The rise and fall of J. Walter Thompson, the oldest advertising agency in the world

Business

By CAPosts 01 December, 2020 - 11:58am 322 views

In early 2016, United Airlines needed help. Its share price dropped, CEO Jeff Smisek had resigned due to a Justice Department investigation into alleged political interference, and United finished last in an industry customer satisfaction survey.

© Joe Scarnici / Getty Images for Fortune ; Priyanka Parashar / Mint via Getty Images; Eric Gaillard / Reuter ...

Enter J. Walter Thompson

Gustavo Martinez, the chief executive of the advertising agency, led his way into a speech to the company's global advertising business through a connection to the new high United executive Oscar Muñoz.

JWT presented the idea that United employees ran the business and showed potential advertisements that ended with a United logo made up of the signatures of actual employees. When the JWT creative team finished their presentation, United executives applauded.

The blows to J. Walter Thompson

United told the creative team that they had won the field, but that they ultimately stuck with their record agency Mcgarrybowen, why not they could partner with JWT, knowledgeable sources said. United Airlines did not respond to a request for comment.

The previous month, JWT's global public relations director, Erin Johnson, sued Martinez and the WPP-owned agency, alleging sexual harassment and discrimination.

Days before the decision made public, his attorneys posted a video of Martinez making a rape joke at a company meeting in 2015.

It was another blow to JWT, which was already on a downward trajectory.

Like other ad agencies, JWT struggled to adapt to the rapid rise of digital platforms like Google and Facebook, and the disintegration of a model built on decades of steady revenue from big-budget print and TV ad campaigns, which reduced the dominance of portfolio companies inherited from the industry

J. Walter Thompson and how to reinvent yourself in a different world

Throughout the world, traditional one-stop-shop creative agencies co mo JWT no longer drives the business; clients have reduced costs, leading agencies to try to make up for the loss with data services and media buying

Clients are investing more in influencer marketing and e-commerce and are using niche agencies to help them. In the pandemic, specialized services, such as healthcare marketing, have remained the only sources of growth for companies

Specifically on WPP, a short-term focus on margins to guarantee bonuses for the top executives of companies of portfolio also hampered JWT.

's transformation Finally, the legal scandal made its name toxic to prospects and hires alike.

When asked by Business Insider about JWT, WPP CEO Mark Read said: “ We have to be aware of the past, but we cannot feel nostalgic for it. We must respect our heritage but define an offering for our future. ”

JWT was based on a century and a half of timeless advertising campaigns.

“ I don't want to grow up, I'm a Toys 'R' Us kid ”. There is a Ford in your future. "The few. The proud. The Marines. "Snap, Crackle and Pop" by Rice Krispies.

These were just a few of the campaigns that made JWT.

famous J. Walter Thompson, the first advertising agency

The business commonly described as the oldest advertising agency in history If not the first, she started in 1864 as a broker named Carlton & Smith who sold New York City newspaper advertisements to religious groups.

James Walter Thompson joined as an accountant in 1868 before going into sales, buying the company and renaming itself nine years later.

JWT pioneered Libby's first television commercial; the first one-hour scripted drama, "Kraft Television Theater," in 1947; and Ford's "Global Anthem" in 1999, the first commercial to aired in all markets around the world. He helped the British government create World War II-era radio programs against Hitler and the Axis powers. His 118-year relationship with Unilever is the longest in advertising.

was one of the first agencies to expand internationally in the early 1900s; and former CEO Bob Jeffrey recalled meeting with heads of state in India and Saudi Arabia during his tenure.

Jeffrey told Business Insider that most people weren't impressed that he worked in advertising. "But when I called out J. Walter Thompson's name, there was immediate recognition around the world," he said.

J. Walter Thompson, Most Successful Agency

When Randy Shepard, a longtime strategist at JWT Atlanta who oversaw the account of the Marines for years, died this fall, four United States Marines. In their best clothes they participated in the funeral. Lt. Col. Christian Devine, who runs public relations and marketing for the Marines, served as the pallbearer.

In 1987, then-WPP CEO Martin Sorrell acquired JWT for $ 556 million. It was his first major purchase in a 30-year effort to turn obscure shopping basket maker Wire and Plastic Products into the world's largest advertising business.

For several years, JWT was WPP's largest and most successful agency. A former executive recalled asking Sorrell what JWT meant to him during his last period of significant growth, to which he replied, “The two Ps: pride and profit.”

Sorrell declined to be interviewed for this story.

The Strict Ones Financial controls at WPP hampered the agency's ability to adapt

Several former executives said JWT's fortunes began to decline around 2010 with the abrupt departures of US President Rosemarie Ryan and Creative Director Ty Montague and the loss of important clients. including Microsoft, JetBlue and Royal Caribbean.

At the time, JWT's New York office alone employed 667 people and generated more than $ 200 million in revenue. These people said that JWT's last period of global growth was the first quarter of 2016; At the time of the 2018 merger, the New York workforce had been cut by around two-thirds and revenue was down by more than 50%. WPP did not provide current financial figures for Wunderman Thompson and does not disclose earnings by agency in its public statements.

Ryan had been hired in 2004 to land new business and help JWT move to digital media. She and Montague added big-name clients, including Microsoft, JetBlue, and Royal Caribbean, but their ambitions went headlong to WPP's finance department.

Sorrell was known as a micromanager who closely watched spending across the WPP empire; A former JWT leader said his approval was required for almost all raises and new hires. Former JWT CFO Lewis Trencher was nicknamed “Dr. No "for rejecting spending requests and was described as" the most feared man in the building. " Some former executives said that he did indeed run the agency and that his decisions were often at the expense of JWT.

Trencher, who retired shortly after the Wunderman merger, did not respond to an interview request.

J. Walter Thompson and the partnership with Microsoft

When Microsoft chose JWT to create a $ 100 million campaign to promote the 2009 launch of the Bing search engine, a hiring freeze was left from the 2008 recession, and a former executive said Sorrell and others WPP leaders would not approve hires for the account. JWT New York had to hire 25 freelancers to work on the business

After Ryan and Montague resigned, JWT gradually lost the Microsoft business

The company bought digital agencies to keep up with the changing needs of customers, But it struggled to integrate them with the traditional side of its business.

In the largest move of its kind, JWT acquired the Digitaria agency in 2010 and combined it with other digital properties to create the Mirum network, which specialized in data-driven services such as web design and email and search marketing.

But two former executives said JWT's traditional business leaders saw Mirum as a threat to their turf and clients ended up confused by the rivalry.

When JWT acquired the digital agency iStrategyLabs in 2016, a former JWT leader said both companies hoped to get new business as a result, but that digital executives are They were "kicking and screaming" to resist joining JWT out of concern of being overwhelmed by the inherited business. Wunderman Thompson closed iStrategyLabs last December as part of the ongoing streamlining efforts of WPP.

J. Walter Thompson, the digital advertising strategy

JWT also hired seven high-profile creative leaders in seven years in an attempt to mimic the success of younger, more modern agencies like Crispin Porter Bogusky, who won the Bing account in 2011. Crispin is part of the MDC Partners holding company, which in It was a promising rival to WPP at the time.

However, growth in digital ad spend did not offset the drop in traditional ad revenue, with executives saying JWT leadership tightened digital to fund the side of the business focused on television and print, putting more money behind a declining model

In late 2013, Martin Sorrell decided it was time for a change at the top and appointed Gustavo Martinez, who had previously overseen new business endeavors at Ogilvy, another major WPP agency, to replace Bob Jeffrey. Sorrell considered Martinez a potential successor at the time, sources told Business Insider.

A lawsuit alleging racism and sexism made headlines around the world and sparked an internal crisis.

One morning in March 2016, a headline from the The New York Post said: "Nasty CEO is World's Worst Boss, Lawsuit Claims."

Lawsuit accused Martinez of making degrading comments about Jews, comparing blacks to monkeys, and joking about rape in more once.

Martinez denied it all, but resigned a week later.

It was two years before WPP reached a deal with Erin Johnson in April 2018, and insiders said Sorrell's unwillingness to reach out a deal significantly affected JWT.

Meanwhile, executives were quick to preserve existing relationships with their customers.

Two people said Macy's, which had been with JWT since 2006, decided to c Create ties overnight. One said a Macy's board member told them, “We have to get rid of JWT. We can't get involved with an agency in this mess. ”

JWT missed a speech for Macy's upcoming Christmas campaign and never worked with the retail giant again. Macy's did not respond to a request for comment.

Loss of accounts and a deep divide at J. Walter Thompson

A deep divide had also developed within the agency. An insider said Sorrell described the lawsuit as "a public murder" and many employees continued to support Martinez as he retired.

Sorrell chose Tamara Ingram, a longtime WPP executive who had overseen the company's relationship with Procter. & Gamble, to succeed Martinez.

Some informants said an executive director was needed, but one executive called the decision "a public relations band-aid"; and several said Ingram took over a position she wasn't properly prepared for.

When Martinez introduced Ingram to the agency's New York office in mid-March 2016, some employees openly wept and others applauded the outgoing CEO. An executive assistant yelled, “We love you, Gustavo!”

Martínez, who led WPP's operations in Spain before leaving the company just as the 2018 deal was closing, helped launch an agency in his native Argentina in February.

Martinez, Ingram and Johnson declined to comment.

Wunderman executives came to dominate the merged organization in what many now call an acquisition.

JWT was already weakened when its name was all but erased; region by region, from late 2018 to mid-2019, when the merger with Wunderman began.

Many now debate the importance of an established agency brand. WPP has withdrawn or amended several since 2018, including Burson Marsteller, Young & Rubicam, and Gray

Some say these changes have destroyed decades of value overnight by making agencies indistinguishable from each other

Others They say CMOs don't care which agencies they work with as long as they get the best talent; Although P & G's Marc Pritchard required WPP to keep the gray name, according to Ad Age

J. Walter Thompson, the

JWT merger was widely recognized in critical markets like India, but customers there had never heard of Wunderman and did not understand what it meant. the merger for its business, a WPP employee said.

Read, meanwhile, told Business Insider that it believes in individual brands, but that WPP, with nine creative networks compared to three or four at rivals like Omnicom and IPG , needed to simplify them to better serve customers.

The decision was made to put Wunderman first to emphasize the focus on digital marketing; followed by 'Thompson', which many employees used as an internal nickname for JWT.

Wunderman Thompson positioned itself as a union of equals. But after the merger, JWT leaders moved to corporate WPP roles, resigned or were replaced, some in a matter of weeks. Global Creative Director Bas Korsten is the only former JWT leader still in an executive role on the network.

As one former executive put it, "There is no greater sign of an acquisition than to quickly remove all leadership from 50% of the business." .

Read had been Wunderman's Global CEO prior to running WPP; and some experts said his familiarity with that agency led him to prefer it to JWT.

Wunderman Thompson's global CEO, Mel Edwards, told Business Insider that the merger happened faster than he would have liked; In hindsight, it would have explained it more clearly to clients and omitted the pre-recorded video addresses in favor of Live Zoom meetings.

Still, it said that Wunderman Thompson is now one of the two largest WPP networks with little fewer than 18,000 employees; and noted that it won Duracell's global business in early 2019 as evidence of its success.

J. Walter Thompson may not have survived the changes in consumer behavior and the rise of digital platforms

Several people said J Walter Thompson could still exist today if Martinez's lawsuit had been resolved quickly and quietly; and many continue to believe he was the right person to turn the business around.

Others see possible models for the agency's success in Ogilvy, another legacy agency, which hired former Deloitte executive Andy Main as CEO in a turn to work consulting; and Sorrell's new company, S4 Capital, which uses a single profit and loss in which each employee works as part of a whole rather than operating their businesses separately, as WPP does.

But the rise of digital platforms it could have led to the agency's demise anyway; as creativity alone is no longer a great source of income for portfolio companies

Even as people celebrated in 2016 when JWT swept the Cannes Lions festival in the south of France, the biggest awards show in publicity, a former executive said the sense of optimism on the beach that week was misplaced, because the awards can't sustain a business.

Former JWT Europe CEO Toby Hoare, who runs WPP's Unilever account , said the most important parts of WPP's business now are its relationships with big spenders like the packaged goods giant and Google, which attract talent from across the holding rather than any individual agency

J. Walter Thompson no longer monopolizes The

Marketplace Today, people are consuming more media and, by extension, more ads than ever. But long-standing agencies like J. Walter Thompson no longer monopolize the budgets behind those ads.

“JWT wasn't just a poorly run business; the whole industry collapsed, "said former Mirum CEO Dan Khabie.

But he also said JWT never had a proper burial.

" We ended up with a piece of American history, that's the bottom line. "

NOW READ : Apple receives a fine of 10 million euros for cheating about the water resistance of its iPhone

ALSO READ: This vegetable burger tastes like meat and has 45% less fat than a beef one ... and it is not vegan

Discover more stories in Business Insider Mexico Follow us on Facebook , Instagram y Twitter .

Source: MSN