This week’s Mad Men serves up interesting and potentially explosive twists and turns, which are pushing SCDP towards opposing negative and positive poles. In order to save himself from the U.K. tax collector, Lane activates a $50,000 line of credit against anticipated future revenue. He uses this cash influx to paint a rosy financial picture for the partners and fund a bonus pool for the agency from which he can pay his tax bill. Lane sees this as a risky but reasonable bet. Then, an uncertain business environment and cautious partners delay the bonus distribution to the partners, forcing Lane to up the ante with an even bigger gamble. Lane “borrows” company funds by forging Don’s signature to a check hoping that he can return the money before his actions are discovered. This betrayal of trust is unforgiveable in a partnership like SCDP and a potentially criminal offense that can only lead to disaster.
On the positive side, Pete continues to show some new business initiative and gets the agency on the short list for the Jaguar account. A second chance at the business that Pete smartly and quietly engineers and uses as leverage to push Don into rethinking his work ethic. The Yin and Yang of Mad Men. Lane’s bad judgment and actions jeopardizes SCDP’s financial stability and threatens to tear the partnership apart. A driven Pete and a fired up Don can ignite the flame needed to drive the agency forward. A collision is coming.
Bonuses Speak Louder Than Words
Holiday bonuses are very important at ad agencies on a number of levels. On a practical level it’s an opportunity for the partners to pull some cash out of their equity position, reward key employees and provide a tangible confirmation the agency is doing well. Emotionally, bonuses build staff morale and serve as an affirmation of an optimistic outlook for the year ahead. Unfortunately, Lane also sees it as a way to generate the immediate cash he needs to avoid a major financial and personal catastrophe in the UK.
On an operational level Lane initially goes about this in an orderly, manageable fashion. First, he checks with Harry on the media spending projections to reassure himself that revenue for the first quarter is reasonably safe. Next, Lane secures an additional line of credit so there is minimal effect on short term operating cash. Then he uses the credit line cash cushion as a way of providing bonuses to everyone. It’s been three years since the last bonus so Lane is sure that the partners will agree to establishing the bonus pool. Ultimately, circumstances force Lane to do the unthinkable and resort to forgery to access company cash without partner permission. With the help of a light box and a pen, Lane makes a risky financial bet and commits the cardinal sin of violating partner trust.
Here’s why Lane was initially confident he could pull this off. In the ‘60s, agency compensation was based on the 15 percent commission system. SCDP receives a 15 percent commission on all media dollars expended by the agency on behalf of their clients (paid for by the media). Furthermore, media commitments require long lead times and the agency generally knew what their revenue would be 3-4 months in advance. So when Harry told Lane he was reasonably confident in the projections, Lane felt he was taking a manageable short-term risk. Lane didn’t foresee Mohawk cancelling its first quarter advertising due to a machinist strike. Today the commission system has been replaced by fee based compensation programs based on hours expended for services delivered, supplemented by incentive compensation for positive performance. Faced with the same decisions today and with firm client contracts in hand, the partners would probably be a bit more willing to roll the dice on their bonuses.
Jaguar: From Pipedream To Pep Talk
Pete had worked hard to get the agency into the Jaguar pitch. He announces it to the partners and lets them know the agency is up against Foote Cone Belding, Ted Bates, and D’Arcy with the pitch scheduled for January. This is very tough competition and it will take a lot of work and a big idea to win the business. The partners’ reactions are lukewarm. Bert complains about the electrical system in the cars and Don lets Pete know that he thinks SCDP doesn’t have much of a chance. He calls it a “pipedream.” Pete is rightfully upset and chastises Don with some well deserved zingers about having to work past 5:30 some days.
A car account is a plum piece of business for an agency and it was especially prestigious in 1966. Automotive clients funded big media budgets and spent heavily in TV, magazines, outdoor, radio and newspapers. These were full commission, highly visible media expenditures behind big awareness campaigns that drove traffic to dealerships and sold cars. Just as importantly, very often the consumer target for these campaigns were the executives at other client organizations who could direct business to an agency. In the ‘60s, imported cars were just beginning to make their marketing impressions. These imported brands needed to mount unusual, creative campaigns that would make them stand out from the traditional Detroit fare. DDB’s legendary “Think Small” campaign for the Volkswagen Beetle was created in the late ‘50’s and is still going strong in 1966. In 1962, Amil Gargano and Carl Ally created the “Drive It Like You Hate It” campaign that put both Volvo and the Carl Ally agency on the map. Now, SCDP has the opportunity to do the same thing for Jaguar at a point in time when America is captivated by all things British in fashion, music, movies and TV. It’s easy to understand why Pete wonders to Don why he isn’t “kissing him on the lips” about this opportunity.
Being the buttoned up account guy, Pete takes a Jaguar out for a test drive and suggests that Don and Megan visit a dealership and do the same. Don finds himself in a situation where he has to rescue Joan from an office meltdown and takes Joan with him to the Jaguar dealership. They play their roles perfectly and Don uses his charm and a $6000 good faith check to convince the dealer to let he and Joan take a hot, red XK-E for a solo test drive. A few flirtatious hours and many cocktails later, Don leaves Joan at the bar and returns the car. The next day at the office meeting, Don, obviously motivated by his time reminiscing with Joan, turns Pete’s lackluster announcement about Jaguar into his personal rejuvenation moment. Don takes off his jacket and tells everyone to prepare to take a giant leap forward and work day and night over the holidays. “Every agency on Madison Avenue is defined by the moment they got their car account. When we land Jaguar, the world will know we’ve arrived.” The room erupts in applause and now it’s Pete who wants to kiss Don on the lips. Don is back!
More Year-End Moments To Remember
Megan takes Don to watch the play America Hurrah and he becomes increasingly uncomfortable as the actor rants about advertising and commercials. Don sees it as a slap at him and his profession. It also reminds Don of Megan’s disenchantment with what he does for a living. “No one’s made a stronger stand against advertising than you.” There’s no doubt these emotions contribute to Don’s reawakening.
Anything can happen at year-end agency meetings. On past Mad Men episodes we’ve seen everything from wild parties to humiliating moments and bad speeches. Before Don’s pep talk, this year’s SCDP staff holiday meeting was shaping up as a boring and confusing mess. The bonuses were announced against a backdrop of the Mohawk cut back and a deferment of partner bonuses so the staff was confused and underwhelmed. It took a classic Roger Sterling quip to rescue that moment. “You’re all getting Christmas bonuses and we aren’t”. The staff smiles, Lane cringes, Don takes charge.
Lane’s moment of reckoning is next.