J Walter Thompson Worldwide (US)

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J Walter Thompson - still widely known as JWT despite its official rebranding in 2014 - is one of the most famous brands in marketing history and was arguably the world's first advertising agency in the modern sense of the word. Owned since 1987 by WPP, the company took steps to brighten up its image in 2005, dropping the old name in favour of its already well used JWT abbreviation and a new logo. It readopted the J Walter Thompson brand once again in 2014 to celebrate its 150th anniversary. Under any name, the agency has an enormous geographical spread, with some 200 offices in 90 countries. In most cases, the group operates as a fully integrated agency offering a wide variety of other marketing services disciplines beyond advertising. A handful of separately branded subsidiary units remain, but the biggest of these, marketing services network RMG:Connect, was merged into the main agency at the end of 2009. Longstanding leader Bob Jeffrey stood down in 2014; but in a shock development, his successor departed abruptly in 2016 following allegations of racist and sexist behaviour. WPP stalwart Tamara Ingram was appointed as the new CEO in March that year. See also J Walter Thompson UK, J Walter Thompson Canada and J Walter Thompson Australia.

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Adbrands Weekly Update 17th Nov 2016: Erin Johnson's lawsuit against J Walter Thompson and former CEO Gustavo Martinez doesn't appear any closer to a conclusion judging by a flurry of new court filings. Having been on paid leave of absence since she initiated the suit, Johnson accepted an invitation from JWT to return to work at the beginning of this month, despite the fact that the case is still ongoing. That seemed like a promising development. However, any hopes of a rapprochement have been dashed by her claim that she has suffered over the past couple of weeks "highly visible retaliation" by the agency for her actions. According to a letter from her lawyers to the presiding judge in the case, the agency has kept Johnson "in a box"; it has stopped her "from speaking to the press, a central function of her former position; barred her from working with her former staff and seated her in a cubicle in front of JWT's human resources head where [her] every action can be closely monitored. Johnson has virtually no work to do. The few assignments she has received are at levels far below the work she did in her former position." She is, the filing says, treated as "nothing more than a pariah". The reason, suggest the lawyers, is to dissuade other staff from testifying on Johnson's behalf in the anticipated court hearing "lest JWT isolate them in similar fashion".

In its response, JWT called this new complaint "incomprehensible". It says it has "not only bent over backwards to accommodate each and every request [Johnson] has made but the company has taken extraordinary steps to address concerns she raised." It says any revision to her duties were made at her own request because of the possibility of a conflict of interest. "She was adamant that there were certain duties that she could not or would not be able to perform... The company took these issues to heart and when it finally insisted that she return to work in order to earn the money she was being paid, it agreed to revise her responsibilities to specifically address each and every one of her concerns." If she feels like a pariah, it says,"that feeling is entirely of her own doing... It would not be surprising if company employees find it awkward or unsettling to talk to her as they are now aware that the content of such conversations (and perhaps their identities) may be used as fodder for her lawsuit."

Johnson's lawyers fired back their own reply to JWT's rebuttal, accusing the agency of "distorting the facts" in its response, and reiterating its claim that she has been placed "in a seat immediately outside the HR director’s office, like a student waiting to be punished outside the principal’s office". The whole situation sounds like a nightmare for everyone involved. Whatever the truth of the original allegations brought by Johnson or of these new claims, the continuing public life of this story threatens to tarnish everyone involved irreparably. Johnson's future career prospects will hardly benefit from the latest row, while most observers will surely be amazed that a company whose job it is to make its clients look good has failed so spectacularly to put a lid on such an embarrassing brouhaha within its own organisation. Some sort of settlement needs to be reached quickly for the sake of all parties involved.

Adbrands Weekly Update 3rd Nov 2016: Erin Johnson, the chief communications officer at J Walter Thompson, returned to work this week after a prolonged leave of absence. Unless you were living in a cave for most of this year, you will already know about the lawsuit Johnson brought against her employer and former JWT CEO Gustavo Martinez for his inappropriate behaviour and language. That suit has yet to be resolved, but JWT's new CEO Tamara Ingram issued an all-staff memo this week to announce Johnson's return to the office, reporting directly to her. We join with Ingram in welcoming her return to the agency after what must have been a difficult few months. Martinez also still officially works for WPP, overseeing unspecified projects in Spain and Latin America from Barcelona.

Adbrands Weekly Update 13th Oct 2016: Ads of the Week: "Best Day Of My Life". Shell is burnishing its green credentials with this impressive global campaign under the "Make The Future" banner. It's hard to get people's attention for six entrepreneurial clean energy projects as far afield as Brazil, China and the UK, so Shell signed up a different recording artist to represent each of the six countries involved for this joint music video. Among those appearing are Jennifer Hudson from the US and the UK's Pixie Lott. It's an extraordinarily complex endeavour but works beautifully. The video was conceived by creative agency Interlude and prodco Particle3, in association with Shell's global agency J Walter Thompson.

Adbrands Weekly Update 30th Jun 2016: J Walter Thompson's long-serving Asia Pacific chief Tom Doctoroff is leaving after 24 years with the agency, most of them in Asia. He was one of the first Western advertising executives into the burgeoning Chinese market during the 1990s, initially in Hong Kong, before becoming managing director of JWT in Shanghai in 1998. He moved up to regional director of the region in 2013. Now he plans to return to the US in a new as yet undisclosed role. He is succeeded at JWT Asia Pacific by Australia & New Zealand chief John Gutteridge.

Adbrands Weekly Update 23rd Jun 2016: Cannes Lions Grand Prix Cyber and Creative Data: "The Next Rembrandt". There were two Grand Prix winners in the Cyber category. We've already honoured in these pages Leo Burnett Madrid's Pixar-esque animated film Justino for the Spanish Lottery, a worthy winner of one of those two trophies, and a past Adbrands Ad of the Week. (See it again on our Facebook page). The other - as well as a separate Grand Prix for Creative Data - went to this technically impressive project to create a new computer-generated Rembrandt painting by analysing the data of all the ones we already have. It's a bold idea, coordinated by J Walter Thompson Amsterdam for sponsor ING and the Rembrandthuis, but we have to say that in our opinion it rather misses the whole point of art and what makes the original paintings so vibrant. It will be a sad day indeed for humanity when we rely on computers and technicians to make our finest art.

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Background

Free to all users | see full profile for current activities: James Walter Thompson joined the small advertising brokerage William J Carlton in 1868, initially as book-keeper. The firm specialised in buying advertising space in religious journals, which were then virtually the only periodical publications which accepted promotional copy. Although newspapers were happy to accept what were then called "paid solicitations", more prestigious women's magazines and literary journals generally restricted advertising space to no more than a page per issue, usually hidden away at the back of the book.

Astonished by this lack of foresight, Thompson launched a concerted campaign to open up "polite magazines" to the financial rewards offered by additional advertising space. Early experiments with women's magazines Godey's and Peterson's and literary journal Scribner's were enormously successful, and as a result Thompson secured exclusive representation for a group of what were eventually 30 of the country's most prestigious magazines. He also changed the company's direction, actually creating the ads instead of merely buying or selling space for them. Thompson bought the company from owner William James Carlton in 1878, and renamed it after himself. (According to company legend he paid $500 for the agency, but another $800 for its furniture).

By the end of the 1880s the agency was able to boast that "80% of the advertising in the United States is placed through the agency of J Walter Thompson New York". More significantly still, he persuaded his client publishers to shift the advertising space they offered from the back of the publication to the opening pages, and in some cases even the front cover itself. At the same time, in order to better manage his business, Thompson invented the position of account manager, appointing specific employees to handle the requirements of individual clients. By 1890, Thompson's billings had grown to more than $1m, a huge sum for the time, and over the following decade, he broadened his field by extending his list of publishers beyond magazines to the newspaper industry. The business expanded rapidly, opening additional offices. The first of these was in Chicago, launched in 1891 in anticipation of the up-coming 1893 Chicago World's Fair. Boston and Cleveland followed, as well as Thompson's first international outpost in London in 1894.

By the early years of the 20th century, however, Thompson's ground-breaking tactics had been widely imitated, and the agency was overtaken in both skill and innovation by others, notably Albert Lasker's Lord & Thomas. Thompson himself was by now more interested in indulging a passion for yachting, and on the increasingly rare occasions that he came to the office, he was often to be seen in sailing gear, a fact which earned him the honorary title of Commodore among staff. The man most often credited with revitalising the J Walter Thompson agency and turning into a world force is Stanley Resor, who took control of the business in 1916 and ran it for the next 45 years until he retired, aged over 80, at the turn of the 1960s. Resor and copywriter partner Helen Lansdowne were originally hired by Thompson in 1908 to open an office in Cincinnati, and were able to win a brief from what was already one of that city's most important corporations, Procter & Gamble. It was the first time in its early history that P&G had looked beyond its inhouse resources to produce advertising for a new product, the vegetable shortening Crisco.

Far more significant were the ads created by Lansdowne for another client, Woodbury's Facial Soap. Bringing feminine intuition into the creative process for the first time, Lansdowne crafted a series of ads which made a direct emotional appeal to female consumers, promising them "A skin you love to touch" and implying that use of the product would make women more appealing to men. Rival agencies were speechless with admiration: "You see what Thompson has done," Lord & Thomas's Lasker told his staff. "They have gone us one better and put sex into soap advertising." The ads were so successful that Resor was transferred in 1911 to New York, along with Lansdowne, to run head office. Five years later, he led a team of executives who bought out Commodore Thompson for $500,000.

The new management team set about reinventing the large but now rather tired business, cutting a client list of 300 down to just 80 major accounts. As the first college graduate (from Yale) to head an agency, Resor placed great value on research and integrity, running it more like a law firm rather than a sales company, and quickly establishing its reputation as the distinguished gentleman of the advertising industry. He pioneered a more scientific approach, positioning Thompson as a "university" of advertising. "Advertising, after all," he said, "is educational work, mass education." He established a research department in 1915, and hired academics including John B Watson, the founder of behavioural psychology. Later he founded the industry's first Consumer Research Panel to carry out detailed research into the spending habits of ordinary Americans.

Resor and Lansdowne were married in 1917, and they had effectively taken full control of the agency by 1924. A senior executive from a rival agency said at the time, "You cannot begin to understand the J Walter Thompson Company until you realize that it is basically an extension of Mr and Mrs Resor's living room." Lansdowne was never in fact granted an official title at the agency, but she oversaw all aspects of its aesthetic personality (including lavish and tasteful interior design which was to become the envy of the industry). Most important of all she supervised the creation of the Women's Editorial Department, a separate team of all-female copywriters, who specialised in exercising a female point of view on behalf of clients. At a time before women even had the right to vote, Thompson was widely considered to be one of the most emancipated workplaces in the country. Among other pioneering roles, Thompson was arguably the first agency to recruit celebrities and society figures to provide endorsements for products such as Pond's and Lux. It was also the first to use photography rather than illustration in advertising, commissioning the likes of Edward Steichen and Cecil Beaton. It claims responsibility for the first-ever television commercial in 1939, and in 1960 the agency arguably set the style of modern TV ads when it created the "Those Kodak Moments" break for the Ed Sullivan Show. Dispensing with a traditional voiceover hard-sell sponsor's message, the agency instead compiled a sequence of photographs taken by ordinary people on Kodak cameras, accompanied by a musical soundtrack. This mood and image approach came to replace the traditional 'endorsement' style of commercial.

During the 1940s Thompson was also the first agency to establish a widely spread overseas operation, initially at the insistence of cornerstone client Ford, and in 1947, it was the first to reach annual billings of $100m. By the time Stanley Resor finally retired as chairman in 1961 at the age of 82, that figure had grown rapidly to almost $500m. Having bought back Resor's majority shareholding in 1961, the agency went public at the end of the decade and embarked on major international expansion. By 1973, it was generating more revenue from the international market than the US. However that year was also the beginning of a difficult period for the now widely diversified company. Like other corporate groups it had moved into a number of other industries not necessarily related to advertising, such as insurance, truck and car leasing and teaching equipment, and it was increasingly being accused of complacency by some of its US clients, including Ford. Also in 1973, Thompson was overtaken for the first time as the #1 US agency by billings (by Y&R), and a year later as the global #1 (by Japan's Dentsu). New CEO Don Johnston divested some of the group's non-core activities and also attempted to strengthen its marketing credentials with a series of acquisitions, including the world's leading public relations group, Hill & Knowlton.

In 1980 the company was restructured under the new name of JWT Group Inc to accommodate the large number of marketing services businesses it had acquired alongside the main agency. But although revenues had grown dramatically as a result of the expansion into other marketing sectors, JWT's profit margins lagged well behind other agencies, as did its stock price, and the business was plagued by management instability. Between 1980 and 1987, around 20 senior managers, including three group CFOs, came and went, and there were complaints about Johnston's management style. The company was also the subject of a major financial scandal when a manager in its TV syndication department was accused of falsifying $30m of fictitious revenues in order to hit her reporting targets. Nevertheless, creative output remained strong throughout much of this period, at least until creative chief Burton Manning was overlooked by Johnston as the new head of the JWT network in favour of Joseph O'Donnell, who had been running the Ford account. Manning quit, a major blow to morale, which took another hammering in early 1987 when it transpired that O'Donnell had approached the board with a proposal to oust Johnston and sell the group to private investors. Instead, O'Donnell was himself ousted, along with several other senior managers who had supported his plan.

Taking advantage of this turmoil, Martin Sorrell chose that summer to launch an unsolicited takeover bid for the group, via his recently acquired holding company WPP. His main argument was that, as one of the key architects of Saatchi & Saatchi's global expansion in the first half of the decade, he could do a better job of running JWT than its current, visibly dysfunctional management team. JWT's board dismissed his offer, but JWT's long suffering shareholders did not, and gradually they fell in behind Sorrell, especially after his offer was raised to around $566m. It was, said one newspaper, "possibly the most spectacular coup ever carried out by an English company on Wall Street".

It was certainly an audacious feat. In an attempt to calm any jitters, Sorrell reinstalled Burton Manning as head of JWT. Yet the purchase did not run entirely smoothly and JWT's first nine months as a subsidiary of WPP proved tough. Sorrell was able to improve the financial structure of the business through better organisation, cost control and targeting. But clients were much harder to please. Almost as soon as the deal was completed, Ford delivered a bombshell, pulling almost all of its business outside the US from JWT. Later Goodyear Tires, which was fighting off a hostile takeover bid of its own from a British company, pulled its account too, and was followed by PepsiCo's Slice and Sears' Discover credit card. The biggest blow of all was the loss of the $200m Burger King account to NW Ayer, then the biggest account switch in advertising history. By the end of 1987, WPP shares had more than halved from their mid-year high, and the group's market value had fallen with them to $262m, less than half of the price paid for JWT in the first place.

An even bigger problem was with staff at JWT and its subsidiary units, now tied to rigorous financial controls which they had never before experienced. Morale was reported to be "very, very bad" by year end. The worst fallout came in 1988, when a group senior managers at JWT's subsidiary agency Lord, Geller, Federico, Einstein walked out, precipitating a vicious legal battle. Despite that, Sorrell's financial backers kept faith, and gradually JWT's ship turned round. By the end of 1988, the agency was widely regarded to have regained its pre-eminence after a solid year of growth by the international division, and a return to form in the US. The group reported net new business of more than $420m, its best-ever performance, including the recapture of Ford business in several Asian markets. Operating margins meanwhile had jumped from the 4% reported in Don Johnston's final year to the industry-standard 10%. The recovery of JWT and resulting boost in WPP's share price allowed Martin Sorrell to move on and launch an even bigger takeover in 1989, this time of the Ogilvy Group.

In the early 1990s, JWT adapted to its new role as one of a growing portfolio of advertising brands within the WPP structure comparatively smoothly. The security of a larger, more financially secure group certainly paid off, and by 1995, billings had more than doubled to over $6bn, and the JWT group's revenues rose from $470m to over $900m. That year, Burt Manning appointed British-born Chris Jones, previously head of the London office, to succeed him as group CEO. Jones oversaw a continuing expansion of the JWT network into new markets, but one of his most important legacies was to preside over the spin-out of the agency's inhouse media department and its merger with the equivalent division at Ogilvy & Mather to form MindShare.

Yet new troubles began to emerge towards the end of the decade following Burt Manning's retirement. Now chairman as well as CEO, Chris Jones' tenure was shaken by a new series of problems, not least the loss of the Kodak account, a client for almost seven decades, as well as Citicorp and Sprint. These blows were accompanied by the abrupt and acrimonious departure in 1997 of JWT New York chief executive Susan Gianinno and worldwide creative director Helayne Spivak. The capture of the Dell Computers account at the end of 1998 turned sour only three months later when JWT was fired after delivering its debut campaign, leading to a bitter court battle. The emergence of the internet as a driving force in marketing, and of a new generation of consumers, also seemed to have caught JWT off-guard.

To free up Chris Jones, Martin Sorrell parachuted in legendary advertising figure Charlotte Beers – whose career had begun at JWT before blossoming at O&M - to offer support and guidance, and take over the role of worldwide chair. But that development arguably only seemed to make the problems worse. Beers was championed in a series of press articles during 1999 as a potential saviour of the agency, who had been dragged out of retirement to turn the business around. That portrayal was resented by JWT's existing management team, and in fact Beers moved on a year later, with managers later claiming that much of the agency's recovery had taken place without her direct assistance.

Jones's tenure as CEO was also marked by chronic health problems which reached a crescendo in 2000 when he was incapacitated by a life-threatening blood clot in his chest, incurred during a long-haul flight to visit client Nestlé in Switzerland. After several months in recovery, he stepped down in 2001, passing the role of CEO to agency president Peter Schweitzer, a JWT lifer who had already clocked up almost 30 years at the agency, half of them as custodian of its Ford account. (In fact Schweitzer had previously been Burt Manning's first choice for CEO in 1995, but turned the position down in order to avoid relocating his family from his home in Detroit to New York.)

During this period, JWT developed a stronger presence in the healthcare sector, capturing a significant piece of the consumer business of fast-growing pharmaceutical group Pfizer. That process was aided considerably following WPP's acquisition of smaller marketing services group Cordiant. The core business within that group was the Bates Worldwide agency, once a substantial global network which had lost its way as a result of a series of dramatic account losses. The Bates network was carved up, with JWT becoming its principal beneficiary, absorbing clients and staff in the US, including another $200m of Pfizer billings.

Yet while, Thompson remained one of the world's largest advertising networks, with a global footprint surpassed only by rival McCann Erickson, it had difficulty in shaking off its unglamorous reputation as the "ministry of advertising". The agency was unmatched in its skills at handling client relationships, but still seemed to lack a real creative edge. This weakness began to tell in the early 2000s, especially among long-standing clients such as Unilever and Miller Brewing, each of whom was engaged in a furious battle for market share. Thompson's grip on both these clients began to loosen, and the group suffered a steady drip of accounts from both companies to other agencies.

As a result, for its next CEO, JWT looked for a leader who could rekindle its creative spark. The choice was Bob Jeffrey, the first Thompson chief executive to-date to have spent the largest part of his advertising career outside the agency. Although he had joined JWT in 1998 (as the replacement for Susan Gianinno), he cut his teeth in more maverick creative shops such as DDB New York and Chiat/Day, before establishing his own agency, later absorbed into Lowe's New York office. Jeffrey replaced Schweitzer as CEO in 2004, and early the following year he launched a dramatic reinvention of the business, abandoning many of its traditional aspects, not least its official name and the logo formed from its founder's signature. Instead J Walter Thompson became known by its well-used nickname of JWT. Jeffrey's vision of the company was as a self-styled "billion-dollar startup", with a renewed emphasis on creative excellence and high performance. Jeffrey promised to turn the agency into a "creative organism that is inspired by the visceral".

Despite the revamp, the agency suffered a few major account losses. In particular it saw several Unilever accounts move away to sister shop O&M as well as to rival BBH; and it also lost the worldwide Samsung after only a year on the account. See full profile for current activities


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