Instead, morale sank to lower plateaus with each wave of the year’s blood baths. The human tendency to find justification for the firing of other people could not be sustained, given the loyalty and abilities of so many who bit the dust. Older staffers shuddered at the number of long-tenured and hard-working hands, such as media and research vice-presidents in their late 40s and 50s, who unhappily accepted non-refusable offers of early retirement packages. The beat of the agency’s legendary heart slowed, and stilled.
At most advertising agencies, the link between account losses and payroll cuts is clearly understood and accepted. But most advertising agencies neither get nor deserve the committed love that DDBers gave their company.
Now, whether fired or fed up or plain old scared about the future, DDBers began to overwhelm headhunting offices. Barry Loughrane received a call from an industry friend who wanted to alert him to a possible exodus in the making.
“Most of the people who are leaving we don’t want anyway,” responded Loughrane.
* * *
Roy Grace had no twinges of compassion whatsoever for the many departing people in the creative department. On the contrary, he later looked back with pride on his sweeping achievements.
“I cleaned out the agency,” he puffed.
Some creatives he fired; more were “encouraged to leave.” He boasted of having found ways to “make it not attractive to stay” for a number of art directors and copywriters. His targets gave up and quit, which, noted Grace loftily, saved the agency severance pay.
“Here’s an anecdote for you,” he related. “Ned Doyle calls me up and says, ‘Why the hell did you fire ———?’ I said, ‘She’s not talented, Ned. I would rather have somebody in that job who has talent.’ Ned said, ‘So? She hasn’t been talented for twenty years!’”
Grace’s judgments of other creatives’ talents were far from universally shared. (In fact, the agency would eventually rehire a number of those alienated or discarded by Grace.) Moreover, his “why are you bringing me this piece of shit?” approach continued to demoralize the very people whose egos he should have been nurturing.
Loughrane and Pfundstein, while encouraging departmental cuts agency-wide, eyed Grace’s actions with growing unease. They began to question him about the departures of veteran creatives esteemed for the work they’d produced over the years.
Grace, unflappable when quizzed about those who’d gone, invariably countered with, “They never really were any good.”
There seemed no more will to deal with Grace’s handling of the creatives than with his lethal misjudgments on the Procter & Gamble story and the Miller monkeys. He remained untouchable. Why?
Because, one was told, “He’s the only game in town.”
* * *
Marvin Honig had gone on the heels of Neil Austrian’s departure. “Neil left me unprotected,” he said later. “He left me vulnerable to the people who knew I didn’t think much of them. Like Barry Loughrane.”
That eliminated one of the three contenders for Bernbach’s mantle. It also offered an easy answer to why Polaroid pulled out. The Ned Doyle – Ted Voss theory about the inevitability of the agency-client split after “DDB’s guys” left Polaroid was not heard in 1984. Then, one kept hearing the fault was Honig’s, for failing to come up with a winning campaign after taking over creative responsibility on the account.
Honig’s departure left his creative partisans as easy targets in Grace’s moves to “clean out the agency.”
Once, staffers had worked for Doyle Dane Bernbach. Now, they chose up sides, and lost their jobs when their leaders fell.
* * *
Bob Levenson had his own small “merry band” of creatives, with whom he worked on international campaigns, out of Grace’s reach. He harbored the hope that “after Roy, Barry, Neil, and all the New York guys blew themselves out of the water, John [Bernbach] and I would be in a position to take control of the New York agency.” Levenson and John had formed a close bond during Levenson’s many business trips to DDB’s foreign offices.
“We thought the campaigns done by those offices were the last best remaining example of what Doyle Dane Bernbach was supposed to do. Not uniformly true in every office in the world, but closer to the real thing than anything going on in New York.”
Despite Bill Bernbach’s silence on a creative heir, many DDBers still rooted for Levenson, preferring his decency and articulateness to Grace’s apparent delight in shattering psyches and egos.
The Bernbach family showed their feelings by asking Levenson to deliver the eulogy at Bernbach’s funeral. And then, when Michael Gill dropped out of the Bernbach book project, the family asked Levenson to “finish” Bill Bernbach’s unwritten book. (The relationship soured somewhat when Levenson realized the family expected him to do the book “out of love of Bill,” i.e. without payment. Levenson signed a contract splitting royalties with Evelyn Bernbach.)
Levenson’s fantasy of eventually taking over gave way to the reality of events. “More and more I felt that it was all over, that it was a lost cause,” he related. So did industry observers, on reading Phil Dougherty’s New York Times column of January 22, 1985.
“In an unusual display,” Dougherty led off, “Doyle Dane Bernbach yesterday revealed its 1984 woes to security analysts, relieving the drab litany with the news that earnings for the year should come to about $1.50 a share, up from $1.05 in 1983.” The “woes” included “lost accounts, lost top executives, too much personnel, real estate that was too expensive, one third of the flagship New York office’s accounts unprofitable, more than $13 million in accounts receivable, and employee morale sagging to new depths.” The steps taken by the agency “to regain a pretty profit picture included cutting the New York work force by 198 people.”
So much for the Camelot of the advertising industry.
The Saatchis, sensing the time was right, set out to win Levenson, seeing him as the true spirit of Bernbach, and just what they needed to lift the creative reputation of their U.S. acquisition, Compton Advertising. (Yes, Virginia, Compton. Paul Paulson’s old home. Slice-of-life City.) The Saatchis’ courtship succeeded. On April 10, 1985, Levenson announced he was leaving, after 26 years with DDB.
“How can you leave us, Bob?” pleaded Joe Daly. “You’re part of the woodwork.” Responded Levenson, “You just answered your own question.”
To the many old hands who’d never lost hope that Levenson would outlast Roy Grace, his leaving marked The End of Doyle Dane Bernbach as they had known and loved it. And they said it, to him and his “merry band,” all of whom he had arranged, as part of his deal with the Saatchis, to take with him to Compton.
“The End came long ago,” argued copywriter David Herzbrun. “This is just the period that completes the sentence.”
Throughout that day, financial chief Bob Pfundstein placed calls to Wall Street analysts, triumphantly announcing the departure of Levenson and his crew, and how the move would improve the company’s balance sheet by one million dollars per year.
* * *
Well then, that resolved the problem of who, among the three contenders, would inherit, for good and all, Bernbach’s golden bough. Didn’t it?
Alas, the resolution-by-departures only exacerbated matters. With no back-up candidate on the premises, Grace showed ever-more contempt for ever-increasing numbers of DDBers. In truth, he had produced many more great campaigns than ever Bernbach had, but he had not acquired an iota of Bernbach’s magical aura as a creative leader. The insiders who had shielded the Bernbach legend, while having some doubts themselves, came to a far greater appreciation of what had been lost. Bitterly did they swallow Grace’s arrogant demand for a $60,000 raise on the day after he’d trimmed his staff to save on his departmental budget. Ruefully, some recalled Bernbach’s oft-spoken words, that to work at Doyle Dane Bernbach, people must be nice as well as talented.
* * *
Grace—chairman and executive creative director U.S., and vice chairman of
Doyle Dane Bernbach International, winner by survival, the only game in town—had no intention of hanging around much longer. He hadn’t believed in Barry Loughrane since 1972, when he, Loughrane and Marvin Honig tried, and failed, to launch an agency of their own. The story was known only vaguely. Conventional wisdom had it as proof of a long and close friendship among the three men. On the contrary, Grace and Honig had blamed the failure on Loughrane, and came to unflattering conclusions about his business abilities.
Nothing in the first year of Loughrane’s regime altered Grace’s opinion. No excitement followed his installation as CEO. A sense of pulling together under a terrific new management didn’t happen. So Grace started a series of secret meetings to plan a new agency with two other DDBers—a top copywriter and an account man.
At the same time, Loughrane was secretly interviewing “every creative star in the business, from Mal[colm] Macdougall to Jay Chiat to Burt Manning.” He recalled weekends in Connecticut, sneaking into hotel rooms in Los Angeles.” He “had to have a few alternate plans,” had to protect himself, “because supposing Roy . . .” He didn’t complete the sentence, as he looked back, in September of 1986, on his reign as CEO.
It was indeed a bizarre situation. A company desperately in need of inspiring, reviving leadership, whose two top executives, instead of working together to provide it, were secretly plotting moves to cut the ground out from under one another.
Others in high managerial positions looked in vain for the teamwork they hoped would bind the agency together at long last, under a “real” advertising man. Loughrane ran the place, some said, as a one-man band. Board members, who’d voted to buy back the Bernbach family stock on the assurance that the agency could make its own way, were given no more hint of Loughrane’s maneuvers than he gave his colleagues. The latter felt they were “no longer an integral part of management.”
Looking back, Loughrane did not dispute this. He had, after the buy-back, concluded that the agency couldn’t make it “without either doing a merger or bringing in from the outside, which heretofore never worked, two or three all-stars to rekindle the flame.” Thus, his secret meetings, not only with creative stars, but also with possible “agency partners”—or mergers. “I’ve done a lot of things that nobody around here has ever known,” he said later. “I had no one to communicate to. The people I had to play with, the situations and the fiefdoms, were already in place.” And they were not Loughrane’s team.
“If you’re in charge of a big company and your next in line are all independent, that’s hard to communicate with. Because they don’t give a shit about me and my point of view. All they care about is their point of view.
“So particularly if I want to do anything radical, particularly if I want to change the company, particularly if I was looking for other people, particularly if I was looking for other ways of doing business, the last people I want to talk with are the people on this goddamn row! What, are you mad? This gang couldn’t keep anything secret for more than four seconds. I didn’t even tell the board.”
Which explains why the directors were dumbfounded when, in April 1986, they were asked to approve a mega-merger (in fact, a sale of the agency) because Doyle Dane Bernbach was “dead in the water.”
* * *
Roy Grace stayed just long enough to collect on his Long Term Incentive Award. Neil Austrian had created the LTIAs in 1980 to lock in a handful of executives. The first round of the five-year awards would pay off at the end of 1985, when each participant would receive a windfall of hundreds of thousands of dollars.
The agency had, from 1980 to 1985, pumped $7,874,000 into funding the LTIAs. In the same period, about $13,000 covered the company shares awarded to everyone else on their key anniversaries. So pathetic was the contrast that anniversary awards became a joke that eroded employee loyalty.
On January 30, 1986, Roy Grace announced at a press conference the opening of Grace & Rothschild. He did it with a swift kick in DDB’s groin.
“The energy and the focus of larger agencies is toward mindless growth, and not toward turning out a better product,” said Grace, adding that DDB “is more interested in the bottom line than in the product it produces.”
Grace had informed Loughrane that he was leaving only the night before, though he worded his bombshell as “two weeks’ notice.” Loughrane, caught unawares, asked Grace to withhold an announcement. “It’s a very important thing, losing a creative director. I want to make sure we have a chance to talk to our clients, and I have a chance to talk to everybody in top management here, and figure out how we’re going to handle it.”
Loughrane believed Grace had agreed. Instead by 10 a.m. next day, the press was calling, following up Grace’s conference. By noon, clients began calling Loughrane. “Roy and Diane [Rothschild] had been calling our clients, telling them.” In the late afternoon, Loughrane addressed a meeting of the agency’s top managers and creatives.
“We don’t know what we’re going to do for a creative director,” he told them, “but I’ve asked Bob Gage, who certainly doesn’t want it, to step in as acting creative director. He has all the credentials so far as the outside world is concerned.”
At which point, John Noble walked out of the meeting, having told Loughrane before it began, “If I don’t get the creative director job, I quit.” A few days later Noble, who had been a candidate for termination in an earlier DDB bloodbath, was named executive creative director of Doyle Dane Bernbach. No one had ever envisioned him as a possible heir to the Bernbach mantle, and in fact he’d be gone soon after the mega-merger.
* * *
The agency’s profit picture deteriorated in 1985 as advertisers cut budgets, new business failed to take up the slack, and disinflation put an end to years of soaring media costs that had fattened agency coffers. Payroll was reduced by another fifty jobs. As a cost-cutting measure, Loughrane recommended an end to the expensive Long Term Incentive Awards program. But not before setting up a second round, designating 32,000 shares for himself, and 18,500 for Bob Pfundstein. Vice chairman-general manager Arie Kopelman was down for 6,000; exec VPs for 5,000; research director Ruth Ziff for zero.
Unhappiness at perceived inequities in the upper echelons soon paralleled fears of job losses in the lower.
* * *
The new round of LTIAs, like the first round, would pay out in five years—unless there was “a change in control,” in which case it would vest immediately. Board members did not expect any such change. They still had confidence that the agency could “make its own way” under Loughrane and Pfundstein. So they generously voted to give both men one hundred percent of their units when the first round came due at the end of 1985. Technically, the two didn’t qualify for the payout, because profits of their division—corporate—hadn’t met the requirements of the complex formula underlying the plan.
But what the hell, these were the guys running the company now. Quibbling over a formula could poison the waters.
The poison came a few months later, when round two vested, thanks to an upcoming “change in control.”
* * *
Bob Levenson described John Bernbach as a kochleffl. The Yiddish word, literally a “cooking spoon,” metaphorically connotes a person who stirs things up, makes things happen. It was John Bernbach who brought the mega-merger about, by being his usual affable, social, convivial, getting-around self. Attending a cocktail party given by Ted Voss in January 1985, John met Keith Reinhard, CEO of Needham, Harper Worldwide.
“We struck it off at once,” John recalled. They chatted in a cocktail party way about the problems their two agencies faced in a world of shrinking business and disinflation. Before the party ended, they agreed to talk again. Perhaps after he returned from a business trip to London, said Reinhard. Ah, but John was going to London, too. They made a date to meet in London.
John briefed Loughrane, who gave his blessings. Reinhard, after all, was a creative star, up there with the Burt Mannings, the Mal Macdougalls, the J
ay Chiats. And Doyle Dane Bernbach had talked merger with Needham when Bernbach was alive. It hadn’t come off then, but now the managements of both agencies had changed, and so had times. Both were actively seeking merger partners.
So John and Reinhard met in London later in January, and decided, as Neil Austrian had earlier, that the two agencies were “remarkably compatible” in their philosophies and cultures. (In actuality, the combining would prove as difficult and unnerving to the two staffs as any other merger.) Certainly, the geographical fit was good. Needham strong in its home town of Chicago; it had never succeeded in New York. Doyle Dane Bernbach, a great New York agency, didn’t even have an office in Chicago. Internationally, Needham’s strength lay in the Far East; DDB’s in Europe.
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