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S.C. Johnson/DraftFCB: How to Lose a Giant Account in 20 Weeks

You don't need to be an ad business insider to understand why consumer-product maker S.C. Johnson has threatened to yank its entire global business from ad agency DraftFCB. It's not about the quality of the Chicago shop's creative work or its media strategy. It's about the individual relationships between client and agency executives -- and that relationship has been tossed out the window in the last few months.

In the ad world, S.C. Johnson putting all its advertising up for grabs at once -- at Christmas! -- is seismic. It's as if the Rolling Stones said, "We're holding auditions to replace Mick Jagger."
It's not clear how much ad spending is at stake worldwide, but it's in the hundreds of millions of dollars and north of $350 million in the U.S. alone. The company's brands include Pledge, Windex, Raid, Ziploc, and Scrubbing Bubbles. S.C. Johnson's ads are recognizable because they tend to feature lots of housewives cleaning things, their inner souls satisfied by a shiny toilet.

DraftFCB, a unit of Interpublic (IPG), has been on the account since 1953. If SCJ fires the shop completely it will decimate Draft, Chicago's largest ad agency, and leave yet another gaping hole in the city's reputation as a regional center for the ad business. The advanced age of the relationship goes hand in hand with the conservative nature of SCJ's advertising. More importantly, SCJ's billing practices go back to the Mad Men era also, according to AdScam:

SC Johnson is one of the last big companies that pays a full 15% commission. [Most clients have moved on to fee-for-service plans.] it's a fantastic client for that reason alone because this income frees the folks not on this account up to do less profitable fun work. my old agency loved how they paid the rent and salaries for everyone and demanded nothing but solid, no-sweat work that they had two senior (and by that I mean old) teams on.
So how did DraftFCB manage to screw up 57 years of lucrative brotherly love? Here's the timeline:
  • October 2009: DraftFCB promotes Mark Modesto (pictured), president of DraftFCB Chicago, to the newly created role of president of DraftFCB North America. Modesto is Draft's key man on the SCJ account, having had a hand in it for nearly 30 years. Clearly, something is up.
  • August 2010: Modesto and two other Draft execs are escorted out of the office at night(!). Modesto and his colleagues were a "disruptive troika" trying for a "powerplay" at Draft, sources tell Adweek.
  • Dec. 2, 2010: SCJ appoints an outsider, Richard Conti, as COO in a "substantial shakeup" of its management ranks. COOs tend to want to find ways of taking costs out of the business. Modesto's replacement at Draft is Mark Pacchini, who also carries the title of Draft's president of Asia-Pacific operations.
  • Dec. 22, 2010: SCJ says Merry Christmas, Draft -- you're on notice!
Aside from the juicy internal drama at Draft, two substantive things happened: The key executives on both sides of the relationship disappeared. Worse, Draft tapped a replacement whose attention is divided between Asia and Racine, Wisc., where SCJ has its HQ. Agencies almost never survive when there's personnel changes at the client and its own client handlers have left. (A notable exception is Crispin Porter + Bogusky, which appears to have secured the Burger King account despite similar changes -- a prediction I got wrong.) The fact that being made president of Draft was not good enough for Modesto is interesting. It suggests Draft made an attempt to appease him and failed.

The problem -- and the value -- of having handlers with strong client relationships in your company is that eventually they become the company. That's why Draft's moaning about a "powerplay" is so silly -- Modesto has been the key to Draft's fortunes for 30 years. He owns Draft, not the other way around. It may seem humiliating to give in to Modesto's demands, but the bottom line is that if the price of keeping SCJ was a gold Rolls Royce filled with hookers (or whatever), then financially the agency ought to have asked Modesto whether he wanted tinted windows as well.

What will happen next? Follow the Modesto! It's hard to imagine he won't have a role where SCJ's business lands. Given that Draft's security guards have already humiliated him, I can't see much of it remaining in Chicago.

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