by Peter Mayle
No wonder the atmosphere is charged as the nettle is tentatively grasped: “Has anyone had any thoughts about the name?”
Yes indeed. Marvels of self-interested invention are put forward to support the view that the other side’s name should come last. If it happens to suit the argument, even alphabetical order—“it’s so much easier for people to remember”—might be tried. But that can always be countered by another, equally suspect assumption: “Our clients wouldn’t be happy.” (Agencies like to believe that clients share their preoccupation with names.)
In fact, this stage of the negotiations is interesting, and the final decision revealing, because it reflects the result of the first trial of strength between the two sets of management—the first of many accommodations that will be made by the weaker side in deference to the stronger. One side always needs the merger more than the other, and the degree of need can usually be measured by the concessions that are made, not only in agreeing on the name but in the jockeying for status that follows.
Two chairmen, two managing directors, two creative directors, two financial directors: There is an entire corporate Noah’s Ark to be reshuffled and retitled, and it is damn tricky work. Joint titles won’t do, since nobody takes them seriously, and there is a limit to the number of labels available in any single hierarchy. But all is not lost, because here, a sop to many an ego, the inspired notion of a holding company comes into its own, with all its multifarious divisions: International, Acquisitions & Development, Public Relations, Communications Studies, Management Consultancy—a brave new world as yet uninhabited by a single executive. Surely room can be found in this exciting and infinitely elastic structure for the overflow from the agency boardroom.
And, in due course, it is. All that remains to be decided now is the allocation of shares, which prompts one final round of bartering, and then the new, improved agency can concentrate on preparing as seductive a marriage announcement as possible.
The content of these announcements is fairly standard. Better everything is promised—better service, better creative work, better media buying—and the joining together of the two agencies is presented as the most natural of developments, inspired by the deep admiration that each agency has for the other. Somewhere in the announcement will be a quote along the following lines: “The more we looked into it, the more it made sense to consolidate our abilities and resources so that we could offer a broader range of expertise in today’s increasingly competitive business climate.” It’s simple, harmless stuff, and none but the most gullible would be misled by it for a moment.
The timing of the announcement is not quite so easy. The more important clients will already have been sounded out, but they are not necessarily any more discreet than agency people, and it would be embarrassing if one of them leaked the news prematurely. Ad Age would get hold of it and bellow about merger rumors, the poor ignorant staff would get jittery, the uninformed clients would be upset, and other agencies would be on to them quicker than you could say conflict of interest.
So, in a last-minute frenzy of phone calls and assignations, the news is given out to everyone within one frantic twenty-four-hour period. The staff is told that golden opportunities lie ahead, clients are given the party line, Ad Age is offered a limited exclusive, press releases are sent by messenger to influential journalists, champagne is served in the boardroom, and photographs are taken of the beaming newlyweds.
Then the problems begin. Having declared their intentions, the two agencies have to move in together. Those stark offices aren’t big enough, and so for the time being everyone is jammed into less fashionable accommodations while new premises are found, gutted, and redesigned. The staff is cramped and apprehensive. They know that any day now the “consolidation of resources” will make a good many of them redundant. Friends in other agencies are sounded out in case another job has to be found in a hurry, and uneasy speculation takes up much of the time that used to be devoted to work.
The management, however, is working fourteen hours a day. The merger will not be considered successful unless it is blessed fairly quickly by the arrival of more business, and this is unlikely to happen if too many of the existing clients take exception to the new arrangement and leave. It is a hectic two or three months of keeping one set of masters happy while courting another, and it is not made any easier by the friction within the agency caused by overcrowding and political skirmishes.
The creative people can be counted on to make a meal out of the situation. They find that they can’t concentrate in unfamiliar surroundings. They are not pleased to be reporting to a different creative director, and the executives they are now being asked to work with are, if anything, even worse than the last bunch of idiots. They accuse the management of selling out, of letting creative standards drop, of kissing the client’s ass. They feel slighted, almost betrayed. They mope.
The executives tend to take a more businesslike view, seeing opportunities for advancement in the increased size of the agency. But the creative department, suspicious and touchy though it may be, is not their chief concern. The hand in need of holding at the moment is the client’s hand, because he is definitely feeling a little insecure. He, too, might have been demoted in the merger from being one of the old agency’s big clients to one of the new agency’s medium-sized clients. Is he still going to receive the service and attention that he is used to? Can he look forward to a continuation of his pleasant relationship with the creative director, those unhurried chats about the size of the logo or the soundtrack on the latest commercial? Will there still be those agreeable dinners with the chairman two or three times a year? Will he still be loved?
Yes, yes, says the executive, massaging furiously, of course he will. Clients like him are the backbone of the agency, and together we will grow. Onward and upward! How about lunch next week? (Agency mergers are always wonderful for the restaurant business.) And yet, despite all the protestations of goodwill and confidence, there is a wait-and-see atmosphere. The client may admit it or he may keep it to himself; but he is reserving judgment.
This is not lost on the rest of the advertising industry, and the poachers are sharpening their knives and forks with a vengeance. The months immediately following a merger are assumed, with some justification, to be a period during which stirrings of discontent can be converted to advantage, and it is a rare merger client who doesn’t receive daily offers of food and drink and speculative presentations from agencies he has never met and often never heard of.
Meanwhile, the consolidation of abilities and resources at Merger House is taking place. The unlucky ones are paid off and asked to take their personal effects and hurt feelings elsewhere as quickly as possible. They’re not expected to work out their periods of notice; on the contrary, they’re encouraged not to, since to have people under sentence of death hanging around the agency is considered bad for morale.
For the ones who remain, particularly those who have been rewarded in one way or another, the merger begins to look like quite a good idea, after all. The agency has accelerated off the plateau and up into a different league. There are bigger and better opportunities at every level, and if they can be properly exploited, everyone will benefit. Fame and fortune are just around the corner, and once the agency has settled into its imposing new offices, a lot of the initial friction will disappear. A change of surroundings often works wonders in dispelling the prickly atmosphere of those first uncomfortable weeks.
In the end, most of the clients wait to see how things turn out. They may have misgivings, but their instinct is to stay put. Changing agencies is hard work, time-consuming, and disruptive, and the devil you know is usually preferred over the devil you don’t. Providing the agency is careful to maintain as much continuity as possible and to put on its most enthusiastic face, the misgivings should be forgotten.
The three men have almost pulled it off. The board is not entirely obedient (no board ever is), but the deadwood has been cleared out and the client li
st hasn’t suffered too badly. The merger has been 90 percent successful; a big piece of new business would add the final 10 percent, and then they can start planning their assault on the Stock Exchange. How difficult can that be? It’s only another variation of the new business pitch.
Invasion of the Men in Suits
At one time, not all that long ago, it was almost inconceivable that the denizens of Wall Street and the City of London could consider advertising worthy of shareholders’ attention. Agencies were regarded as entertaining, good at lunch, even useful, but slightly suspect, run and staffed by unpredictable people who were quite likely to argue with their clients and often had the impertinence to insist that they knew best. And who could say for sure that they didn’t? As the first Lord Leverhulme complained: “Half the money I spend on advertising is wasted, and the trouble is I don’t know which half.”
There are two responses to the attitude that prompts remarks like that. One is to admit that advertising is an inexact business and probably always will be, but this is not an admission that will encourage confidence in either clients or investors.
The other response is to surround the central function of the agency, producing advertising, with an elaborate range of supporting services in order to get as far away as possible from the bad old days of the idea salesman and into the position of the total communications consultant, a purveyor of top-level advice rather than a lowly supplier of words and pictures.
Not surprisingly, most agencies have chosen the second option, and over the last few years some have done it remarkably well, elevating the status of the industry to such an extent that the traders now look with interest at any agency that feels the itch to go public. No wonder our three young men—by now, it’s true, not quite so young—are confident that they will soon be in there rubbing shoulders with the other members of the advertising millionaires’ club.
Before that can happen, however, they must learn to package themselves for the merchant bankers, the financial journalists, and the assorted investment consultants who make up their target audience, and their first lesson is this: Good figures alone are not enough. Wall Street has to feel that the agency is a serious business with long-term growth prospects, run by a team of responsible and intelligent people, old heads on young shoulders, steady fellows who will ensure that the shareholders’ interests are paramount.
Some minor physical modifications are necessary here in order to make the principal company assets, the management, look as attractive as possible to the punters. Personal appearance assumes a greater significance than before. The untamed hairstyles, leather jackets, and boots that were so appropriate in the dynamic, slightly antiestablishment days will have to go. Wall Street likes suits, although these can be from Armani or one of the less stuffy designers. It also likes ties, once the badge of the gray plodder, but at least a hint of individuality can be retained by wearing a spotted bow tie, which has the additional advantage of being highly telegenic.
The more flamboyant aspects of behavior and personality will need a little attention, too, and any tendencies to rant or to say fuck every other word will have to be controlled. The editor of the Wall Street Journal would not be amused. In fact, the whole of one’s public face has to be looked at with the same critical care that is devoted to the image of a politician seeking election. But this is not a problem. It is just presentation, and presentation is advertising’s stock-in-trade.
The other disciplines and requirements involved in a public offering are a little more onerous, and perhaps the most tiresome of them all is to give the books an overhaul so that they conform to the rigid standards of fiscal probity demanded by the financial world. The agency’s detailed financial records will be exposed to close inspection, and some of the old carefree habits might cause raised eyebrows among the underwriters.
The garage bills, for example, might seem a little excessive. Does a company doing business in the city really need thirty-four BMWs, six Porches, eight Jeep Cherokees, three large Mercedes, and a Maserati in addition to a cab bill of several thousand dollars a month? Is it simple coincidence that the agency retains a catering consultant who happens to be the chairman’s wife? Was the boat in Florida always used for entertaining clients, even on that abortive and uncomfortable run to the Bahamas that ended so expensively with a broken mainmast? Who is this office maintenance man who lives in Westchester and who spends all his time working in the managing director’s stately country house? And which new business prospect necessitated a three-week trip to the Caribbean?
This rich cake, which used to be divided up between the board and the senior executives without reference to busybodies from outside the agency, now has to be stripped of its icing. Lean and prudent management is the new order of the day, and those generous annual shareouts will soon have to include investors, some of whom might not take kindly to the more exotic items that figure as expenses in the balance sheet. It’s a painful process, this full disclosure.
Finally, there are some adjustments to be made in the way the agency reports its own successes. Wall Street is actually going to take these announcements seriously, and the natural optimism of the press release, which rounds out figures to the nearest million or two, might backfire when income falls below stated expectations. Restraint and accuracy, which are not always evident in agency self-promotion, will have to replace airy and overhopeful hype.
It is even possible that there might be moments during the long months of preparation when the agency principals have second thoughts about going public. The obligations and restrictions mount up, and a future of behaving in a responsible and businesslike manner lies ahead, sacrifices that would be intolerable were it not for the fat checks that have mentally already been put in the bank, and the gratifying prospect of commercial respectability, one’s name in the stock-market listing, equal status with the tycoons. The ego will at last be fed. And, one fine day, it is. The public offering is made.
The weeks immediately following are happy weeks for our three young men. Their bank managers give them lunch and talk about portfolio management. Their staff, who have calculated the size of their winnings, look at them with a satisfying mixture of envy and admiration. Every morning, they turn to the share listing and see themselves immortalized, rich, and successful. And during the tedium of the daily round of meetings, they can divert themselves by planning how they are going to spend their money.
Bigger and more impressive houses are usually top of the list, and particulars from smart real estate agents start to outnumber marketing documents and conference reports in the attaché case. And then there is the choice of a suitably expensive hobby: for some the purchase of a speedboat; for others, art or opera or vintage cars or first-growth clarets. Maybe a condo in Florida, as well. Why not? We can afford it.
In many cases, the money goes out as suddenly as it came in. And at the same time, the days and years of reckoning begin, which can be rather depressing if that first flash of extravagance has taken care of most of the liquid cash. Future wealth depends on the agency’s performance and the value of its shares, and this is pointed out with irritating regularity by the swarm of security analysts that invades the agency every month.
For the most part, these walking computers know little about advertising and probably care less. They’re interested in figures—bigger figures. Every quarter, every six months, every year. How are they going to react to the news that you have resigned an account because the client is congenitally incapable of recognizing a good campaign when it’s stuck under his nose? They will not be pleased. They will suck their teeth and shake their heads. Temperamental behavior, they will say to themselves. It will revive their suspicions that advertising, for all its businesslike veneer, is still erratic and unprofessional, subject to whim and fancy instead of hardheaded management disciplines.
So the share price will drop—and with it, the paper fortunes of the agency principals.
The pressure to produce bigger profits and bett
er dividends will have an increasing effect on the way in which the agency does business. When growth is an absolute requirement, the search for new clients will become more frenzied and, in some cases, much less discriminating. Accounts that the agency wouldn’t previously have touched for one reason or another—perhaps because the client is known to be a bullying megalomaniac or a notoriously late payer—now become acceptable, even desirable. Who cares if the man is a foaming idiot with a taste for kicking account executives around? Nobody said that life as a publicly quoted company would be easy, and his account will provide the extra billings needed to toss to the security analysts.
It will keep them quiet for a month or two and then, as relentless as slugs after lettuce, they’ll be wanting more. But where is it going to come from? It’s all very well being one of the fastest-growing and most promising agencies around, but that’s a position with limited prospects. An agency can’t keep growing indefinitely on purely domestic business, and if it doesn’t keep growing, those security analysts will be dispensing gloom and talking down the share price. The daily dips into the Wall Street Journal’s listings won’t be quite so pleasant. Instead of the warm glow, there will be a twinge of disappointment as the shares falter, then slump. Relative poverty! What can be done?
Some time ago, the Saatchi brothers started to promote a one-word solution to their growth problem, and it has been more successful (for them, at least) than the “unique selling proposition” in its finest hour ever was for Ted Bates (now a member of the Saatchi collection). That one word—as yet unrecognized by the Oxford English Dictionary but doubtless soon to get in there—was globalization.
Like understains and empathy, two other contributions that advertising has made to the English language, globalization was a new label for something that already existed. For many years before the word was coined, the large American agencies had been globalizing all over the place. It used to be called servicing international clients. Thus, if an agency had Colgate or Procter & Gamble business in the United States, it was natural to extend the arrangement into those more primitive markets such as Europe. Client and agency understood each other, they were used to working together, and they could transplant doctrines and working methods developed in Cincinnati to less enlightened parts of the world.