SUDDEN IMPACT
Everything old is new again at Impact. Sort of. At the beginning of the year, Chicago-based Foote, Cone & Belding reorganized its promo agency – again. FCB scrapped the hybrid promotion/direct marketing/ad agency it formed in 1997 under the name Impact Communications Group and absorbed the disciplines into the general ad agency. President Jim Cerasani, the FCB vet placed in charge of ICG, is out after FCB failed to find another role for him within the agency. Founding Impact president Joe Flanagan retired and started up Flanagan Marketing in an office at FCB’s Chicago headquarters. His first client is FCB. His No. 2 man, Sherwin Leff, is working on new business for FCB on its S.C. Johnson team.
Impact now runs as two departments of FCB Chicago under the working titles FCB Impact Promotions and FCB Impact Direct. Its staff is being assigned to “brand groups” that are headed mostly by FCB advertising staffers. Brand groups take over profit and loss responsibility. Each brand group has account planning and creative members, and staffers from every discipline FCB handles for that client. The brand group for ad client Coors, for example, is led by FCB ad staffers, and may have promotion and direct staff sit in on annual planning meetings. The brand group for promotion client Wendy’s, on the other hand, is led by Impact staffers with the ad folks waiting in the wings.
In theory, the new setup puts promotion and direct marketing on par with FCB’s traditional advertising. FCB Chicago president Brian Williams calls it “a holistic approach to brand-building – for both brand business and brand reputation. In the past, building brands was mostly advertising. Now there’s a whole range of marketing vehicles. We’re looking for strategic plans for each brand that have the right amount of each discipline for short-term business-building efforts and long-term reputation-building.”
A holistic map puts Impact “back the way it originally was, in one regard. We want Impact Promotions and, on the other side, Direct, to be very focused, and have expertise and capabilities better than anyone else in those core disciplines,” Williams explains. “The plan is to bring it back to the future. Until [ICG was formed] Impact didn’t start losing its focus. Impact understood what it stood for. It’s important to give that identity back again. The one twist is that, rather than be identified as promotions experts, we want Impact to be identified as branding experts within the discipline of promotion.”
The new configuration addresses two key issues: profit structure and media objectivity. Brand groups take over all p&l responsibility, including groups led by promo staffers for promo-only clients like Wendy’s and Nestle. Impact Direct and Impact Promotions will be run like traditional agency departments, with budgets for staffing but no responsibility for the bottom line. “We’ll probably also do shadow p&l just for our own benchmarking purposes, just so we can understand how operations are running and how revenue is migrating across different disciplines,” Williams says.
He also insists brand groups must be “media-neutral,” unbiased about the right marketing venues for each client. “People in traditional advertising are kind of biased. But they’ll need to consider promotion, direct, event marketing, p.r. – whatever is necessary to target segments and build long-term reputation and short-term business.”
That’s the newest model in the ongoing search for the Holy Grail of integration. Agencies continue to feel their way around as marketers add bigger doses of below-the-line disciplines to branding strategies once dominated by advertising. Execs have always argued that you can’t integrate divisions that are separate profit centers, because they compete for the same dollars. “Separate p&ls just encourage cross-selling, and clients recognize that,” Williams says. “It’s the biggest roadblock to anyone accomplishing integration.”
FCB removed that hurdle by forming a single profit center and the media neutral brand groups. Now the question is: Can FCB make promotion a high-enough priority to keep a talented staff doing high-caliber work? Or will promotion be cast again as the ugly stepsister?
Integration, Take Two Impact was a high-profile promotion agency for 10 years, with clients like Coca-Cola and Kraft Foods. Remember the 1996 Diet Coke/Friends sweepstakes that culminated in a one-hour show after Super Bowl XXX? That was Impact.
But for the last two years the shop suffered under the hybrid structure, losing Coke and True Value and faring badly in Kraft Foods’ widespread agency review. Critics say Cerasani’s background in advertising and direct made him ill-equipped to oversee promotion, so the agency foundered. Flanagan’s role was diminished, and the staff grappled for some kind of mission statement that fit the agency’s expertise while answering FCB’s mandate for more ad work.
Insiders say ICG didn’t work because there were too many layers of management, and senior-level execs were too removed from the business. “Everyone was in charge of something without any real focus,” says a long-time Impact exec. “Our creative strengths were confused – we didn’t have the best caliber of creative people working on promotion, because resources became more focused on advertising.” Good creative people got shifted to ad work, or left and had their salaries allocated to hiring ad staff.
Total head count shrank from more than 100 before ICG was formed to fewer than 50 on the promotion side now (with 20 moved to other FCB assignments), and another 70 staffers on the direct side including CM Partners. A lot of people left because “the whole emphasis on promotional stuff wasn’t as significant,” the exec says. “Impact has to get back to the roots of its real strength.”
Williams hopes to shore up each discipline with clear leadership. In January, he brought in Craig O’Keefe as exec vp-director of promotions and merchandising. “When Craig was 11, his dad brought him into the promotions business,” Williams says. “He was 13 years old and doing FSIs. He understands the role of promotion in building a brand.”
O’Keefe started Young & Rubicam’s integrated marketing department in ’89, creating Camel Cash for R.J. Reynolds and later assisting with RJR’s launch of Moonlight Tobacco. With Burnett from ’95 through ’98, he got the promo group talking with Burnett’s account service teams and clients. At FCB, he’s pushing strategy to make Impact staffers more than “fast-food window operators that just ask clients ‘Can I take your order?’ and make them real marketing partners,” O’Keefe says. “I want clients to pay for our heads. We’re not just a tactics shop. Our thinking is most important.”
Stronger strategic guidelines may improve Impact’s spotty creative work: Briefs handed down from brand teams could move the work of Impact’s young creatives from “high-energy innocence to strategic brand-building,” O’Keefe explains. “I’m pleased with the talent base, and want to get it on focus.”
On the direct side, Scott Grafft has been running the business since October ’97. He shares the helm now with Clive MacLean, a Burnett veteran who ran the CM Partners direct marketing agency FCB bought in January. CM moves from its suburban headquarters into FCB’s building. “We want to make sure the people charged with overseeing each discipline are clearly infused with that type of background,” Williams explains.
But Williams didn’t interview anyone with a promotion agency background; O’Keefe’s promo work has been at ad agencies. “I talked to people who had a good understanding of promotion within the context of total brand communication,” Williams says. O’Keefe “understands how to meld the discipline and work within an advertising agency.”
Forty FCB layoffs in January included nine from Impact, mostly creative staff. At the same time, the agency put out feelers to hire more, possibly to fill gaps from CM employees who won’t follow the shop downtown. A spokeswoman for FCB said the agency plans no more layoffs from the restructuring.
When Williams called Impact’s staff together in December to explain the new structure, “they had two reactions: relief and apprehension,” he says. “People felt kind of lost and unfocused over time, and now all of a sudden they have another strong grounding point. [But there’s also] apprehension: Here’s another new guy, another direction, when only two years ago they were told this was the be-all, end-all direction. There’s a real ‘show me’ attitude.”
Some at Impact worry how much the Burnett influence figures into the new equation. “No one has directly confronted me, though I suspect everybody talks about it,” Williams says. “If someone asked me, I’d say, ‘Don’t worry about this becoming Burnett North.’ We are our own organization and will base our decisions on what’s right for our clients and for us, independent of what anyone else is doing. We’ll set our direction by looking at what our clients’ business needs will be in five years, and how we can develop the capabilities to serve them.”
There are no promises, of course, that the process won’t involve a new vision of integration.
