How McCann Botched the Sterling Cooper Acquisition: "It's the Clients, Stupid"
Sterling Cooper's entire management -- Roger Sterling, Bertram Cooper, creative chief Don Draper and CFO Lane Pryce -- abandoned their agency over the weekend in reaction to McCann Erickson's planned acquisition of the shop and its parent, Putnam Powell & Lowe. The quartet will form a new agency, Sterling Cooper Draper Pryce, sources tell BNET.
The mutiny highlights a key strategic error by McCann and PP&L: Never buy a large agency without first making sure that the key clients are on board with the proposed merger. SCD&P have walked out with about $2432 million in accounts, including Lucky Strike and the $24 million American Tobacco business (Sterling Cooper's second biggest account). The seeds of the walkout were sewn months ago when PP&L financial officer Pryce split account service duties between Pete Campbell and Ken Cosgrove, thus creating resentment on Campbell's side. Campbell has taken at least $8 million of his clients to the new shop.
Draper, Sterling et al appear to have been able to take their clients with them because neither PP&L nor McCann got their blessing prior to the sale -- that was a critical error, as clients make agencies, not the other way around. It is not clear whether McCann will proceed with the deal now that Sterling Cooper has been gutted. The agency is still viable, as it retains all of Ken Cosgrove's accounts (he was the more successful of the account co-heads) plus copywriter Peggy Olson. Whoops! After initially demurring, it appears Olson is on board with Draper as well.
The fiasco recalls the acquisition of Scali, McCabe, Sloves by McCann parent Interpublic (IPG)'s Lowe Worldwide in 1993. The renamed Lowe & Partners/SMS fell apart shortly afterward when Marvin Sloves left the shop, taking the Mercedes account with him.
And finally: What exactly is Draper's role at his new agency? He failed to bring the giant Hilton Hotels business with him, and it's an open secret that Olson was the real creative talent at Sterling Cooper. So what is Draper's value in the new equation?
Disclosure: BNET's editors have previously required the author to make this disclosure regarding items on Sterling Cooper.