CEOs at London ad agencies are said to have just 18 months to prove they are up to the task, but what makes a good leader? A talent for winning new business and delivering on financial targets, or building for the future with a succession management strategy? David Benady investigates
Some of London’s top advertising agencies are shortly expected to appoint chief executives, while other marketing services companies are bedding new bosses into their jobs.
These new starters may wonder how long they will be given to prove their worth before either facing the chop or being feted as saviours. Many observers believe they have about 18 months to show their mettle, though the way they are judged can vary greatly depending on the agency, network and holding company concerned.
A new wave of agency chiefs is flooding the London advertising scene. Omnicom’s DDB London is likely to announce a new chief executive shortly, while Interpublic Group’s (IPG) Lowe London has started searching for one. Saatchi & Saatchi, owned by Publicis Groupe, is rumoured to be seeking a high-profile figure to work under UK chairman and chief executive Lee Daley. Meanwhile, on the media side, ZenithOptimedia UK – another Publicis company – last week appointed 34-year-old managing director Gerry Boyle as UK chief executive, replacing Antony Young, who becomes president of Optimedia USA.
“The pressure to deliver faster is there for the chief executive of any business – and advertising is no exception,” says Richard Hytner, chairman of Saatchi & Saatchi Europe. “Lee Daley [installed at Saatchi & Saatchi London in October 2004] has shown great resilience in making a big impact quickly in London. You’ve got to be noisy these days as a CEO/ you can’t achieve transformations incrementally.”
Racing against time
Another agency boss concurs that incoming chief executives are racing against time: “Assessment times have definitely come down. Once, you might have got away with two years plus, but now by the second year people have discovered whether the formula you put in place is going to work. That is determined by your ability to build a team around you – a lot of pitches are won by teams, not individuals.”
He says that incoming bosses come under twin pressures: firstly to hit financial targets set by the owners of the agencies – holding companies such as WPP Group, Omnicom, IPG or Publicis Groupe; and then to live up to the expectations of network bosses to fulfil operational goals.
However, another observer believes that the way a chief executive is assessed can vary widely between different holding companies. The source says that within WPP, overall boss Sir Martin Sorrell judges “everything in terms of new business wins”. The observer points to a number of executives favoured by Sorrell because they have led winning pitches, such as JWT executive chairman Toby Hoare. In the same way, Garry Lace, who worked as chief executive of Grey London and Lowe London, built his public image around his ability to win new business.
But the observer adds: “Omnicom is, by contrast, more holistic in how it judges people. The chief executive is a leader, [the role] is about inspiring people and creating the right culture to make sure you’ve got the right talent and make sure it functions.”
Who’s next in line?
Others believe that the way different agencies handle the comings and goings of their chief executives is fundamental to their success. “The best agencies have succession management sewn up. Where it starts to go wrong is when you don’t have someone in place to take over. Agencies such as Bartle Bogle Hegarty and M&C Saatchi have a very definite culture that people buy into. You might need to refresh it now and then, but you know who will take over,” says the observer.
He blames a failure by IPG to establish a coherent culture and succession management at Lowe for the subsequent management turmoil that led to the resignation of London chief executive Garry Lace in April, just over a year after joining.
However, even within the holding companies there are widely differing approaches to succession management and to the assessment of the achievements of chief executives.
For instance, within Omnicom’s London offices there is a stark contrast between Abbott Mead Vickers.BBDO and DDB London. AMV has carefully handled its management succession since the departure of the founders, passing the chief executive’s baton on to Michael Baulk, Cilla Snowball and then to Farah Ramzan Golant.
But DDB London has failed to manage the handover of power following the reign of long-running boss Chris Powell. Following the tenure of his successors Chris Cowpe and Ross Barr the agency brought in Paul Hammersley from Lowe to run the London office, but it was felt he was offered too little to keep him there and he left to join Sir Frank Lowe’s start-up The Red Brick Road. The agency is currently overseen by acting chief executive Michael Bray, who is also president of DDB Europe, with a new chief executive understood to be waiting in the wings.
So how long have the newcomers at Lowe and DDB got? According to Gary Leih, who was brought in as chairman and chief executive of WPP-owned Ogilvy Group UK from Ogilvy South Africa in May 2005: “There would be raised eyebrows if you didn’t show some progress in 12 to 18 months. You’ve got to show movement and positive motivation of staff, in figures and quality of work. You’ve got to find out where the real opportunities lie.”
Leih says that Ogilvy has added accounts such as Avis and easyJet under his tenure. While he acknowledges that the relationship with WPP is important to his role, his strongest relationship is through the Ogilvy network, ultimately with Shelley Lazarus, chairman and chief executive of Ogilvy & Mather Worldwide in New York.
DDB London’s business development director Richard Morris says it is a mistake to judge a chief executive just by financial results. “Do you spend time building a team for the future or are you judged solely on results? Trigger-happy chairmen only look at results, which is unfair. However, sometimes the agency world is all about confidence. You can state the facts about how your business is growing, but if you are perceived to be doing badly it is hard to shake that perception.”
Another chief executive says that agency bosses are judged by holding companies on key performance indicators such as the agency’s “compensation ratio” – the proportion of staff salaries to income, with a ratio of about 50% being preferred.On the other hand, network bosses have a series of goals for London chief executives, such as attracting creative talent and striking the right balance between winning new local business, against ensuring that international network clients are well served. This seems to be the case at IPG’s McCann Erickson, where the challenge is to make sure that the network business – accounting for the lion’s share of the London office’s work – is well looked after.
Even so, regardless of the type of marketing services company concerned, the clock starts ticking from day one for new agency bosses. They are well aware that the alarm bell will ring sooner rather than later if they are caught napping.