McCann Erickson | McCann Worldgroup (US)

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McCann Erickson - or just plain McCann as it is increasingly better-known - still claims to be the biggest worldwide agency network by global footprint. The main agency specialises in traditional advertising, but it also offers a broad range of other marketing services under the banner of the McCann Worldgroup, which coordinates input from several other Interpublic-owned agencies including Momentum, MRM, Futurebrand and Weber Shandwick. A dynamic force during the 1990s, McCann stumbled badly at the beginning of the following decade, distracted by accounting irregularities and management problems. The loss of the prestigious Coke Classic account in several important markets was a severe blow. McCann recovered some of its composure and steadily re-strengthened its client portfolio during the 2000s, before stumbling again from 2010 onwards. Despite its worldwide presence, it has come under intense pressure from more nimble competitors in several key markets, and has had to fight hard to keep hold of key clients like Verizon, Microsoft and General Motors. A change of CEO at the end of 2012 appears to have restored McCann's poise and performance since then has been generally solid.

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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. See also

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 18th Jan 2017: Ads of the Week: "LEGO Batmobile by Chevy". Commonwealth McCann's latest campaign for Chevrolet not only lightly mocks its own long-running "focus group" series but also pokes fun at Batman's diminutive LEGO alter ego, to tie in with the upcoming movie release. LEGO Batman is really doing the rounds at the moment for advertisers (he's also in a Sky TV campaign here in the UK). It's a clever move on Warner Bros' part to make the "real" Batman a humour-free legendary hero, while also allowing for some playful self-deprecation with his toy-sized mini-me. 

Adbrands Weekly Update 28th Jul 2016: Fast food chain Chick-Fil-A - now America's top chicken restaurant ahead of KFC - called time on a 22-year relationship with creative agency The Richards Group. Instead it has appointed McCann New York as its new lead agency, with project-based support from start-up boutique Erich & Kallman, run by Steve Erich (ex-CP&B) and Eric Kallman (ex-Goodby Silverstein).

Adbrands Weekly Update 28th Jul 2016: Interpublic has sold the main marketing operations of McCann in four Nordic countries to I&F Grupa, a Serbian company which will continue to operate the business as a licensee. It already operates the McCann, UM and Initiative businesses in Serbia and several other South-Eastern European markets. Under this new deal it will also add responsibility for McCann in Sweden, Norway, Denmark and Finland.

Adbrands Weekly Update 21st Jul 2016: Havas Worldwide's hold on Reckitt Benckiser's brand portfolio weakened further with the appointment of McCann Worldgroup to take over global creative for anti-bacterial cleaner Dettol / Lysol, the group's single biggest brand by sales. However, at the same time RB reaffirmed its continuing relationship with Havas, with a new but slightly vague brief as lead agency for "new strategic initiatives". Separately, McCann's production network Craft Worldwide was appointed as lead agency for US office supplies retailer Staples. The agency will establish a dedicated team working out of Staples HQ. McGarryBowen previously handled the business.

Adbrands Weekly Update 30th Jun 2016: Ads of the Week "The Affair". More soap opera insanity from McCann New York for General Mills' Cinnamon Toast Crunch cereal. We loved "Season One" of mock drama The Tiny & The Tasty, in which a cast of dolls played out for laughs the traditional hopes and betrayals of daytime soap characters. Season Two ramps up the star power, with special appearances by Luke Perry's thumb and especially... Tiny Hamster, the series' new arch villain. Confused? You won't be after watching this episode...


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Background

Free for all users | see full profile for current activities: McCann Erickson established many of the ground rules for worldwide advertising networks. It was the first agency to embark on a deliberate policy of international development, the first to acquire a second-string agency brand to resolve client conflicts, and also the first to diversify into a wider range of marketing disciplines.

The seeds of the group were sown in 1902 by Alfred William ("Eric") Erickson, the son of an immigrant Swedish engineer. Schooled in Brooklyn, Erickson eventually ended up in the advertising department of New York's McCutcheon department store. A restless would-be entrepreneur, he left the store in 1902 to set up on his own. AW Erickson Advertising was a modest success, but Erickson was keen to dabble in other areas as well and acquired or invested in a string of other companies over the next few years. The most lucrative of these proved to be the floor covering material Congoleum. Under the name Congo, it had originally been developed as a roofing material by one of Erickson's advertising clients, The Barrett Company. To improve sales, a Barrett employee suggested painting the material and using it as a floor covering instead, as a cheaper alternative to linoleum. Barrett's board wasn't keen, but Erickson thought it was a splendid idea, and acquired a controlling interest in the business. Congo was relaunched as Congoleum and proved a big success. Later, Erickson bought out Barrett's remaining interest in the product and in 1924 merged his Congoleum Inc with another business which made cork and linoleum coverings to form Congoleum-Nairn, which became one of the country's biggest flooring manufacturers. Other lucrative investments included Bon Ami cleaning products, Technicolor film stock, and the Boorum & Pease Stationery Co. By the late 1920s, Erickson was said to have accumulated a personal fortune of over $48m (worth around $600m in today's money). Needless to say, all of these companies were also persuaded to employ the AW Erickson agency to manage their advertising.

Despite Erickson's success, it was partner-to-be Harrison King McCann who really built the framework for the business that exists today. Raised in Maine in a moderately prosperous family of Irish and Scottish extraction, McCann was educated at Bowdoin College and had already spent several years in advertising, as bookkeeper for a small New York agency and then as advertising manager for the New York Telephone Company, before he joined the advertising department of Standard Oil, the massive holding company which then controlled virtually all of America's oilfields. In 1911, Standard was broken up by US anti-trust regulators to form 34 separate regional businesses, and McCann submitted an offer to spin off the group's central marketing department as an independent company. As a result, the HK McCann Advertising Company launched in 1912, adopting the simple motto "Truth Well Told". The company was able to sign up six of Standard's fragments as its founding clients, along with the oil by-product Vaseline. Others soon followed, including Mack Trucks, Wells Fargo and Del Monte. By 1924, the McCann Company operated eight offices in the US and Canada to service more than 80 clients. By the end of the 1920s, there were also offices in England, France and Germany, opened to serve the growing international interests of another important client, General Motors.

McCann was by most accounts a shrewd businessman with a keen eye for financial details. But he was also a decidedly hands-off manager who left the day-to-day business to an increasingly large team of vice-presidents, many of whom shared the old school tie of Bowdoin College. According to a Time magazine report from 1930, he believes in an 'open door' office and encourages his executives to stand on their own feet, think with their own brains." Other accounts suggest that this was merely a polite way of saying that he rarely interfered in the business as long as it was making money. According to another executive, Draper Daniels, who worked under him for several years during the 1940s, McCann "said very little and sat in few meetings". One idiosyncrasy was that he had a "reverse superstition" about the number 13, which he regarded as lucky. His company's name (The HK McCann Co), address (285 Madison Ave) and Truth Well Told motto all contained 13 characters.

McCann was obliged to surrender that particular quirk in 1930, when the McCann and Erickson agencies merged. Erickson initially took the title of chairman, but died four years later, leaving McCann as sole owner of the business. To service another new client, Coca-Cola, the agency moved south into Latin America during the 1930s, then further afield in the 1940s with partners in China, Philippines, India and South Africa. By 1950, McCann-Erickson had billings of $60m, of which $10m came from outside North America. By now, however, McCann had relinquished day-to-day control of the agency. In 1948 he had appointed a shy but brilliant 32-year-old executive named Marion Harper as president. McCann himself took the role of chairman, which he held until his death in a car accident in 1962. Until that point, he had continued to control virtually all of the company's voting shares. Upon his death, a 20% holding as well as effective control of the business, passed to Marion Harper.

Harper was one of the more remarkable products of the American corporate boom of the 1940s and 1950s. He had originally joined the agency as a mailroom clerk but rose quickly through the ranks as a result of an obsessive and single-minded focus on research. By modern corporate standards, it's hard to imagine how such a complete outsider could climb so quickly through the hierarchy of a large advertising agency. However, despite (or perhaps even because of) its size and age, McCann-Erickson seems to have been in a certain amount of disarray in the mid-1940s. According to Draper Daniels, who arrived from Y&R, then the country's #1 agency, "Y&R had been a disciplined army [but] McCann-Erickson was a loose alliance of warring chiefs." Harrison McCann's hands-off management style had created a huge middle-management tier of old-school ad executives "dedicated to pleasing the client at any cost" while bickering among themselves. McCann famously hated to fire people, preferring instead simply to move underperforming managers into a different job. New research techniques then beginning to be applied by other agencies were not high on anyone's agenda at McCann-Erickson. "Many top executives," said Daniels, "still looked on research as newfangled nonsense and most creative people found it hard to believe that there could be any good in anything that so frequently contradicted their preconceived ideas."

Marion Harper Jr had been born in 1916 in Oklahoma City, the son of the advertising sales director of the Daily Oklahoman newspaper. In the 1920s, Harper's parents split up, and Marion Harper Sr took a job in New York, first as a vice-president at General Foods and later with the Compton advertising agency. Marion Jr is said to have developed an interest in advertising after his father took him along to watch the recording of an NBC radio show. After college, he applied for various jobs in advertising in New York and was accepted at McCann-Erickson for a job in the mailroom, delivering post and running other errands throughout the agency.

One task assigned to Harper was to refill the carafes of water which were provided each day on the desks of all the agency's more senior executives. An anecdote recounted by Russ Johnston, a colleague and later Harper's biographer, is typical of the workings of his mind. Chet Posey, then one of the three top managers in the company, arrived early in his office one day to find the new mailroom clerk carefully and laboriously refilling Posey's water carafe with a small paper cup. Unaware that he was being watched, Harper diligently counted the number of cups needed to refill the flask, and then inscribed the quantity in a small notebook. Posey waited for him to finish, then cleared his throat to alert Harper to his presence, and asked him what exactly he was doing. "It's an experiment in consumption," Harper replied. "I've noticed that you gentlemen really don't use these water containers very much, and I found out why by tasting the water. It didn't taste very good, so last week I washed the insides of the bottles and started with fresh water. Since that time, consumption has increased by almost 25%. So taste must be important."

Needless to say, Posey was impressed with the young trainee's diligence, even more so a few days later when Harper explained another experiment he was dabbling with in his spare time. One of the few methods then available for monitoring the effectiveness of advertising was the Starch Continuing Readership Program, first introduced in the 1920s. This collected the results of interviews with magazine readers about which ads they recalled having seen, and whether their response was positive or negative. Harper told Posey that he had pulled out all of the Starch figures for the past three years and was painstakingly transcribing them in an attempt to identify precisely the factors which made some advertisements more effective than others in persuading consumers to purchase a particular product. The next step, Harper told Posey, was to get hold of all of the ads covered by the readership data and grade them according to a number of different factors such as size of illustration, length of headline, amount of copy and so on.

Within just three months of arriving in McCann-Erickson's mailroom, Harper secured a promotion to the agency's small and under-utilised research department. Here he was charged with launching the project which he had outlined to Chet Posey, under the name of the Continuing Study of Magazine Readership. The idea of readership research had already been developed by George Gallup at Y&R, but it was new to McCann-Erickson. The results of the study were soon being used to pre-test all new ads being developed by McCann to ensure their maximum effectiveness.

The process proved so successful that two years later, Harper was promoted to head of copy research at the tender age of 26. After another two years he became vice president in charge of research and merchandising, then director of research at 30. According to Draper Daniels, he was originally passed over for that role because he was considered too young. McCann changed his mind when he discovered that Harper had been offered an alternate job as George Gallup's assistant at Y&R. Eventually Harper was appointed as special assistant to Harrison McCann himself. "Anyone who could make research as exciting as Marion Harper does," said McCann, "would make a pretty exciting president." McCann was as good as his word, appointing Harper to the role of company president on his 32nd birthday in 1948.

Yet if Harper's work at McCann-Erickson was exciting, the man himself was quite the opposite. Unlike the brash ad industry types depicted in The Hucksters, a sensational best-selling novel of the time, Time described him in 1948 as "far from the outsider's idea of an advertising man. He was quiet and studious; he did not wear hand-painted ties, didn't smoke, showed not a single huckster characteristic." Tall and heavy-set (Time later described him as "hulking"), he had the look instead of a college professor. Draper Daniels said he "had the pasty pallor of a man who spends too much time indoors". He was also obsessively focused on his work.
According to Russ Johnston, "it wasn't easy for [him] to engage in even the simplest social activity. Small talk was extremely difficult for him". Emerson Foote, who Harper recruited in 1951 to become EVP of McCann, commented "Marion was the hardest working person I have ever known. By my calculations he averaged over 100 hours a week, possibly much more". A profile in Time from the early 1960s revealed that he began each day with a four-mile ride on a home exercise bicycle, poring over a business book propped up on its handlebars. He possessed suits in just two colours, a brown suit for days he felt cheerful, otherwise grey. ("Sometimes I don't really find out how I feel until I notice what I have on," he told Fortune magazine in 1961). He always ate the same lunch: a hamburger and stewed tomatoes, accompanied by a cup of tea. An unnamed rival agency head told Time in 1963, "While I find Marion unattractively impersonal and ruthless, he does seem to be a marvellous organizer, and his mental capacity is immense."

Over the years he ran McCann-Erickson, that mental capacity was unstintingly applied to an unprecedented expansion of the agency to mirror the equally rapid growth of the television industry. A passionate believer in social science, Harper established the first ever psychological research department within an ad agency, and encouraged his staff to avoid "skipping around a maypole of creativity" but instead base their work in cold, hard research data. "Advertisers are not spending billions to decorate media," he told Fortune in 1961. "Their messages are not meant as ornaments." Instead, he ordered McCann's creative department to focus on determining what he called each client's 'purchase proposition', an alternative form of Bates' 'unique selling proposition'.

"What is the one thing that will cause prospective customers to buy our client's product instead of another's?" Harper asked. "We must find out through application of sophisticated research – not just how many subscribe or don't subscribe to our copy themes, but why they do or why they don't. What is the one idea that moves them to buy our product instead of our competitor's? What is the best purchase proposition to bring this about?" This, he said, was the difference that makes the difference. "It's not enough just to say our product is good, wholesome, fairly priced, and available. We have to look for the difference in our product that makes a difference."

McCann's research department was steadily expanded to provide the raw material for Harper's theories of research, and it was eventually established as a separate business in its own premises outside the main agency under the new name of Marplan. At the same time, the publicity and sales promotion departments of McCann were themselves established as separate units, with grand new names: Communications Counsellors Inc and Sales Communications Inc. Quite quickly, Harper set himself a new goal of overtaking J Walter Thompson to establish McCann-Erickson as the undisputed giant in global advertising. To that purpose, he launched a huge recruitment drive, drawing staff from a wide variety of other sources including scientific institutes, manufacturers and especially rival companies. He actively encouraged his managers to identify the best talent in the industry and to raid other advertising agencies to capture it.

That ruthlessness extended to clients as well. In 1959, Harper sent shock-waves through the industry with an unprecedented piece of hard-nosed business negotiation, when he resigned the multi-million-dollar Chrysler account in order to take on the business of arch-rival Buick, owned by General Motors. As Russ Johnston said, "never before had an agency dropped a multimillion-dollar client, especially an automotive account. A client's right to fire an agency was undisputed. The agency's right to fire a client was at that time unheard of." What made the situation even more controversial was the apparently surreptitious nature of the arrangement.
General Motors had already called a public pitch of the Buick business, and numerous agencies presented their credentials for the account. McCann-Erickson was notable for its absence from that list, because of its relationship with Chrysler. As a result it came as quite a shock to the industry at large as well as to Chrysler when Harper informed the latter's senior management that he was resigning their account, and would be taking on Buick instead. McCann strenuously denied any accusations of underhandedness. The agency, it said, had been singled out specifically because of the work it was already doing in Germany for GM's Opel subsidiary. Yet to the industry at large it was clear why Harper was prepared to drop Chrysler: the prospect of adding other General Motors brands to McCann's portfolio. "We are not very proud of the advertising business this week," commented Advertising Age in its coverage of the story.

Yet with this and other such machinations, Harper was also responsible for transforming advertising, arguably for the first time, from a craft into a true business. By 1953, in its first five years under Harper, McCann's billings had doubled to $106m. Over the next three they doubled again to $200m. Yet tantalisingly, J Walter Thompson's revenues also grew, placing the #1 position just out of reach. Frustrated at McCann-Erickson's apparent inability to overtake its rival by billings alone, Harper tried a new tack in the early 1950s. Traditionally, a limiting factor in all advertising agencies' growth was their inability to handle the business of competing clients. In 1954, Harper found a way around this by acquiring a Cleveland agency, Marschalk & Pratt, which had successfully stolen part of McCann's core Standard Oil account several years earlier. Borrowing a strategy already pioneered by General Motors, which owned several different and competing car brands, Harper chose not to fold Marschalk into the McCann-Erickson network but left it to operate as an independent agency. As a result, Harper's empire was, at a stroke, now able to service competing accounts, a feat no other advertising company had managed until then. McCann-Erickson could handle Standard Oil of New Jersey, while McCann-Marschalk worked for Standard Oil of Ohio. "What we've done," Harper told Newsweek in 1964, "is take the management ladder and turn it into a horizontal position."

To accommodate the rapidly expanding business, McCann-Erickson was restructured in 1960, with a holding company created to manage its various subsidiaries, under the name The Interpublic Group of Companies. However the continuing expansion took its toll on the group. Despite creative successes such as Esso's "Put A Tiger In Your Tank" campaign, the unwieldy Interpublic conglomerate came close to collapse mid-decade, and Harper was unceremoniously ousted by the board in 1967 (see Interpublic profile for more).

The 1970s marked a return to form. In 1973, the US and international operations, previously two separate entities, were merged to form a single global agency under CEO Gene Kummel, and the group delivered a string of creative triumphs for Coca-Cola ("I'd Like To Teach The World To Sing"), L'Oreal ("Because You're Worth It"), Miller Lite ("Everything You Always Wanted In A Beer. And Less.") and Buick ("Wouldn't You Really Rather Have A Buick?"). McCann finally overtook J Walter Thompson as the world's biggest advertising agency in 1979.

After two dynamic decades, the group faced a fresh set of challenges in the late 1980s and early 1990s. Rival agencies had followed Interpublic's example, acquiring or merging with competitors to form new supergroups. As a result, Interpublic was overtaken in size by new challengers such as Saatchi & Saatchi and Omnicom. Then in 1991, core client Coca-Cola announced that it would split its account between McCann and the Hollywood management agency CAA, led by powerbroker Mike Ovitz. Although McCann continued to deliver the core theme of "Always Coca-Cola", virtually all of the Coke ads which launched in 1993 were produced by CAA's roster of directors and producers. An aggressive refocusing of the agency by newly appointed CEO John Dooner saw McCann regain its position as the #1 network by 1995, and the Coke account too was won back from CAA. A strong series of campaigns subsequently encouraged Coca-Cola to sign an unprecedented deal with Interpublic, naming the group as its global ad strategy partner.

At the same time, the agency began another acquisition drive, strengthening its portfolio of marketing services with add-on businesses which began to constitute a separate group of their own within the larger Interpublic structure. This was formally branded as the McCann-Erickson Worldgroup in 1997, and the next five years saw a relentless growth in the business, with the network averaging net new business of at least $1bn every year. Between 1998 and 2000, it was named Global Agency of the Year for three years in a row by Adweek magazine. In 2000, Dooner was rewarded for his efforts with a promotion to CEO of the overall Interpublic group, and was succeeded as chairman & CEO of McCann by Jim Heekin, a former head of the network's North America and EMEA regions.

But the McCann rollercoaster took another dip in 2002. That year Interpublic was forced to restate its revenues as a result of what were described as accounting irregularities over a period of several years at McCann Europe. The amount of the adjustment was first pegged at $68m, but was subsequently restated twice, finally ending up at over $180m. McCann's CFO Sal LaGreca and EMEA director of operations Brian Watson resigned at the same time. (The group eventually agreed to settle charges of accounting fraud by paying a fine of $12m to the SEC in 2008; LaGreca and Watson also agreed to pay a settlement fine without admitting or denying the charges). These financial problems appear to have shaken the confidence of some major clients. A further blow came when Coca-Cola once again began to backtrack on its worldwide affiliation to the network. During the second half of 2002, Coke quietly shifted several accounts out of McCann in different territories around the world. The real crunch came when McCann US lost lead status on the core Coca-Cola Classic account to Berlin Cameron, a small subsidiary of arch-rival WPP.

In a surprise reshuffle in 2003, Jim Heekin, was unceremoniously ousted. At the same time IPG CEO John Dooner resigned that role in order to be reinstated as head of McCann Worldgroup. It wasn't enough to prevent the loss of the Classic Coke account in several other important markets, including France and the UK. New CFO Art D'Angelo also moved on after less than a year in the job. In 2004, the agency announced plans for a new corporate makeover. Among the changes were the shortening of McCann-Erickson Worldgroup to just McCann Worldgroup, and the removal of the agency's central hyphen. Performance gradually improved over the remainder of that decade, and Dooner finally retired from day-to-day management of the agency in 2010.

He handed over the role of CEO in April 2010 to Nick Brien, previously head of Interpublic's Mediabrands umbrella. Dooner remained executive chairman of McCann Worldgroup until the end of the year, when that role too was passed to Brien. Over the next couple of years Brien made numerous changes to McCann's management team in an attempt to boost performance. However, none seemed to provide a lasting solution. There were several additional account losses, but the crucial factor in Brien's eventual departure appears to have been the resounding lack of new gains. Pressure on IPG to take more decisive action finally came to a head in November 2012, when Brien was dismissed. He was replaced by Harris Diamond, previously of CEO of Interpublic's Weber Shandwick PR network. See full profile for current activities


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