The most noticeable features of Bill Ludwig's office are its devotion to earth tones and light wood, its somewhat large cacti and a pillow emblazoned with "Keep Calm and Carry On," the slogan from a British poster prepared in 1939 for a German invasion that never happened. It was never distributed and nearly lost to history, but reproductions have become mainstay office decorations for advertising agency executives beset by a recession that ravaged their work force and a recovery that has been muted at best.
Just how hard the Detroit ad business was hit needs little retelling. Thousands of local jobs were lost. A few agencies, such as BBDO's outpost built to handle Chrysler, went under. More often, agencies gushing from the massive chunks of business ripped out of them were left to clutch their guts and hobble on in a much-changed Detroit. Campbell-Ewald, where Ludwig is CEO, was one of those agencies. It was informed in early 2010 by General Motors that the automaker was moving its all-important Chevrolet business to another agency.
It took more than 90 years, an eternity in Madison Avenue time, for Chevrolet's relationship with Campbell-Ewald to unravel. Now the agency, whose co-founder kept his office in the GM building, is giving itself three years to recover the revenue lost when the account changed hands. Representing a reported $30 million in revenue and media billings in the $600 million range in 2009, Chevy had girth and a cultural profile that don't exactly grow on trees. It was so dominating that Campbell-Ewald will now have to forge a new identity. And Ludwig, 56, who has been at Campbell-Ewald since 1982 and has been its leader since the beginning of 2010, is left with what he calls a "100-year-old startup."
I checked in on Campbell-Ewald's progress in August, with a visit to its Warren, Mich., headquarters. Across the street from the General Motors Technical Center, it's cursed with a now tragic view. My visit took place the week after Joel Ewanick, head of GM's global marketing and the man responsible for firing Campbell-Ewald, publicly criticized the new Chevy agency, Goodby, Silverstein & Partners. One of the most outspoken marketers these days, Ewanick had talked about Goodby's "C and B work" and spoken fondly of some past campaigns that were made, naturally, by Campbell-Ewald. I asked Ludwig how he felt about that.
"We are extremely proud of the work we did for Chevrolet," Ludwig said, reeling off all the famous Chevy campaigns he has worked on: "Heartbeat of America," "Lean on Me," "Like A Rock," "An American Revolution."
"More than 700 songs have been written about Chevrolet, and we expect many more to be written," said Ludwig, for whom every reference to the brand is "Chevrolet," not "Chevy," perhaps following the 2010 dictate that GM employees not use the nickname regardless of its popularity.
I gave him another shot. Wasn't he angry or frustrated by that sort of comment from Ewanick?
"I appreciate it. Goodby's a good agency. They do great work."
As you may sense, Campbell-Ewald is not known for being staffed by controversialists or even for being particularly press-friendly. Folks there are aware of this. Jim Palmer, the agency's chief client officer, said it's a holdover from the days of Ludwig's predecessor, Tony Hopp. Hopp, Palmer says, was "an introvert as far as the agency was concerned" and favored a tone of "quiet confidence."
Palmer dismissed the suggestion that that was a mistake in an industry that values flash, but he added: "It wasn't the best strategy for a turnaround agency. We need to be better known and better understood as we go into the future."
Palmer is responsible for figuring out how to market the company to brands looking for a new agency. If it's no longer the Chevy agency, then what does it stand for?
Campbell-Ewald now wants to present itself as the kind of agency that can help marketers manage complexity, an abstract idea but one with some currency. Complexity is a hot issue; the Harvard Business Review even put the topic on a recent cover.
Campbell-Ewald's experience with Chevy had the agency dealing with a corporate brand, subbrands and local dealers, doing both the flashy work and the hard sell. Ludwig said: "We can fly the plane at a 40,000-foot level and create an emotional bond between the brand and consumers, but we can also land the plane in local markets and engage customers and activate sales. Very few agencies are able to do that."
He said that having handled both brand and dealer work for Chevy -- functions that often are divided among agencies -- has left Campbell-Ewald a "full-service agency" capable of working in digital and in customer relationship management and other disciplines that often get farmed out. Campbell-Ewald touts that it was early among agencies to spot the opportunity in social media, with a 2006 user-generated content program for the Chevy Tahoe that ended up being a pulpit for the SUV's haters. Much derided at first, the campaign is now seen as a sales-sparking success.
To hear Ludwig and Palmer talk about it, the positioning makes a lot of sense. But will the industry buy it?
Even Campbell-Ewald's executives acknowledge that the agency needs a better new-business profile. "We're not an all-star agency," Palmer said. "The fans might not vote us, but we might get picked by the coaches and hit a double in the first inning."
Since the Chevy loss, the agency has had success winning small accounts. It has replaced about one-third of the Chevy business and, Ludwig said, is on pace with the three-year plan established after the loss. If that's the case, that progress has come with the addition of small brands and project work. Of those, the most notable is probably Chicken of the Sea, the tuna fish brand for which Campbell-Ewald is now agency of record. Other wins include projects for the Centers for Disease Control and Prevention and the U.S. Department of Education, the media-buying business for Alltel and a bunch of smaller clients, including Allina Hospitals and Clinics, BrassCraft, McKesson, MotorCity Casino Hotel and the National Flight Academy.
The big one
What's missing is the big one, the household-name brand that will reverse the agency's decline and show that it can shrug off the past. Campbell-Ewald is now down to 800 people from a high of 1,100, Ludwig said. Citing the policy of parent Interpublic Group of Cos., which bought the agency in 1972, Campbell-Ewald declined to provide financial information. Advertising Age's Data Center put revenue for 2010 at about $157 million, a dramatic drop from 2007 when it brought in an estimated $239 million.
That could have been worse if Campbell-Ewald hadn't been working to diversify the company for the past 15 years or so. At one point, Chevy was responsible for as much as 80 percent of billings, the agency said. By the time it went away, it was only 25 percent. To be sure, some of that was caused by spending cuts by an ailing GM.
Now, Campbell-Ewald's biggest client, Ludwig said, is the U.S. Postal Service, followed by, in no particular order: the U.S. Navy, the health insurer Kaiser Permanente and USAA, the insurance company for active servicemen and veterans known for its sterling customer-service ratings.
Knowing that two of those clients are government accounts probably doesn't help Ludwig sleep better during a time of intense scrutiny of budgets. Although the U.S. Postal Service is readying a new campaign, it's facing severe shortfalls and, in September, there were fears of a default early next year. And revenue on the Navy account has been getting a haircut in recent years. A recent report from Bloomberg News found that 2010 ad revenue on the Navy account was $58.9 million compared with $68.3 million in 2009 and $163.6 million in 2008. These cuts have been going on across the armed forces because advertising is less in demand when retention comes easy, as it is during times of high unemployment.
A Campbell-Ewald spokeswoman noted that the agency has a diverse client roster and said it is not overly dependent on its largest clients. She disputed the figures (though she didn't offer any corrective ones) and added: "You should know we have several clients who make up our top tier from a revenue perspective -- all within the same revenue range. In addition, the agency currently has more than 30 clients at various levels of revenue."
For all the uncertainty, the agency enjoys some bastions of stability. Kaiser Permanente has been with Campbell-Ewald since late 2003, and during that time it has run one main campaign, "Pride," an optimistic message focusing on wellness that's now headed into its eighth season. In an interview, Debbie Cantu, Kaiser Permanente's vice president of brand marketing and advertising, praised the agency's work, citing as evidence strong performance with both Kaiser Permanente members and nonmembers.
Shortly after the Chevy loss was announced, Cantu hopped a flight to Detroit to spend time with Ludwig. "I wanted to talk about what talent we could move on to our account, what partnerships we could create to help them save parts of their business that were at risk because of the revenue loss. And I wanted to hear the going-forward plan to replace that business. Their success was critical to our success."
One of the new initiatives is known as the "Wild-Card Forum," in which creative staffers of all experience levels are encouraged to submit ideas, no matter how crazy. "It hasn't netted a huge amount of ideas, but it has created a rapport," Cantu said. "We've had a couple of things we've implemented." And it has opened up agency personnel that in the past might have been devoted to Chevy. All in all, Kaiser Permanente has gotten more attention.
"It gave our whole effort a shot in the arm," Cantu said. "From my perspective it was very positive."