Ogilvy & Mather

Ogilvy & Mather Worldwide: A Corporate Profile

The Company

Ogilvy & Mather Worldwide is one of the largest advertising agencies in the US, specialised in so-called brand stewardship.

Overview

Building brands is at the core of Ogilvy & Mather Worldwide's activities. The company emphasises it uses a holistic approach to brand building, touching every contact point a consumer might have with the brand. It could be the packaging, merchandising, and advertisements on billboards, television, radio or the Web. The company even uses public relations to create a more conductive environment for the brand.

Ogilvy & Mather Worldwide's divisions include OgilvyOne (direct marketing to individuals), Ogilvy Interactive (marketing through Web sites and wireless devices), and Ogilvy Public Relations Worldwide. Ogilvy Public Relations Worldwide offers services, including consumer marketing, corporate branding, public affairs lobbying, and creative media. Ogilvy PR operates two specialist units: B/W/R, a corporate entertainment firm, and Feinstein Kean Healthcare (FKH), a service firm specializing in biotechnology and the pharmaceutical industry.

The company was acquired by number 2 advertising conglomerate WPP Group in 1989. WPP also owns PR giants Hill and Knowlton and Burson-Marsteller. Clients of the WPP Group include the majority of companies in the Fortune Global 500 and the NASDAQ 100, including Ford, IBM, Kellogg, Eastman Kodak, Novartis, Pfizer and American Express.

Market Share / Importance

Ogilvy & Mather Worldwide has 35 US offices and a further 359 worldwide in over 90 countries. Excluding specialised marketing subsidiaries, Advertising Age rank O&M as the number 8 agency network worldwide in 2001 with gross income of $1.1m and billings of $10.7bn.[1] Another source recently labelled O&M Worldwide as the world's ninth largest agency network, with billings totalling almost $13bn.[2]

Company History

David Ogilvy: founder and patriarch of the expansive Ogilvy Group

Ogilvy was founded in 1948 by British ad pioneer David Ogilvy who now stands as a legend within the advertising world. David Ogilvy "believed it to be the right and duty of a wise and benevolent elite to civilize the world."[3]

In 1936, David got an internship at the London ad agency Mather & Crowley, which sent David abroad to study American advertising techniques for one year. He returned from his year abroad with extensive knowledge about American advertising techniques. In 1948, after being out of advertising for ten years, Ogilvy started his own agency. His brother Francis financially assisted him. S. H. Benson Ltd., another London shop, also invested $45,000, but insisted that Ogilvy hire someone who knew how to run an agency. Ogilvy hired Anderson Hewitt away from J. Walter Thompson to be president, and appointed himself vice president in charge of research. The business opened as Hewitt, Ogilvy, Benson & Mather (HOB&M).

The beginnings of Ogilvy & Mather

Opening a new advertising agency in 1948 seemed good timing. The Depression and World War II had driven all but the largest, well-established, advertising firms out of business and had discouraged attempts by newcomers to break into the market. However, with the war over and the American economy expanding with unprecedented vigour, and a greater public awareness of the media and its influence, advertising became a necessary element in any business practice. The potential for growth was almost limitless. Still, the agency of HOB&M did not become successful overnight. Competing with such long-standing industry leaders as J. Walter Thompson, Young & Rubicam, Leo Burnett, and BBDO was difficult.[4]

HOB&M moved forward steadily. In 1951, a small shirt maker, C. F. Hathaway, came asking for help. This led to the "man with the black eye patch" campaign, arguably one of Ogilvy's most famous that ran for 25 years. Quickly after came the Schweppes Co., a British maker of soda water and other mixer beverages. By 1952, David Ogilvy was becoming incredibly well known. However, trouble was brewing at the agency. Despite his role as Mr. Ogilvy's boss, Anderson Hewitt was not getting noticed at all. By 1953, Anderson was gone, and HOB&M had become Ogilvy, Benson & Mather.

Soon after, the third of Mr. Ogilvy's defining advertising moments came along. With a meagre budget of $50,000, Rolls-Royce appealed to Ogilvy in the same low-profit, high-prestige way that Schweppes and Hathaway had. The Rolls-Royce ad ("At 60 miles an hour, the loudest noise in the new Rolls-Royce comes from the electric clock.") became the paradigm for all subsequent automobile advertisements. In the short run, these three ads barely paid for themselves; the accounts were small. However, over the long term, the Hathaway, Schweppes, and Rolls-Royce ads demonstrated the 'Ogilvy Style' and attracted a number of new clients.

Expansion, Innovation and Diversification

In 1955 O&M helped launching Unilever's Dove as '1/4 moisturizing cream'. In 1960, Shell Oil started an account, increasing O&M's revenues by almost 50%. Later, accounts were also secured from General foods, Bristol-Myers, and Lever Brothers, to name just a few. By 1962 the agency's billings had increased dramatically, and Ogilvy had established himself as an innovator in the business. Indeed, the 1960's and early 1970's marked a period of expansion and innovation. In 1964 Ogilvy, Benson & Mather Inc. of New York merged with Mather & Crowther Ltd. of London to become Ogilvy & Mather International. In 1966 O&M became the first ad agency to go public on both the London and New York stock exchanges.[5]

During the same period O&M also became more diverse in its range of advertising. It developed campaigns for large corporations, non-profit organizations (e.g., the World Wildlife Fund), whole nations (Puerto Rico, Singapore, France), and international clients whose markets were primarily outside the US. By 1975 O&M had grown extensively. In addition to General Foods and its other base accounts the agency had established accounts with American Express, IBM, Merrill Lynch, Campbell's Soup, and Mercedes Benz. Branch offices were set up around the world to handle the large amount of international business the firm had developed and subsidiaries were consolidated under the umbrella of the parent company.

Growth on the scale experienced by O&M also resulted in adverse effects. O&M's creativity became stifled as the immensity of the operation created bureaucratic impediments. The agency became conservative, feeling an obligation to its shareholders to secure consistent dividends and minimize risks. The agency successfully produced conservative campaigns for large companies, but creatively speaking, had stagnated. David Ogilvy was aware of what was happening and, on the eve of his retirement, made some dramatic changes, taking new, creative people on board.[6] To avoid creativity problems in the future, O&M created a network of semi-autonomous subsidiaries that, while having access to the resources only a large company can provide, still work in a "small shop" environment.

Ogilvy becomes part of the WPP Empire

In May of 1985 Ogilvy & Mather International Inc. became the Ogilvy Group.

In 1989, O&M was acquired by number 2 advertising conglomerate WPP Group. David Ogilvy wasn't at all pleased with the hostile takeover and called WPP CEO Sorrell "an odious little shit".[7]

Conflicts of Interests among Clients From the eighties onward, companies in all industries have increasingly been focussing on building brands. Factors ranging from the rise of the global economy to the rise of the Internet have helped make brands more powerful than at any time in history. On the 5th of May 1994 IBM made marketing history by consolidating its entire $400 million global advertising account at one agency, Ogilvy & Mather.[8]

However, from the 1980's onwards O&M began to experience conflict of interest problems among clients and prospective clients, making it hard for the firm to expand. In other words, it became difficult for the firm to pursue additional clients in a particular industry when it was already doing the advertising for another company manufacturing the same type of product.

Current Trends

Diversification in the Digital Age

O&M keeps diversifying, although selectively. The agency is currently exploring new possibilities opened up by the Internet and digital TV. Both venues allow for more focused advertising, targeting specific audiences. Aim is to stimulate the shifting consumption habits, and to get consumers -not confined to conventional shopping hours- to buy more online. However, as Ogilvy PR CEO Mike Walsh explains, Ogilvy's priority is still old-economy brands [as opposed to the new economy brands] because "these are still the guys with the money, with the investments, the experience and the long-term vision."[9]

Counter Threat

Six months after the September 11 terrorist attacks Ogilvy PR has become the first major public relations agency to launch a unit dedicated to helping clients respond to terrorism. September 11 had brought about a "sea change" in the way companies handled crises, said Bob Seltzer, the chairman and chief executive of the company.

The new division, called Counter Threat, is designed to help companies prepare for and cope with crisis scenarios, including the disruption caused by terrorist attack.[10]

Clients

Ogilvy's clients include: BBC, BP, Coca-Cola Co., Glaxo SmithKline, IBM, MasterCard International, Merck & Co. Merrill Lynch, Novartis, Pfizer, Unilever, Xerox, Argos, Ariba (UK) Ltd., Deloitte & Touche, Dubai World Cup, Intelsat, Kimberly-Clark Corp., Shell, Nestle, Pfizer, and Sun. Ogilvy PR Worldwide's division B/W/R is dealing with media relations for celebrities such as Ben Affleck, Brat Pitt, Michael J. Fox, and Reese Witherspoon. Finally, several governmental bodies stand amongst Ogilvy's clients.

Resources

• Ogilvy & Mather: Who, Where, How Much?
• Ogilvy & Mather: Influence / Lobbying
• Ogilvy & Mather: Corporate Crimes

External Links, contacts & resources

Books:

Stauber J and Rampton S, 1995, ‘Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry’

Stauber J and Rampton S, 2000, ‘Trust Us, We’re Experts: How Industry Manipulates Science and Gambles with Your Future’

Trento S, 1992, ‘The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington’

Rowell A, 1996, ‘Green Backlash: Global Subversion of the Environment Movement’

Others sources:

O’Dwyer’s PR Daily, www.odwyerpr.com; the PR industry’s leading trade journal online

Holmes Report www.holmesreport.com; another good industry source

PR Watch www.prwatch.org; published by the Center for Media and Democracy this is the leading source of critical coverage of the PR industry

http://www.wpp.com; web-site of WPP Group, O&M’s parent company.

Tired of one-way corporate communication? Visit Adbusters, the anti-consumerist-activist site and magazine. Website: www.adbusters.org

Notes

[1] O&M Profile, www.mind-advertising.com/us/om_us.htm accessed 15 May 2002 [2] 'Ogilvy & Mather Unveils IBM Designed Digital Video Archive', 8 April 2002, IBM website: http://www-1.ibm.com/industries/media/pressrelease/PRESSRELEASES_75763.html accessed 28 May 2002 [3] 'Philosophy', www.ciadvertising.org/studies/student/98_fall/theory/clark/two/philosophy.html accessed 15 May 2002 [4] 'Advertising: The Ogilvy Group, Inc.', International Directory of Company Histories, Volume 1, St. James Press, Chicago, USA, page 25-27 [5] 'Ogilvy history, Ogilvy website: www.ogilvy.com/history/ accessed 15 May 2002 [6] 'Advertising: The Ogilvy Group, Inc.', International Directory of Company Histories, Volume 1, St. James Press, Chicago, USA, page 25-27 [7] 'Ad Man on Fire', by Patricia Sellers, 10 July 2000, Fortune magazine, Fortune website: www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=00000902 accessed 20 May 2002 [8]'Wielding a Mean Branding Iron', BusinessWeek News, 6 August 2001, BusinessWeek online: www.businessweek.com/magazine/content/01_32/b3744004.htm accessed 15 May 2002 [9] 'Making a 360-degree turn: Ogilvy chief describes the challenges of building a brand online', 23 June 2000, The EIU ebusiness forum, website: www.ebusinessforum.com/index.asp?layout=rich_story&doc_id=1137&title=Making+a+360%2Ddegree+turn&categoryid=11&channelid=2 accessed 10 June 2002 [10] 'Ogilvy PR enters corporate war on terror', by Julia Day, The Guardian, 11 March 2002, The Guardian website: http://media.guardian.co.uk/attack/story/0,1301,665597,00.html accessed 10 June 2002