This week’s episode brought out the good the bad and the ugly at Sterling Cooper Draper Pryce. As far as Roger was concerned it was particularly ugly. This was a riveting episode that brought the uncertainties of the agency business, the fragility of client relationships and the vulnerability of people into dramatic focus. It was an especially emotional episode to watch.
A Very Big Blow
Any account loss creates problems at agencies. The loss of a founding, cornerstone, big revenue account is traumatic and creates deep ripple effects. These ripple effects hit SCDP in seven critical areas…staff cutbacks. client confidence, poaching of talent, relaxing of standards, resource allocation, management friction and morale. Unless they are addressed immediately and managed smartly, these ripple effects can converge into a tidal wave that could sink the agency. Roger’s decision to keep things to himself and postpone the agony of bad news was a stupid and egregious error. The stage is set for major defining moments at SCDP which will determine its very viability, dramatically alter partner power and relationships and create a clash of the old guard and the next generation.
Roger successfully convinced Lee Garner to agree to a 30-day termination postponement and then he turned that one and only good aspect of his dinner into a disaster. Every agency executive knows that the agency being fired is always the second party to get the news. So, well before Lee and Roger had dinner, the Lucky Strike folks had already closed the consolidation deal with BBDO and delivered the celebratory handshakes. Once that happened it was a virtual certainty that the news would immediately start to spread at both the client and the agency, rumors would soon hit the street and the press would be calling. Roger had to know that. So, rather letting things sit, Roger should have gathered his partners and rallied their support to do everything they could to get ahead of the story in five key areas. Letting key staff know their positions were secure. Informing clients and assuring them that the agency will remain strong. Replacing the business. Assigning partner responsibilities. Managing the press. By not leveling with his partners right away, Roger deprived them of the opportunity to go on the offense. Instead, the agency was taken by surprise, knocked on its heels, and had to scramble to play defense.
To make matters worse Roger lied to his partners about what he knew and when he knew it and then deceived them further with his phony trip to Raleigh-Durham to save the account. The partners were mad as hell at Roger, and Don excoriated him for having let the account slip away. They will definitely find out the rest of the story and when that happens their anger will amplify and change the game for Roger. He will be a partner with no account, very limited skills, no credibility and a severely eroded reputation. Roger will be left with his self-serving memoir (which is bound to offend someone) and a blank name plate on the door. It’s hard to see how the partners can continue to embrace him….unless of course he replaces Lucky Strike with another big client. You never know. Revenue heals many wounds on Madison Avenue.
The Anatomy Of Implosion
There’s no question that SCDP is standing at the precipice of a possible implosion of the agency. Advertising is a highly competitive business and it was particularly cutthroat in the Mad Men days. Everyone was always trying to grab a piece of business from a competitive agency, the poaching of hot talent was an art form and getting the inside track on a dissatisfied client was a big leg up. So, when SCDP lost a big visible piece of business it triggered critical reactions from clients, employees and other agencies. The agency’s remaining clients wanted to make sure that SCDP was viable for two critical reasons. First, to insure that they would continue to get the output they needed to drive their business and, perhaps even more importantly, that they would not have a financial exposure to the media for unpaid bills. In those days, the clients paid the agency for the media and the agency subsequently delivered payment to the media less their 15% commission. Agencies worked on a very tight cash flow and the loss of a cash cow client such as Lucky Strike made the possibility of defaulting on media payments very real. So when Don said to Faye that “SCDP’s clients are running scared”, that’s why. Glo Coat’s decision to leave the agency heightened the partners’ sense of urgency to properly address these concerns and caused Don to lash out at Pete for his “distracted” and inadequate handling of this client.
The other area that contributes to implosion is the loss of talent. More than half of an agency’s operating expense is the cost of people (salaries, benefits & bonus). When a major account exits, the agency has no other alternative than to let people go. Everyone knows that, but it fosters an aura uncertainty and anxiety and makes headlines. So resumes get updated and sent out, other agencies begin calling the best and brightest and account and creative people directly tied to a piece of business rush to solidify their relationships. Sometimes plans are hatched to walk out with a client if and when circumstances warrant it. Pete faced this reality almost immediately upon his return to the hospital. When he informs Tom about Lucky Strike, Tom advises Pete to leave SCDP for CGC. “There’s no reward in going down with the ship.” Fortunately for SCDP, Pete’s disdain for Ted Chaough should be enough for him to pass up a 30% stake in that agency.
Don Rallies The Troops..Sort Of
After Bert Cooper read a rather pathetic prepared statement to the staff it fell to Don Draper to deliver the message of confidence, resolve and resilience. Don tells a skeptical staff that nothing will change. “We’re going to push ourselves,” he exhorts, “stand shoulder to shoulder and it will be exhilarating.” Then in a private meeting with the creative teams Don’s survival instincts kick in and he tells the creative teams to lean over backwards to please clients. “Clients’ ideas should seem better than they usually do.” A good move that Don made was keeping Peggy as the lead for the Playtex creative meeting. It freed Don up to address the bigger issues and gave Peggy a confidence building opportunity. Peggy delivered.
The conference room scene where Don was leading the agency teams through a strategy session on how to get through the account loss and fight its way back was on the mark. I’ve been in a few of those and they were always productive. Don was game planning their next moves and the headings on the blackboard summed their business strategy well. Existing. Likely. Maybe. Longshot. First, solidify current clients and then go after the likely hits. For SDCP another tobacco account had to be number one on their list. The agency could leverage their knowledge of the category and the consumer and SCDP could be a good option for an unhappy client.
Whatever It Takes
Looking for the inside edge and exploiting competitive agency/client issues and problems was commonplace on Madison Avenue. Mad Men espoused an “all’s fair in love and war” attitude and sometimes agency people crossed the boundaries of good taste and ethics. The scene where the SCDP executives went to a memorial service for an industry veteran in the hope of finding out about accounts that might be unhappy provided a lighter side look at it. On the more serious side, Don clearly crossed the line when he asked Faye to let him know about any clients that might be unhappy at other agencies that she worked with. Faye rightly took great offense at this request since it would mean compromising her ethics and violating confidentiality agreements with her clients. Don had no qualms about it. Faye snapped back at Don and said “I’m not going to kill my business to save yours.” She later gave in an agreed to set up a meeting with the Heinz client whom she knew was unhappy with their Agency, Ketchum McLeod & Grove. Ketchum was a solid Pittsburgh based agency and I had the opportunity serve as President of its New York office in the late ’70s. Heinz was still a client then. There’s no question this adds another level of complexity to the Don and Faye relationship.
So with two more episodes remaining and SCDP facing the possibility of dissolution, it certainly looks like there is changing of the guard in the works at the agency. Roger is being defrocked and Don is becoming more desperate while Peggy is growing her capabilities and confidence and Pete’s bolstering his leverage and ego. And, who knows if and when Lane will return.
Can it get any worse?