Originally formed as the parent entity for ad network Foote Cone & Belding, True North Communications aimed to rival Omnicom, Interpublic and WPP as one of the world's major marketing services groups. But the business was consistently hindered by its lack of a truly global network. An attempt to create one in 1990 through a joint venture with Publicis proved disastrous, and ended in a bitter and protracted divorce. Long established as the group most likely to buy another agency or be bought, TN was finally snapped up by Interpublic in March 2001 for $2.1bn. Five years later, FCB's independent identity was also sacrificed when it was absorbed into direct marketing network Draft, to create Draftfcb. See also:
The agency known by the 1980s by its initials of FCB, had begun life as Lord & Thomas, before transforming into Foote Cone & Belding at the beginning of 1943. (See separate profiles for more). Despite its mammoth size in the US, the agency had not been able to establish a strong local presence in key international markets, with the possible exception of the UK, where its London agency was a major force during the 1970s, responsible for a series of memorable campaigns including the Dulux dog, the Sure deodorant "tick" and British Airways' "We'll take more care of you". By the mid 1980s, this lack of a global footprint was beginning to damage the agency's relationship with its biggest American clients, such as Colgate-Palmolive. As a result, in 1988, FCB chairman & CEO Norman Brown negotiated a joint venture arrangement with French network Publicis which pooled both companies' offices in Europe in a new entity, to be known as Publicis/FCB, which at a stroke became the second largest network in Europe after Saatchi & Saatchi.
This appeared to offer major benefits to both companies. FCB was then America's biggest agency, but had little strength in Continental Europe; Publicis was strong in mainland Europe, but had no presence in the US other than a small office in New York. The two companies swapped shares to seal the bond, with each ending up with a holding of around 20% in the other. Initially, everything seemed to go well, but the partnership became strained after Norman Brown's retirement in 1991. He was replaced by Bruce Mason, a former US Army tank commander who had become the highly effective head of FCB's North American operations. It was not long before evidence arose of personal friction between the blunt, no-nonsense Mason and Publicis CEO Maurice Levy, suave and charming but also ruthlessly ambitious.
The crunch came in 1993 when Publicis announced plans to acquire another French network, FCA (see BMZ profile for background). This business had recently acquired its own outpost in New York, The Bloom Agency, a direct competitor to FCB. To complicate matters, following completion of its takeover of FCA at the beginning of 1994 Publicis then proceeded to merge Bloom with its own small outpost in New York, despite the objections of FCB. At this point, tensions that had been building behind the scenes erupted. FCB claimed that the move constituted a breach of contract because the two partners had agreed not to compete in each other's home territory. Publicis, however, refused to back down on either the purchase or the merger, leading to several furious rows. By the end of the year both parties were seeking independent arbitration to dissolve their joint venture.
In December 1994, FCB announced a corporate restructuring in which a new parent entity, True North, was created as an umbrella for its various holdings. This provoked Publicis, which saw the move as the first step towards a dilution of its 20% shareholding in FCB. In an SEC submission of Spring 1995, True North made a formal declaration of its grievances, listing a number of actions taken by Publicis which it considered to be in violation of their joint venture, including what it said were attempts to shift FCB clients to what was now Publicis/Bloom in New York. It also recounted details of a conversation between Levy and Mason from the year before, in which Levy threatened to "burn the earth" if FCB attempted to take control of the Publicis FCB joint venture. One financial analyst said at the time it was like a married couple who go from sleeping together to "separate beds and saying to each other, 'If you snore or eat celery in bed, I'm going to sue you.'". Maurice Levy later complained to UK trade paper Campaign "Mason thinks we come from the Third World. We are good enough to choose the wine for his table but not to sit at it."
After a two year moratorium, the agreement was terminated in 1997. The falling-out had proved an immense distraction, and rather than drag out the divorce proceedings, True North agreed a resolution that seemed to favour Publicis, keeping only four of the 17 offices which had been part of Publicis/FCB, in Athens, Lisbon, London and Paris. By then it had also acquired Wilkens International, a group of 12 agencies which had once been the European arm of US agency NW Ayer, and latterly a satellite of Germany's Springer & Jacoby. These various units were then consolidated, along with independent agency Banks Hoggins O'Shea in London, to form FCB's new European network. In the meantime, there had also been bolt-on purchases in the US, including Bayer Bess Vanderwarker, merged into FCB Chicago in 1996, and new media specialist Modem Media at the end of 1996.
The only issue not resolved by the divorce of Publicis and True North was what to do with their mutual shareholdings. As a result of the break-up of Publicis/FCB, True North's shareholding in the French company rose to almost 27%, while Publicis still owned around 19% of the American group, making it the biggest single shareholder. Those links were to cause the old bitterness to flare up once more in summer 1997, when True North announced plans to acquire US rival Bozell Jacobs Kenyon & Eckhardt, parent to the Bozell advertising network. This $440m deal caused two immediate problems. The first was an outcry from Chrysler Corporation, a BJK&E client, who forced FCB to resign its Mazda account, because of its connection to arch-rival Ford.
Potentially more serious was the fact that the payment to BJK&E was to be paid mainly in company stock. This fired up Publicis again, since the transaction would necessitate a dilution of the French group's holding in True North. Maurice Levy tried to block the deal by launching his own $700m takeover bid for True North, but it was declined by other shareholders, and Publicis' stake in True North was duly reduced to from 18.5% to 11%. True North's sales for 1997 jumped to $1.2bn, but the group made a loss of $50m, reflecting the costs associated with taking over Bozell.
Late in 1998, the row erupted once more when Publicis announced a restructuring of its own main holding company. In an uncanny reversal of the furore caused by the acquisition of Bozell, this move effectively reduced True North's shareholding in its former French partner, forcing the US company to write off its investment and book an ugly $30m loss. True North CEO Bruce Mason argued that this was an unsatisfactory resolution and issued a lawsuit, claiming $60m in compensation. True North eventually lost the law suit, but made $140m from the sale of its remaining Publicis shares.
Soon afterwards, in an oddly uncoordinated corporate restructuring in 1999, CEO Mason announced his forthcoming retirement, and appointed search consultants to find his successor. At the same time, rumours began to circulate that True North had opened preliminary acquisition talks, first with Saatchi & Saatchi, and then with Cordiant Communications, parent of the Ted Bates network. Yet any such negotiations were thrown badly off-track by the leaking of an internal memo from the recruitment agency hired to find Mason's successor. This highlighted management problems within True North, in particular its fragmented company culture. The memo commented that relationships between the holding company and its subsidiaries were "not currently as good as they should be", and highlighted the group's over-reliance on "only two truly global clients", SC Johnson and Chrysler. Hot on the heels of this leak came the announcement that Kimberly-Clark, one of the group's biggest and oldest US clients, was transferring its $100m tissues account to JWT. True North accused its rival of heavily discounting its commission structure in order to win the business, but this didn't disguise the fact that JWT also offered economies of scale because of its more extensive global network.
True North won back some of the ground lost by these two stories a few days later, when it announced stronger than expected financials for 1998, and then confirmed the appointment of a successor to Mason, sourced internally, in the form of Bozell CEO David Bell. One of his first corporate decisions was to abandon the search for a third network and focus instead on repairing the existing FCB and Bozell businesses, especially in Europe. Shortly afterwards rumours circulated that True North was actually considering a merger of the two networks to create what would have become the US's biggest ad agency. There was certainly sense in this. Although there would be some client conflicts, the combined business would have gross income of more than $530m, while more than 40 duplicated international offices could be eliminated. In the end, True North stopped short of a full merger, and only Bozell's international operations were transferred to FCB in September 1999. Bozell - now "Worldwide" in name alone - was allowed to continue with just a reduced US presence.
True North reported a 16% increase in revenues for 1999 to $1.4bn, while net income rose 24% to $86m. However, the most significant news of 2000 was the announcement by recently merged automobile giant DaimlerChrysler that it was calling a review of its $1.4bn creative and media business, then split between True North and Omnicom, with a view to consolidating the whole account in a single network. Both groups were taken aback when Chrysler also said it would not be considering creative excellence as part of the review. Instead the business would be awarded purely on the basis of cost-savings and worldwide logistics, not True North's strongest suit. Chrysler was then True North's single biggest account, generating around 9% of total revenues and possibly as much as 25% of profits. Omnicom, whose BBDO and other agencies represented Daimler's much smaller Mercedes account, was reported to have suggested a merger with True North as a way of protecting both companies' billings. That offer was declined, and instead True North attempted to strengthen its offering by buying a large minority shareholding in much admired German agency Springer & Jacoby, which managed the Mercedes-Benz account in Germany and several other European markets. It wasn't enough. In a catastrophic blow for True North, BBDO was declared the winning agency in November.
Despite FCB's subsequent capture of Samsung's $400m global account, it didn't take long for True North to return to the negotiating table in search of a partner. A series of press reports in early 2001 linked the group to talks with Havas, WPP and Interpublic. The latter won. In March 2001, True North agreed to sell out to Interpublic for $2.1bn.
Following its integration into Interpublic, the main advertising network became the lynchpin of newly created division FCB Group, while the advertising agency readopted its traditional name of Foote Cone & Belding Worldwide. FCB Group became the umbrella within Interpublic for several other marketing services businesses associated with the agency, as well as for IPG's independently branded Campbell-Ewald agency. Yet the change of ownership created problems with some clients. PepsiCo, for example, objected to FCB's new relationship with core Coke agency McCann, and moved away the business of its recently acquired Quaker Foods division, which included Gatorade. As a result, FCB was picked by Coke to take over advertising for its Gatorade competitor, Powerade, as well as Dasani and Minute Maid. This led to a clash of injunctions from the two soft drinks giants, and the resignation of several senior FCB managers to form a spin-off agency, Element 79 under Omnicom's wing. The group also lost its AT&T account in 2001, followed by Compaq in 2002 as a result of the latter's purchase by HP. The capture of KFC in the US was an important gain in 2003, but there were further major losses in 2004, including global duties for both Boeing and Samsung Electronics. However the group did win the controversial ONDCP US drug control account after a high profile legal case relating to its handling by previous agency O&M.
Steve Blamer was poached from Grey in December 2004 to become CEO, but was prevented under the terms of his Grey contract from taking up the role until June 2005. Blamer subsequently raided his former employer for several other senior staff members, causing Grey's new owner WPP to issue a lawsuit against Blamer, FCB and Interpublic. Towards the end of 2005, Blamer unveiled a new structure for the group, shifting towards a more focused network concentrated around 12 international "centres of excellence". Other offices were downgraded in stature, although none were closed. The regional centres were named as Brazil, Mexico and Puerto Rico in Latin America; the UK, France, Austria and Germany in Europe; India, Greater China and Southeast Asia in Asia; South Africa and The Horizon Group in Africa and the Middle East. The revamp also led to the departure of the group's existing team of regional CEOs in favour of a single international CEO, supported by an executive committee made up of leaders from the 12 centres. The group began unbundling some of its other regional agencies in 2006. FCB Tapsa in Spain, for example, was sold back to management at the start of the year. (It was later acquired by WPP).
Although FCB had strengthened its performance since the dark days of 2000 and 2001 when it lost Chrysler, it remained under-par between 2003 and 2006. Despite a couple of major account losses, billings rose for the first time in several years in 2004, and the agency converted several important new business pitches. However the brand continued to lack commanding global stature. Its worldwide coverage remained decidedly patchy, largely dependent on unglamorous albeit comparatively high-spending clients such as SC Johnson, Kraft and Beiersdorf. Creative work was efficient and workmanlike but rarely outstanding.
The most significant change to FCB's structure since its formation was announced in June 2006, when Interpublic confirmed plans to merge FCB with stablemate Draft to form a new integrated network. In a clear sign of which agency was top dog, Howard Draft was named as the CEO of the new Draft FCB Group. Steve Blamer and Steve Centrillo, appointed as CEO of FCB New York in 2005, left the group. See Draftfcb profile for more.
Last full revision 6th July 2020
All rights reserved © Mind Advertising Ltd 1998-2022