was a colossal culture clash from the get-go. The BusinessWeek article on Nov. 13 detailing Howard Draft’s expensive tastes and toys had to have rubbed Wal-Mart the wrong way. And the humping lion ad? Well hell, even the jaded New York ad community collectively deemed it “classless.” But Roth, by allowing Martin to proceed, will not quiet the growing number of industry observers, and, I would imagine, certain clients, who are wondering exactly what DraftFCB did to deserve to be banned from the re-review. “You’ve gotta believe there’s something else there,” is a refrain I heard throughout last week.

On Friday, Roth made it clear that he believes there has been no wrongdoing.

“We have made a high standard of transparency and ethics an important pillar of our turnaround,” he wrote in a statement released to Adweek. “Today, we completed an investigation of events surrounding the pitch and found no instances of behavior that violate any of our policies or our code of conduct.”

I’m pleased that IPG addressed the issue. But if that is the case, isn’t it all the more reason to defend Draft by pulling out altogether?

Naturally, $40 million in revenue is nothing to turn your nose up at and Roth has a fiduciary responsibility to his shareholders. He is said to have weighed the options and I don’t doubt he feels he’s doing the right thing for the greater good of IPG. And then there’s Martin CEO John Adams, who now has a 50-50 shot at winning this account after incumbent GSD&M took itself out of the running. Surely he wanted another crack at this thing and why should he be penalized?

Here’s why: Because DraftFCB and its CEO, Howard Draft, have the stench of this thing all over them. Because it could end up costing IPG more than the $40 million Martin stands to gain should existing clients start to get jittery wondering if something else stinks here.

And what about prospective clients? How many Fortune 500 CEOs would be proud to select DraftFCB in the coming months?

If existing clients do leave and potential ones do stay away, they’ll never cite the Wal-Mart episode as the reason.

And that’s why Roth, in the end, will never be able to calculate just how much DraftFCB’s brief turn with Wal-Mart cost—in dollars or in reputation.

Alison Fahey is the editor of Adweek