austynallison

First Draft

In Advertising, Communicate, Dubai, Published journalism, Q&A on November 23, 2010 at 6:33 pm

Draftfcb’s chairman says it’s time for the agencies of the world to unite. They have nothing to lose but their silos

Originally published in Communicate, May 2009

Howard Draft, CEO of Draftfcb, was recently in Dubai to visit Horizon Draftfcb, his agency’s partner in the Middle East. Draftfcb is the product of a 2006 merger between below-the-line agency Draft, and Foote, Cone & Belding, the world’s third oldest advertising agency. Heritage doesn’t mean stagnation, though, says Draft. The agency bills itself as the world’s only global, integrated agency. The CEO tells Communicate what that means, and why other agencies will soon be following suit.

How is Draftfcb structured?
It’s a global integrated offering, no channels that are separate; everything is fully integrated. So there is no separate direct operation, no separate promotion, no separate advertising, no separate media. Everything is fully integrated, with one profit-and-loss.

But you use Brand Connection here for your buying.
That’s the buying, but planning we do back at the agency. If you look at the United States, if you look at the world, we have 700 planners at Draftfcb and they are fully integrated into the agency. So we never broke planning out separately. We’ve always believed that planning was one of the most critical aspects of our business.

How in line is the Middle East operation with your global operations?
It’s not as far along as some of the others. But keep in mind that Draft didn’t really exist in the Middle East. It was mainly built around Europe, North America and Asia. So when we came together, the Foote, Cone backbone, which was Horizon, became the backbone of the operation here in the Middle East. So there wasn’t as much of the heritage of my company brought into this organization. It’s really a process over the next several years of continuing to build up the skills and the depth, and fully integrate these operations.
Have you got affiliations with local agencies around the world, or is it only here?
It’s a 50:50 partnership here. Everywhere else in the world we own 100 percent of the agency, so only here in the Middle East do we not own 100 percent of the company. That’s unlikely to change in the short-term.

Draft began as a direct marketing company in 1978. Is there any category where Draftfcb is particularly strong now?
We still measure the amount of our business in each one of the categories, but we don’t report it. We are a company that does about $1.3 billion in fees and we don’t break out any more that $300 million might be in direct, $200 million in digital (or whatever the number is), because we don’t want to be measured that way. And most advertising groups don’t think that way. But I do feel that most have started to follow us. If you take a look at Leo Burnett and Arc [Burnett’s digital below-the-line agency], they’ve come together. Euro [RSCG] is shuffling it together. And I think over time you will see the model will be completed by just about everyone.

I had one of the largest advertisers in the world come to me about two and a half years ago when we did the merger, and a very senior person said, “You know, this is wonderful. When I launch a new product I don’t have to call in six agencies any more. I can call one agency and they’ll think about it in a holistic way.” And that’s really what we are driving towards.

Now, I don’t believe the clients are set up yet for our model. Because what happened was, when I started Draft 32-and-some years ago, we always argued and argued about hiring the best-in-class agency. Hire the best direct, hire the best advertising, hire the best promotion, whatever you want to do.

But then what happened is that clients drove themselves into silos like the agencies did. We became very siloed, then the clients became very siloed. For example, you work with the PR people at whatever major company, and there’s a direct marketing group there, there’s an advertising group. The clients today aren’t thinking about the combustion of everything that we’ve done, so I think it is still going to take a few more years for the clients to align themselves completely in the way that we do it. Because even on some of our biggest global accounts, we don’t have everything.

Can an integrated agency be best-in-breed in all it does?
I don’t actually believe that you can be. My client made a comment: “In the past, I’ve always shot for trying to hire the “10-out-of-10” agencies, and I think your model – even if it’s only eight out of 10 – is probably better for my business, because I’d rather not have to have agencies fighting with each other. I’d rather not have to have six account teams, six creative teams. So you are probably best for my business. You might not be best-in-breed in everything, but you are probably best for my business.” I took that to heart two and a half years ago, and it’s been the very motto of what we are trying to be.

Is the economic crisis going to force other agencies to adopt your model?
Why not? In today’s economic times, when you are trying to drive expense out of your business you drive efficiency through this model as well. There’s efficiency driven from an account standpoint, and nine out of 10 times you drive efficiency for the client on price value.

Why had nobody done this before? Why were you the first to do this?
Because we’re insane? Keep in mind that I come from the below-the-line background, and I wanted to reverse to the paradigm.
By 2005, 2006, I think the ability and the belief in promotion – digital and direct – had gotten so large that our scale against the general advertising was so large, and our infrastructure was so big, and the depth of the relationships were so good, we were on an equal footing with the general agencies and it was the right time to bring it together. I was tired of multiple agencies arguing over strategy for a brand. There should be just one strategy and there just has to be one big idea driven off it, and by 2006 I felt the marketplace was ready for it.

What changes are we going to see in ad agencies?
We’re going to see that you will have to grab the consumer’s attention even faster and hold it, and the consumer is going to give you less time to focus in on anything. Our advertising isn’t going to go to shock value – which I don’t think it should ever – but it has to be something that allows you to have a big idea, catch it and then explain the benefits, to maybe move from a big idea on television to go to the Internet to learn more about the product before they go to retail. Things are going to have to happen faster.

What advice would you give agencies now?
Spend more time with your clients, and give them consumer insights into their business and their brands, that maybe they are too close to on a daily basis. Come to them with your thinking, do quantitative research, understand the marketplace better, and go to them with what you see in the marketplace taking place. Become their business partners.

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