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Tuesday, September 25, 2018

Ad Agencies And Their Holding Companies Fail At Their Own Branding



I read with great dismay and sadness about MDC merging KBS into an unknown (at least in the U.S.) Swedish agency (Forsman & Bodenfors) and obliterating the Kirschenbaum Bond name.  Without getting into the history of Kirschenbaum and its recent problems, all agencies go through up and down cycles, sometimes those phases go on for years.  But that is no reason to destroy the equity which has been built into the agency brand, especially one that is essentially positive.  The evidence is that once that brand name disappears, the new agency rarely fully recovers.  As a result, when it comes to mergers in advertising, one plus one often equals far less than two.

As every good marketer knows, building a brand name takes years, often decades.  Destroying the brand can take only a stroke of a pen. Changing or obliterating names can be confusing and dangerous for the brand.

One of my favorite stories is how Omnicom screwed up both Chiat\Day and TBWA. Omnicom merged TBWA into Chiat in 1995 and ultimately changed the name to TBWA, eliminating the Chiat moniker.  Yet, even today, especially in Los Angeles, Chiat’s headquarters, TBWA is still known as Chiat/Day. (TBWA was a stronger name in Europe and is rightfully called that in those markets). 
Batton, Barton, Durstine & Osborn modernized and became BBD&O and eventually BBDO, which makes total sense. Ditto when Doyle Dane Bernbach was bought by Omnicom, it was changed to DDB/Needham (to accommodate the merger of Needham Harper Steers – but Needham was ultimately dropped); DDB was the stronger brand. Other agency brands are still confused by their own name changes.  JWT is still called Thompson or J. Walter or even J. Walter Thompson; I think I understand why that name was changed, but I could make a good case for having left it alone.  Ogilvy, which started as Ogilvy, Mather and Benson, and subsequently changed to Ogilvy & Mather, became just Ogilvy, but to this day is still often called O&M, even by its own employees (checks still are marked Ogilvy & Mather).  Y&R Just this week became VMLY&R (why not Y&RVML since Y&R is the stronger brand, but even with the name changed it will remain Y&R).  

Changing a name does not change a culture.

When the founding principals of well-known ad agencies retire, merge or die, unless they made strong succession plans, the agencies often diminish or disappear and rarely recover if they are merged.  Saatchi & Saatchi, at least in the U.S., never achieved its potential when Compton was merged with Dancer and their name was changed to Saatchi & Saatchi.  Saatchi was on of  Briton's more creative agencies and the two merged into it were heavily package goods agencies, more known for their ability to create effective strategy; for complicated reasons, Saatchi, at lease here in the U.S., never achieved the creative reputation of its London parent.  The merger never took into account the cultures of the two American agencies and the strength of their client relationships.  In the case of this three way merger, one plus one plus one ended up equaling about one and a half.

IPG merged Bozell and Kenyon & Eckhardt and then the two of them into FCB, which was subsequently merged with Draft.  Now, what remains is a mere shadow of the original agencies.

In a mistaken effort to keep contemporary, merged agencies often drop the names of the founders, which may be unnecessary.  JWT is a perfect example of that.

So much of advertising is driven by creative personalities.  When it comes time to sell or merge the new agency people want their names to dominate, but that often destroys the equity which was achieved by the original agencies.  IPG was smart to leave the Deutsch name alone, even though Donny Deutsch long ago moved on. When IPG merged Lowe into Deutsch, aside from being a cultural disaster, they still kept the Deutsch name dominant. The people who ran Deutsch figured out how to keep their culture, despite often rancorous disagreements with the parent company (and occasionally, Lowe, which subsequently and smartly separated itself).  

Kirschenbaum & Bond now joins a long line of wonderful creative agencies which simply disappeared after being merged and submerged – Ally & Gargano, Scali, McCabe & Sloves, Wells, Rich, Greene, Lintas, Ammirati & Puris are all examples of great brand names which disappeared out of the hubris of holding companies.  

More often than not, putting these agencies together, without any regard to their individual cultures and differences actually ended up killing the brands, costing the holding companies millions of dollars in the long run.

What a waste.


15 comments:

  1. Great, educational article Paul. In today's "data worlds" just the simple task of keeping agency data current, accurate and relevant with services like ours is a challenge. Few individuals at the agency in question seldom know what steps to follow to make those updates. Failure to do so can immediately affect agency new business.

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  2. Lovely little trip down memory lane. Speaking of Lowe, a hideous guy and agency, what a blunder by IPG to throw away the Marshalk name in that ill considered merger.

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  3. "Yet, even today, especially in Los Angeles, Chiat’s headquarters, TBWA is still known as Chiat/Day."

    Well, actually...it's Chiat\Day. Jay and Omnicom poured a lot of money into that backslash over the years for branding's sake. Talk about a waste.

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    1. And, Chiat\Day lost also lost it's "Mojo" a long time ago!

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    2. Funny. I wonder how many of my readers even remember.

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  4. The difference between AGENCY brand names and CLIENT company brand names is that Clients actually invest millions of dollars, even billions over years, ADVERTISING their brands across ALL multi-media platforms. Whereas, agencies invest nothing beyond relatively inexpensive new business direct marketing outreach (whether traditional, digital, or social). Indeed, when was the last time, if ever, that you saw a commercial anywhere on broadcast or cable network business TV (much less the “Super Bowl”) for ANY agency? The answer, of course, is NEVER! Which seems very strange to me since most of the Fortune 50, 100, or 500 Client companies spend millions in advertising their B2B brands there. So, no wonder agencies are so quick to bury their brands. They’ve got nothing to lose. Not to mention that most Client CEOs, CFOs, and CMOs are Gen X and Millennials (under 50) who don’t know or care about the likes of David Ogilvy, Bill Bernbach, Leo Burnett, Jerry Della Femina, et al. Which really begs the question … What’s the financial worth of a heritage Agency brand name in today’s “flavor-of-the-week” marketing environment? The answer is … not much!

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  5. And just today we learned that WPP is merging Y&R with VML and renaming it VMLY&R. Yet another great name being morphed into something silly.

    The agency business has become commodified, and creative (and the distinctiveness of agencies) has gone by the wayside. As someone who spent most of her career at large agencies, and who is now on the client side, I don't see much difference between the big agencies any more, so I see clients choosing based on price, NOT the specialty, experience and expertise of the agency that is "right" for the brand.

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    1. First, everyone is still going to call it Y&R. My observation is that WPP is the worst of the name offenders. Second, I fully agree that the holding company big agencies have become commodified. And you are totally right, it has now become all about price. Thanks for your comment.

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  6. A little bit sad to see the news about Y&R today. My first job was assistant media planner there (yes, they had a media department) working on P&G. As we used to say - and you've seen this before, even in Paul's column - "Y&R is a great place to work if your parents can afford to send you there."

    It really was. I made some lifelong friendships and learned some disciplines that I still call on today.

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    1. Thanks, Ed. Y&R was once a really nice place to work. I suspect that with this merger, WPP threw the baby out with the bathwater.

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  7. Thanks for sharing this, it's good to find out what's your opinion on this matter. By the way, do you think a small company (15 employees) like mine could really benefit from having an erp system?

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    1. It is hard to know. I suspect it may be expensive. You should have them come in and demo and determine the price/value relationship.

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  8. This comment has been removed by a blog administrator.

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