From the Big Chair

BY THE TIME THIS article sees print, Howard Draft will be one delighted chairman. Or a very disappointed one.

It all hinges on the review Wal-Mart is now conducting for agencies to manage a portion of its $570 million annual ad spend. Draft FCB, the new integrated marketing company of which Howard Draft is chair and CEO, has made it to the final round of the review and was to find out its fate shortly after Oct. 10.

Whatever the outcome, making Wal-Mart’s Final Four is an impressive achievement, considering the Draft FCB merger was only announced in June. But Draft believes that combining his Chicago DM firm with general ad agency FCB will offer clients a powerful marketing skill set that adds up to more than the sum of its parts.

“In order to be at the heart of solving the client’s business problems, you need a company that will bring to bear all the various services and options in a way that has only one profit and loss statement, and one go-to-market strategy,” Draft says. “Everybody talked in the past about integrated marketing, but that still involved multiple divisions coming in with separate account teams. We’re building a fully integrated agency that can do it all.”

Just the same, the Draft-FCB merger raised some eyebrows in April when it was still in the rumor stage. Parent company Interpublic Group had merged some of its agency holdings before — FCB and Bozell, Lintas and Lowe — but always within the same marketing discipline, and generally with less-than-impressive results.

This cross-channel combo promised to be even riskier and more complex. One stop is great in theory; but could Draft and FCB actually be fashioned into one shop?

Equally interesting was the news that Draft, both the company and the man, would take control of the new entity. Branding agencies often have not bothered to mask their contempt for the world of direct marketing, referring to it as “dreck marketing” and dismissing its reliance on sales and conversions rather than impressions and audience share.

Lewis Lazare, marketing columnist for the Chicago Sun-Times, wrote that the day of the Draft FCB announcement “will go down as one of the darkest moments in the history of an increasingly troubled ad industry…It’s a shame to think that an agency like Draft, that was once the lowly tail on a big, healthy, creatively inspired canine, has finally emerged as the powerhouse wagging the mangy mutt that is now the general consumer ad business.” (Like their steaks and their architecture, they take their marketing seriously in Chicago.)

“I don’t know why Lewis thinks I’m out to kill the American ad industry,” Draft laughs. “But he’ll be eating his words when he sees all the accounts we’re about to land.”

Draft knows this kind of snobbery firsthand. In fact, he admits to feeling the same way when he started looking for a Chicago advertising job fresh out of college. Only after failing to get hired at Leo Burnett and J. Walter Thompson did Draft opt for a direct marketing post.

But a year’s experience in the industry turned his thinking so much that he joined with colleagues in 1977 to launch a DM start-up called Kobs & Brady. In time, that firm became Kobs & Draft; finally the name was whittled to Draft, and its namesake was appointed chairman and CEO in 1988. London-based Cordiant Communications bought the company soon after, but Draft bought the company back when the Saatchi brothers were ousted from Cordiant in 1996. The following year, Draft sold his company again, this time to Interpublic Group (IPG).

Branding and direct marketing usually don’t fit together easily under one roof. Most general agencies with a DM division still let the branding side drive the business when it comes to budgeting and planning campaigns.

“The strongest direct marketing talent didn’t want to work in general agencies,” Draft says. “That’s why the great DM agencies — Wunderman, and hopefully Draft — were built by entrepreneurs wanting to have the best-in-class talent in their specialty.”

So why alter the standalone course he and his colleagues took 38 years ago? How do you go from an independent DM agency in 1978 to heading up an integrated marketing company with 9,000 employees in more than 100 countries?

Draft answers that the time is right for an agency that takes a 360-degree look at clients’ campaigns.

“In the past, advertising has focused on emotional attachment to a brand, while direct marketing has looked at transactions,” he says. “I’m arguing that both are coming together, the emotional connection and the results orientation. There’s no above-the-line here and no below-the-line. The world is flattening out.”

That cross-channel synergy already has had an impact within direct marketing itself, Draft says. Once, outfits like Draft didn’t want customers to buy the products they were marketing from a retail store. Rather, they drove them to use the toll-free number or order from the Web site.

“Now we don’t care where they go to buy the product,” he says. “We’re measuring the results in a holistic way. We know that even thought they buy in-store, people will still go to a Web site and learn about products in great detail before they shop, or to TV ads, or direct mail.”

What does the direct marketing side of the house have to learn from branded advertising in this new Draft FCB? Mostly, the elements of media planning and forging an emotional connection between consumers and products, along with perhaps some elevation in DM’s creative game.

“They [general ad agencies like FCB] have got a really good understanding of what motivates a consumer,” Draft says. “Where we come in is in using that emotional appeal to change consumers’ behavior. And changing behavior is more important to me than changing an attitude toward a brand. Someone may like a brand, but if I can get them to interact with it, I’ve won.”

Fair enough — the merger of Draft and a general ad agency looks good on paper. But what will be the impact of aligning with FCB specifically? While a venerated name in American advertising with a past stretching back 133 years (it created iconic images like Mr. Peanut) the agency is not exactly on marketing’s cutting edge today. Parent company IPG is itself underperforming compared with the other big ad holding companies, and is still under the shadow of accounting irregularities it reported four years ago. Some analysts said the Draft-FCB merger was IPG’s effort to transfuse the general agency with some of Draft’s energy.

IPG chairman Michael Roth wouldn’t have any defeatist talk about FCB. “We’re doing this from strength, not weakness,” he told The New York Times after the announcement. “This is one plus one equals three, as opposed to trying to fix a problem child.”

Nor will Draft admit to any pre-merger weakness at FCB. The most he will say is that clients will find it more efficient, and in the end more valuable, to deal with a consolidated marketing agency that may be highly ranked but not top of the line in some specialties.

Another issue raised at the time of the merger announcement was the potential for conflicts between the two partners’ client lists. Draft works with Kellogg, Mars, Nokia, Procter & Gamble and Verizon. All of those butt up against FCB’s longtime clients Kraft, Hershey, Motorola, S.C. Johnson and Qwest.

As of press time, there have been no dramatic client departures. “You usually get some client fallout any time you do a merger,” Draft says. “But we have yet to have a client leave us. They’re in separate areas of the company with walls to keep them apart, and so far everyone seems to be satisfied.”

Of course, clients aren’t the only ones who can desert following a merger; employees also can vote with their feet. Brand agency snobbism can spread in the trenches too, and there always was the possibility that some FCB talent might balk at being yoked to a DM company, and certainly to one run by a direct marketer. But while some few jobs have been cut to reduce redundancy between the two organizations, there has not been a notable exodus from either half of the Draft FCB equation.

Some of this post-merger stability is due to a conscious effort to give both the Draft and FCB sides of the house a stake in company leadership. The company lost Steve Blamer, FCB’s pre-merger CEO, immediately after the announcement. And in August another FCB veteran, New York office president Steve Centrillo, also took leave because of “a difference in philosophy and perspective” about the agency’s direction.

But rather than replacing Centrillo with a Draft executive, the company reached outside for another branding agency pro: Peter DeNunzio, former general manager of global clients at OgilvyOne. Other company titles are being shared pretty evenly between Draft and FCB hires. FCB creative chief Jonathan Harries moved into the same role at Draft FCB early on. In September, Laurence Boschetto, former president and chief operating officer of Draft Worldwide, was named to the same post at Draft FCB. Bob Oates, FCB chief financial officer, also takes over that job for the new company.

The message has been conveyed: There will be no turf wars in this new company, and both the branding and DM sides have a contribution to make to the total effort.

“Everybody’s excited about the change in the sense that we’ve had no clients fall out, and we’re involved in a number of new business pitches,” Draft says. “Employees want to be around an agency that’s got momentum, and that’s what we will be.”

That momentum is starting to show itself. Since announcing the new merger, Draft FCB has attracted new business. Citigroup added the company to its roster for relationship marketing on its credit card line, while Atari will give its global marketing duties to Draft FCB’s London office. The company also won the DM portion of Merrill Lynch’s Total Merrill product portfolio in August.

And of course, there’s the Wal-Mart prize still hanging out there. The retailer is said to be interested in building up cross-selling opportunities — that is, getting customers to shop in departments they haven’t used before — while combating the branding inroads made by rival big- box retailer Target.

It sounds like an assignment that could test most of the moving parts in the new Draft FCB machine. And it might eventually offer proof positive that yes, branding and DM can work together — without killing off the ad industry.

Personal Best: Saab

If you’re adventurous and love cars like I do — not to mention outstanding results — you’re bound to get a kick out of one my all-time favorite direct campaigns. It was created by Draft London last year. Our client: Saab.

Launched in 2005, the new Saab 9-3 SportWagon is a versatile, stylish model with appeal for younger active adults (ages 30 to 45) who haul gear like skis, mountain bikes and golf clubs, or a young family having to move around all the paraphernalia associated with kids.

To reach the market, Draft London created a 100-page novel called “The Race Against Time,” cleverly integrated with an online game, and leveraging the powerful, nostalgic emotions surrounding the popular “Create Your Own Adventure” books (which were at the peak of their popularity when Saab’s target audience was in its youth).

At each turn in the action-packed story, the reader was allowed to make a choice and drive the direction of the adventure, which simultaneously highlighted the car’s countless benefits.

Fast-paced and fun, the campaign was an immediate standout in the crowded, highly competitive United Kingdom automotive arena. The direct mail piece alone resulted in a staggering 40% response rate among the hottest pool of customers and prospects.

The game generated 23,000 registrations, the largest data-collection result in Saab’s history. It also garnered additional mileage by reactivating more than 500 customers who had not responded to Saab since the 1990s, and by creating a huge buzz among the worldwide blogging community. All in all, it was quite a trip.
— Howard Draft