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J Walter Thompson

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Until its global merger with Wunderman to form Wunderman Thompson, J Walter Thompson was 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 its original 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 at its peak had an enormous geographical spread, with some 200 offices in 90 countries. In most cases, the group operated as a fully integrated agency offering a wide variety of other marketing services disciplines beyond advertising. A collection of separately branded subsidiary units were gradually absorbed back into the main agency, for example marketing services network RMG:Connect at the end of 2009. JWT's problems arguably began when longstanding leader Bob Jeffrey stood down in 2014 in favour of former McCann executive Gustavo Martinez. In a shock development, the latter departed abruptly two years later following allegations of racist and sexist behaviour by a senior female executive. WPP's biggest error, certainly in retrospect, was to fight (rather than settle) the allegations. A court case connected dragged on for a little over two years, seriously blemishing the agency's reputation. WPP stalwart Tamara Ingram was appointed as the new CEO in 2016, but she struggled to boost performance under the shadow of that court case, which WPP finally settled in Spring 2018. Later the same year, in a shock realignment, WPP's new CEO Mark Read announced the merger of JWT with sister agency Wunderman to create new entity Wunderman Thompson.

Brands & Activities

At its peak, J Walter Thompson was among the leading agency networks by geographic spread as well as historical importance. In general, the agency had more of a reputation for skilled account management than for cutting-edge creativity. Regarded for years as the "ministry of advertising" for its traditional, even stuffy approach, JWT loosened up considerably following acquisition by WPP. The 2005 reinvention was designed to raise the network's creative output and play down account handling, but while the agency doubled the number of awards it received at the following year's Cannes Lions Festival, the shift also resulted in a few significant account losses, including Reckitt Benckiser and parts of Kraft and Unilever. Yet creative output continued to improve, and in 2008 JWT hit a new record for the number of prizes it collected at Cannes, 39 in all, including seven Gold Lions and one Grand Prix. For 2009, it was named as Global Agency of the Year by Adweek, as a result of a string of account wins including several important projects from Microsoft (although most of those assignments were later lost).

Perhaps the agency's most remarkable recent creative achievement was "Heaven & Hell", a print ad created by JWT Shanghai for luggage client Samsonite. The most awarded print ad in history, it not only topped all rankings of the most celebrated ads in its medium in 2011, according to The Gunn Report, but managed the same feat in 2012, the only ad in any medium to come #1 in its category in two consecutive years. In 2017, the network was among the Top Ten in both The Big Won and The Gunn Report's global rankings.

The respective strength of JWT's local subsidiaries varied quite widely from country to country. It was among the leaders in some key markets, but in the middle or lower tiers in others. Beyond traditional advertising, the service offering also varied by market. Advertising Age estimated global integrated revenues, including marketing services subsidiaries, of $1.48bn in 2016. In 2008, the agency reported its eight most important global markets to be, in alphabetical rather than revenue order, Brazil, China, France, India, Japan, Saudi Arabia, the UK and US.

AdAge estimated US revenues for the JWT advertising network in 2016 at $522m (or 41% of worldwide advertising revenues of $1.3bn). In addition to the main HQ in New York there were full service agencies in Atlanta and Chicago. The newest outpost was in San Francisco, launched in 2017. JWT Atlanta incorporated the former JWT CET (which stood for Communications Entertainment Technology), a specialized unit originally formed from the takeover of Atlanta-based Donino White & Partners, absorbed from the old Bates network at the end of 2004. JWT Chicago, once the company's flagship office, was downgraded in 2007 following the loss of a large chunk of its Kraft business. It struggled on for almost two more years under the control of the JWT New York executive team, but was finally shuttered in 2009, only to reopen again briefly in 2013. JWT also had a presence in Detroit as one of the partners in WPP's Team Detroit entity serving Ford. The Los Angeles offices downgraded from full agency to service office during 2006 and was later closed.

Like stablemate Ogilvy, JWT promiseda generally integrated service to clients under the banner of "Total Branding". As a result, many of what were once separately branded subsidiary units were merged back into the main agency. The most significant such move was the phasing out of the RMG:Connect marketing services network at the end of 2009. In 2010, digital agency Digitaria, based in San Diego, was acquired, becoming a unit of JWT North America. The group acquired shopper marketing agency Lunchbox in 2011. In February 2015, these two agencies folded into a new global digital network aligned with JWT under the name Mirum. Other shops absorbed into the network included Twist Image in Canada, XM in Asia, ActiveArk in several European markets, HeathWallace in the UK. All relaunched under the Mirum name.

Another subsidiary unit focused on employment marketing operated as J Walter Thompson Inside. It was the main unit of what was formerly JWT Specialized Communications. The business downscaled dramatically after the 1980s when, as Thompson Recruitment advertising, it was one of the top 50 ad agencies. It handled a wide variety of HR-related work. The agency was originally formed in 1949 by the Orange Belt Newspaper Group under the name World Wide Agency, with the aim of selling job ads in their regional US newspapers. It was bought by JWT in 1980, and was renamed JWT Specialized in 1996 to reflect its increasingly broad range of services. ThompsonDesign launched out of the New York office in 2003 to handle logo design and corporate ID. Health@JWT was also established in New York in 2003 to take over the running of the agency's existing healthcare accounts, as well as several new Pfizer accounts shifted over from Bates Worldwide.

In 2005 the agency acquired Malone advertising, a shopper marketing specialist with eight offices in the US and Canada. It relaunched in 2011 under the name JWT Action in 2011, and later established a partnership with Ogilvy's Ogilvy Action subsidiary to work together as JWT/Ogilvy Action. Both brands were eliminated in 2013 following the creation of Geometry Global.

Europe was of course one of the group's biggest international regions, with offices in 37 countries, anchored by J Walter Thompson London, the network's oldest office outside the US. In 2003, JWT was one of the main beneficiaries of WPP's acquisition of smaller marketing group Cordiant, absorbing local offices of Cordiant's Bates Worldwide network in several markets, including the UK and France. JWT also took over control of the various Pfizer accounts handled by Bates, as well as staff working on them in the US, London and France. Germany was one of JWT's weaker European markets, a country where the agency had struggled for several years to establish a strong presence. It actually shut what was then its HQ in Hamburg in 2012, though it continued to operate offices in Frankfurt and Duesseldorf, as well as one of the few remaining outposts of RMG Connect in Stuttgart. Also based in Duesseldorf was Team Cosmo, a dedicated agency for the Mazda Europe account.

In the Netherlands, local outpost PPGH JWT merged at the end of 2006 with leading independent Ubachs-Wisbrun to form UbachsWisbrun/JWT, later rebranded to JWT Amsterdam. In Spain, the agency was represented by two branded offices in Madrid and Barcelona as well as standalone SCPF. The group also had an extensive presence across Central & Eastern Europe as well as in the Middle East and Africa. In 2014, it acquired a mjaority stake in South African agency The Hardy Boys, which continued to operate separately.

The agency had a presence in 10 Latin American markets, with regional headquarters in Argentina. JWT was the first international ad agency to establish a presence in Latin America, and it remained one of the leaders in key markets such as Brazil and Argentina. The Asia Pacific regional group covered 18 markets. In 2001, JWT transferred its Australian operation into a joint venture with local group STW, which also operates the Australian outpost of Ogilvy & Mather. WPP later bought out STW to create what is now WPP AUNZ. The agency was a major force in India, both under its own name and in a partnership with local agency Contract Advertising. JWT Adventure was one of the top two or three Western agencies in South Korea. In 2004, the network bolstered its already considerable presence in China by acquiring a 30% stake in Newsun Insight, an agency in Guangzhou.

Management

Bob Jeffrey passed over the role of CEO at the end of 2014 to Gustavo Martinez, who joined the network from McCann as global president at the end of 2013; Martinez subsequently added the role of chairman as well. In March 2016, however, he resigned abruptly by mutual consent after the network's chief communications officer Erin Johnson filed a lawsuit against him alleging blatantly racist and sexist behaviour. In the mean time, WPP stalwart Tamara Ingram stepped in as the new CEO of J Walter Thompson. Although the legal case had not been resolved, Erin Johnson returned - nominally - to JWT's offices in her previous role in Nov 2016. However, she subsequently claimed she was sidelined, and departed the offices though she remained, in name at least, chief communications officer. Gustavo Martinez remained under contract to WPP but was transferred to Spain overseeing unspecified projects. Almost unbelievably, that case was still dragging on two years later, before finally reaching a settlement in April 2018. Following the merger of JWT with Wunderman, Tamara Ingram moved up to global chairman of the combined entity, with Mel Edwards as CEO.

Background

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.

Last full revision 3rd April 2018

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