Tuesday, January 21, 2014

Why The Draft/FCB Merger Was Doomed From The Start

For those of us who have followed the Draft/FCB merger, the announcement last week that they were going back to the name FCB (or Foote Cone Belding) came as no surprise. What I find interesting is that there has been so little chatter, which goes to my point that the merger was doomed from the start and the whole business knew it. The decision to change the name was a good one.

During the past three decades most of the ad agency mergers have been less than successful.  One would hope in a merger that one plus one would equal three, or at least two.  Unfortunately, mostly in the ad agency merger equation, one plus one usually equals considerably less than two.  

There is an essential element in combining companies which the holding companies simply ignore – corporate culture and personality.  If they don’t mesh, the merger is doomed from the start.   

Take a look at IPG for a moment.  Putting Ammirati into Lintas was a total failure.  Putting Scali into Lowe was somewhat successful, but then putting Lowe into Lintas to shore up the Ammirati merger was a disaster.  And then, finally, putting Lowe into Deutsch was simply disastrous.

And so it was with putting FCB into Draft.  FCB was never huge, but it was a big, successful worldwide agency with lots of consumer goodsand a great history.  Draft was one of the biggest direct marketing agencies with, as I recall, significant strength in financial accounts, but very little worldwide experience, if any.  In theory their merger was a good idea. At the time of the merger, the trade press was very complimentary and bullish.

But there was one problem.  Their cultures were diametrically opposite each other. FCB was a good creative agency.  Draft was a good, nuts and bolts direct marketing agency. Whatever plan to merge them ignored these cultural differences.  Or so it seemed to observers like me.

In 2005, just before the merger, FCB had hired two of the smartest advertising people in the business.  Steve Blamer and Steve Centrillo were brought in to run the agency and right the ship.  It was Blamer who conceived of the idea of combining a general agency and a direct agency to create one truly integrated advertising entity. He and Centrillo had plans to combine the cultures in a way that would work. The idea of putting the two together was well received at the time.  If successful, it would be one of the first truly integrated ad agencies.

They were barely there long enough to put their imprint on FCB.  When the merger with Draft took place, it was clear that the Draft culture and ethos would prevail.  Blamer left immediately and Centrillo clashed with Draft management and was gone soon after.  It is a pity that IPG let them leave; in my opinion, they would have made the merger work.

If anyone has read the wonderful Lester Wunderman book, Being Direct, they would understand that direct, as it existed before digital, was a very different business than traditional advertising.  At the combined Draft/FCB the problem was to integrate these diametrically opposed businesses. To my knowledge, IPG management and Draft management never made a real plan to integrate the two cultures; they were just thrown together.  Consequently, the agencies never really integrated.  Draft just took over.

In Chicago, the biggest FCB account was S.C. Johnson, one of the country’s (and the world’s) leading package goods manufacturers.  This client just did not mesh with the Draft people or culture.  Gradually, the FCB people started leaving. The senior FCB management held on to the account as best they could, but my understanding is that when, after a few years, the Draft people started to insinuate themselves into the SCJ business, the account began to unravel.  The huge loss of the S.C. Johnson business in 2011 was the beginning of the downfall of the combined Chicago office; and it probably effected New York as well.

In New York, as many of the FCB employees and clients started to bail, the only area which did well was healthcare, which was a holdover from the old FCB Healthcare practice.  Again, my understanding is that the Draft people stayed away from this part of the business because they had no real healthcare experience (and possibly no interest in it).  

There was a succession of management changes during the past eight or so  years.  I believe I can count at least four heads of the New York office.  Howard Draft managed to hold on to Chicago until the loss of the S.C. Johnson business. Today, Chicago is a mere shadow of its old self.

The problem was always culture.  The direct people couldn’t do the general advertising and the traditional ad people didn’t know anything about direct. Neither had any real interest in the other.  As a consequence, the agency was never fully integrated. And there was no clear direction.  Perhaps if there had been a real plan, as Blamer and Centrillo had envisioned, there might have been success, but without any preparation and without considering the cultures, there was little chance for success, in my opinion. 

Interpublic hired a new CEO to run Draft/FCB last year.  Carter Murray has defined the problem. And changing the name back to FCB signals a willingness to correct the situation and set the stage for a new beginning.  

It takes a big man to admit past mistakes. 


  1. I hope it helps them get their pride back. I think the whole Walmart fiasco killed them. If that had worked, it might be a very different picture. The idea of the merger is spot on.

    Thanks Paul.

    1. I forgot about Walmart, but, since they never really had it (at least long enough to impact), the real icing on the cake was the Loss of SC Johnson. Although, to be sure, the Walmart fiasco was a truly ridiculous incident.

  2. Hey Paul. I worked at FCB/Leber Katz and have a soft spot for the shop but will go out on a limb and say Draft might have been a better name to adopt. If we dump the cache on Emerson Foote, Fairfax Cone and P Diddy Belding and look for a more time-appropriate, energetic communications company handle, Draft may have been worth considering. It's active, participatory and meaningful. A good place to start to build a unified culture.

    1. Steve: I think that FCB has a better worldwide name and a stronger creative heritage. Just my opinion.

  3. Actually, this recent article from Ad Age generated a bit of commentary/chatter. http://adage.com/article/agency-news/draftfcb-preps-drop-draft/291085/

    The following is what I posted on 01/15/14:

    "Here's the deal who don't know the history ... Draft was founded as a direct response agency that counted BRC leads and phone calls. Branding was not within their model or marketing capabilities. Foote Cone & Belding (FCB) was a consumer packaged goods agency deeply rooted in CPG with clients such as Colgate-Palmolive. Then the guys at IPG decided to merge them. Made sense at the time, given all the integration and convergence going on, but now seems like a perfect time to break it up and change the name. Foote Cone & Belding would be best, in my opinion (let others say FCB).

    Of course all agencies want to be all things to all clients and new biz prospects these days, but it doesn't and can't work that way today without bullshitting a lot of people. Pick what you do best and sell the Hell out of it. Branding, advertising, direct, PR, OOH, digtal, CRM, whatever. To borrow a phrase, "If you position it, they will come." Bill Crandall"

  4. Those at the agency during and after the merger will also have a greater appreciation for the characters at play. Whereas FCB has the depth of history to have an industry legacy, Draft suffers from the liability of its surviving founder (a la Walmart).I anticipate that following his separation from the agency masthead, they will quietly dismiss him from the board.

    The loss of the major legacy accounts were a result of IPG discounting the value of relationships. Senior leaders held the keys to these businesses by investing much of their careers alongside the senior leaders on the client side. IPG fought to protect their own interest by taking these personal relationships and making them agency relationships. It doesn't work. Better to make your most valuable people feel appreciated, valued and loyal than to try to get in their way.

    1. @Anonymous: Thanks for two really smart observations and comments. When mergers occur, all agencies need to evaluate senior leaders and relationships and learn to think with their heads and not their egos or wallets.

  5. They weren't even smart enough to call the combined entity "Draft/FCB." Rather, they landed upon the oh-so-unhip nomenclature "Draftfcb" -- further diluting the Foote Cone legacy.


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