In a cavernous studio in West Hollywood's media district, the cameras are ready to roll. At the director's cue, Samantha, a leggy blonde with cherry eyeglasses and endearingly crooked teeth, launches into a critical product demo. Dropping her striped shorts to her ankles, she steps into a pair of nude-tone fanny pads — a perilous feat given that she's in 3-inch heels and balanced atop a small riser — and hikes them up to her waist. Steadied by her perky brunette cohost, Rachelle, she models her new, foam-enhanced tush, to squeals of delight from the assembled cast mates.
"Oh. My. Gawd!" they cheer. "It's like a Betty Boop butt! So perfect and round!" It's cute, it's fun, it's shallow — it's Honeyshed, the latest brainstorm of David Droga, former worldwide chief creative officer of the Publicis network and now proprietor of Droga5, an indie ad shop bankrolled by Publicis Groupe. Honeyshed, Droga says, is a place where brands can play with the people who love them — a Web-based shopping center or interactive infomercial that caters to the mall-rat demographic, with all the bells and whistles that a generation of wired kids demands: social networking, interactivity, music, viral irresistibility, butt jokes, and, of course, shopping.
"Think of it as MTV meets QVC," he says.
Honeyshed's humor may tend to the sophomoric, but the venture is no joke for the mammoth
"This is about profound and unsettling changes. There's nothing we French love more than a good revolution."
The metaphor is not without its irony. Lévy and his fellow CEO ad moguls — John D. Wren at
This is no small challenge for ad agencies, particularly megasize ones like Publicis, which were cobbled together during a wave of consolidation premised on the idea that scale, not precision, was the key to success. Now Lévy and his ilk are watching smaller, nimbler shops — especially those built around interactive work — routinely chip away at accounts they long thought secure. CMOs, straining to show a return on their marketing dollar, are demanding quantitative proof of how their budgets are performing in the marketplace. Then there's the specter of
The undercurrent of panic at big agencies is palpable, as is the hunger for fresh approaches. How Publicis is attacking this reality is a case study for the industry — and a saga of unexpected self-discovery. The rising stars across Madison Avenue are the folks who can best target consumers, deliver tailored messages, and analyze performance. The joyless granularity that once made direct marketing, digital's forebear, the lowest caste in advertising, has come out on top. And suddenly left-brainers like Digitas CEO David Kenny can crow, "We're all gearheads here!" without worrying that he'll be barred from the cool-kids' table in Cannes.
Yet where does this leave the hard-core right-brainers like Droga, the creative superstar who earned his chops producing slick commercials for the likes of
For Lévy, the holy grail is to make Droga a little more like Kenny — and vice versa. Lévy's grand vision is an interlocking system in which data are at the service of creativity, and creativity is responsive to the data. Despite all the focus on click rates, numbers alone, he knows, won't fuel performance without the sizzle that gets target customers excited. "We can't have a line that is pure digital," he says. "We have to be digital with humanism." In short, he needs a fully functioning cortex with synapses firing efficiently and cheerfully across the divide. The complementary brains of his two Davids, Kenny and Droga, lie at the heart of this strategy. Now he just has to prove that it all works.
To be honest, Maurice Lévy confesses over cappuccino at a New York hotel, the only reason he got into the ad business was to chase skirt. And the 6-foot-2-inch, silver-haired, 65-year-old Publicis chairman is every bit the French charmer still.
Back in 1967, when he got his first job in advertising, he says, he knew nothing about the business. He was actually an IT guy, sitting on a good offer from a giant technology company. Then he had a vision of his future: "I was really thinking my life would be boring." When a friend mentioned that a small Parisian ad agency was looking for someone to run its computer department, Lévy was skeptical but went over to take a look. What the 24-year-old saw enthralled him. "The men were wearing sneakers and had long hair, like me, and the girls had long legs and miniskirts," he says. "I thought, 'This is a nice place to work.'" To his surprise, he was hired.
By age 29, he had mastered the business so well that he was offered the company's top job. Still, Lévy knew what he didn't know and figured any agency willing to be led by such a neophyte was best avoided. So he quit to join Publicis in 1971. Lévy was leaving a restaurant on the Champs-Élysées a little over a year later when he noticed a glow in the autumn sky. The Publicis headquarters, farther up the avenue, was on fire. He bluffed his way into the building and recovered what was left of the computer disks, tapes, and papers; within three days, working with
Publicis's network today, like those of the other big holding companies, extends to the far reaches of the globe. Historically, the networks have grown by picking up hot shops as they reached maturity, but in the past few years, as the race for digital assets has heated up, there have been fewer obvious targets — and more competition for them. In the end, the move Lévy made was a surprise to just about everyone: the megadeal with Boston-based Digitas, the fourth-largest marketing-services agency and third-largest interactive agency in the country, with $390 million in worldwide revenue in 2006.
The plot was hatched three years earlier, when members of Publicis's executive committee, P12, sat down to ponder the company's future. The goal was to find an acquisition candidate that could handle clients' growing digital demands, from producing huge volumes of targeted ads to mining the resulting data for consumer insights. Rather than adopt Omnicom's strategy of building out digital capabilities within each agency network, the Publicis team wanted one shared entity for the entire Groupe. Sketching a line on a tablet of paper in his office overlooking the Hudson River, Kevin Roberts, the swashbuckling worldwide CEO of Saatchi & Saatchi, recalls the meeting. "I said to Maurice and the guys, 'I think the Groupe should play here and here,'" indicating endpoints labeled OPERATIONS and TECHNOLOGY. Then, drawing a circle at the center of the line, he told them, "The individual agencies should find competitive positioning to play here." The Saatchis, Leo Burnetts, and Fallons would each be free to establish their own creative reputations in the industry, leveraging a shared technological infrastructure and brain trust.
The group agreed that Digitas was the shop of choice, and Lévy vowed to make it happen. "Maurice was like a hunter in the jungle," Roberts says. But Digitas proved an elusive prey.
For one thing, David Kenny was not sure he wanted his company to be acquired. He and his team had survived the dotcom meltdown — when the stock fell from $29.50 to $0.88 — and were now thriving, picking up such tony accounts as Miller Brewing Co.,
"Maurice told me, 'I really like the idea [of acquiring Digitas], but you guys are so expensive, I don't see how I can afford it,'" Kenny says, adding that he had already turned away several suitors. "I told him, ‘Come back when you're serious.'"
After a rocky summer for Digitas in 2006, including the loss of three clients in the Chicago office, Kenny began warming up to a Publicis deal. "We began to get our heads around the fact that simply being the best digital agency on the planet wasn't a winning strategy," he says. Or, in Roberts's more acid assessment, "David had seen what the future was like — that he wasn't going to break into
By joining Publicis, Kenny would not only get scale (and, eventually, every bit of his $1.3 billion), but also access to those elusive blue-chip clients. In mid-December 2006, an agreement was announced, the biggest ad-industry deal since WPP bought Grey Global Group in 2005.
The market applauded. "It's a huge opportunity to leverage what Digitas does in the Publicis network," says Thomas Singlehurst, an analyst with Citi Investment Research in London (Publicis recently delisted itself from the NYSE). "And Lévy," he adds, "is by far the best integrator of assets next to Omnicom. So far, he hasn't invested his capital base on a deal gone wrong."
But now it's mostly up to Kenny to figure out how that integration is to work. As he told Advertising Age in May, "I've got to transform [Digitas], to rethink it as having one kitchen with many restaurants."
Given the size of Publicis's operations, he has his cooking cut out for him.
With his hipster glasses, cropped blond hair, and artfully frayed jeans, Kenny looks every inch the adman as he settles onto a white leather sofa in Digitas's Boston headquarters. Yet when he opens his mouth, the ideas that unspool — slowly at first, then in a rush — are not the usual Mad Men prattle about the Big Idea, or the Authenticity of the Brand, or the Work, the Work, the Work. Instead, they're densely packed concepts, the sort that fill whiteboards up the river at the Harvard Business School. This is a guy who can say, "We're passionate about operations" without a hint of irony.
Not that that should be surprising. Kenny holds an MBA from Harvard and was, in a previous incarnation, a senior partner at Bain & Co. Indeed, Digitas is rife with former suits from Boston Consulting Group, McKinsey & Co., and other high-end consulting firms.
That may sound like a hellish vision, but for Publicis it's an asset, and not only because the Digitas brand of egghead analysis is beloved by so many American CMOs. The Digitas team's experience in tackling management projects fits Lévy's mandate to integrate the disparate digital pieces of the Publicis network into one efficient, high-performance, client-oriented leviathan. "We are blessed," Roberts says. "David's ex-Bain, and he really gets this shit."
As analysts will tell you, many other holding companies' strategies have tended to be at once simple and shortsighted: Buy up anything remotely digital and figure out what to do with it later. These acquisitions are "bolted on," says Peter Kim, senior analyst at Forrester Research, and the strategy is "Let's buy and place bets because we think these shops are hot, but we're not necessarily going to integrate them and maximize their value."
Kenny has focused on transformative, systemwide initiatives since arriving at Publicis. In May, he rolled out a digital production company called Prodigious Worldwide, which uses workers in low-cost countries like Costa Rica and Ukraine to build the thousands of iterations of ads that clients of all the Publicis agencies use to reach consumers on cell phones, computers, and, eventually, TV. According to Prodigious president Corey Torrence, that effort is already saving participating agencies between 30% and 60% on production costs. Then, in June, Kenny convened a family gathering in Paris to discuss how Publicis could win in digital as a group. Tom Eslinger, Saatchi's worldwide creative director for interactive, sat in on the meeting and has since used Prodigious to build the back end of a variety of labor-intensive interactive campaigns. "I've got more heavy-duty stuff coming down the pipeline, on a scale bigger than we would do in-house," he says. "Now I don't have to have people crunching out 300 Web pages or 50 banner ads." Indeed, without the squads of Prodigious programmers, Eslinger might have a tough time getting the work done at all. The digital talent crunch in the United States has become so acute that it's become a drag on the industry overall, says Kerry Bodine, a research analyst at Forrester. "There's so much interactive work now that agencies are actively turning away 90% of the RFPs that come in the door" for lack of bodies, she says.
Kenny isn't necessarily thrilled to be seen as the wonk enabler of the Groupe's creative visionaries (he likes to point out that Digitas itself has produced award-winning creative for Pontiac and Cingular). But it's hard to avoid that conclusion. "You have to be able to concept how thousands of versions of ads are created, stored, and tagged, then delivered through billions of individual media buys, because you're buying each impression, one at a time," Kenny says. "Then you need to be able to read it analytically and learn from it." These are not the kinds of tasks at which your average copywriter excels. But it's the kind of data crunching that people in the equities markets perform every day, skills that will be invaluable in an ad world increasingly dominated by tech giants.
"Google and Microsoft are creating the New York Stock Exchange and the Nasdaq for media," Kenny points out. "There's no reason we can't be the
"Google and Microsoft are creating the New York Stock Exchange and the Nasdaq for media. There's no reason we can't be the Goldman Sachs."
Nowhere is that melding of metrics and imagination more total than in the Global Marketing Navigator, the new Web tool that's currently setting Publicis clients' hearts aflutter. It was developed by Greg Green, a Digitas senior VP and math PhD, who, like Lévy, saw the ad world as a ticket out of a life of technocratic obscurity (in his case, at Pricewaterhouse). The Navigator is an application that simplifies the masses of data generated by a client's marketing program and suggests ways to capitalize on them. Unlike other such diagnostic tools in the marketplace, with their lagging indicators heavy on numbers and graphs, the Navigator allows anyone in the Publicis chain, from the client to the creative team in-house, to see exactly what an ad looks like in the context in which it is running, as well as how it's performing. So a CMO can, for example, see how his display ad looks — just as a consumer would see it — on CNN.com, or in The Washington Post, or on Dog Whisperer, or in the pages of Fast Company, and evaluate key metrics across channels such as cost per order, return on investment, and brand impact.
It also shows what his competitors are up to, so he can see the price of certain ad words go up if somebody is bidding for them on Google, or how the creative looks in situ. Like a Web 2.0 Bloomberg terminal for advertising, the site also aggregates news, industry information, RSS, and feeds from DoubleClick, Google, Microsoft, and Yahoo, and ties them to each creative execution.
Armed with such digested, transparent information, Green says, a marketer can tweak a campaign quickly in step with consumer response: "The technology allows us to deploy information to the creative team, who can see how an ad is downloading, how long consumers are spending with it. They can see, for example, that 40% are blowing it up to full screen, that 60% are seeing it in the Web site, etc." Armed with that information, chief creative officers — such as Digitas's Mark Beeching — can use those insights to rejigger their ads.
"The data and the creativity play off each other," Beeching says. "For example, topicality can have a huge impact on the success — or failure — of a specific creative execution. We're always on the lookout for this in the travel category [where Digitas has hotel and airline clients]." Paris Hilton suddenly appears topless on a Côte d'Azur beach? The Navigator is ready to capitalize: "We dial up a specific execution to make the most of the location," Beeching says. Think banner ads featuring special airfares to Nice. "We're talking not just percentile improvements here, but major shifts in response, from a 10% uplift to even doubling it." Of course, he says, other events can just as quickly wipe out a specific location or celebrity's appeal. "And topicality itself can soon turn to topic fatigue," he says, "so you can never rest."
When Lévy saw the Navigator, he called it "the connective tissue behind the agency of the future." By next year, all the Publicis agencies — and their clients — will have access to it. "Our value at the Publicis Groupe is to take the complexity away," Kenny says. "We're not trying to drag these CMOs through the details of what we do. We try to give them a front end and say, 'Here's how you navigate it.' And then really focus on delivering what their consumers need, based on that insight."
And it is in that sense, he says, that "creative is more important in the interactive age than it was before — because it's on-demand. Our goal is to build creative so good, consumers send it to their friends." Funny, that's what David Droga's dreaming about too.
Even for a guy whose preferred look is Eric Clapton–grizzled, Droga is looking a little scruffy. It's late on a Friday afternoon in early October, and Droga, 39, ensconced in his new offices in Manhattan's East Village, just down the block from Joe Papp's Public Theater, is bone tired. That's not to say he won't be working this weekend, just like he worked the last one, and the one before that. Getting Honeyshed up and running has been a far harder slog than he ever envisioned.
In August 2005, Droga stepped away from one of the big creative jobs in the industry, where he had become the single most awarded creative at Cannes, with 48 Lions and three Grand Prix. He was, he says, spending all his time on planes, shaking hands, putting out fires. But the rewards of the top job were too abstract, he says. He wanted to be back on the ground, not do time as a grinning front man.
So he cornered Lévy at a park in Cannes in June 2005, and told his boss that he wanted an agency of his own, where he could pursue the big digital idea that would eventually become Honeyshed. Lévy listened, and gave the idea his blessing; he also committed to investing in Droga's project. "It's very hard to say no to David," he concedes. Droga5 (David was the fifth boy of seven Droga children) was founded less than a year later.
The new shop's first project was a sensation right out of the box: a viral campaign for Marc Ecko's apparel line that appeared to show Air Force One being tagged by graffiti artists. Some 87 million people watched the film online, and it was mentioned in 100 million news reports. It also won a Grand Prix in Cannes in 2006. Last June, he followed that by winning a Titanium Lion for his campaign called Tap Project, which encouraged New Yorkers to spend $1 for tap water in restaurants for one day in March, and is projected to raise $5 million for UNICEF's clean drinking water effort by the end of 2008.
As successful as Droga had been in the traditional advertising space, it always bothered him that his work — and that of his peers — was perceived as a distraction by viewers. Honeyshed, which Droga and his pals at an L.A. production studio called Smuggler had been incubating for years, would be "the show itself." (Honeyshed is jointly owned by Droga5 and Smuggler, with Publicis a majority shareholder, having kicked in more than $25 million to get it up and running.)
When we first talked, back in May, Droga was breezily confident that he could create a place online that replicated the collegial fun of shopping, one that celebrated "the sell." He essentially wanted to build a nonstop interactive variety show — the virtual equivalent of a cool Saturday in SoHo, with Sephora next to Uniqlo, around the corner from the Apple Store, and just down the block from
But by August it was clear that strategy was a nonstarter. There had been lots of talk, lots of enthusiasm, but a conspicuous lack of commitment from clients.
"The main thing we had with clients," Droga says, "is they'd say, 'Love it, love it, love it. When are you launching?' It was a tragically valid question." There were the inevitable technology hurdles ("I know more about wireframes now than anyone should," Droga says wearily), plus unexpected legal issues — can you use a celebrity's name in commentary without clearing it? — that sucked up more energy than anticipated. "It's a big idea, but to bring it together requires deal after deal after deal. You're constantly spinning plates," he says.
"I know more about wireframes now than anyone should."
Lévy was resigned during our talk over breakfast in October: "The spontaneous response was so great; we have been a little too optimistic," he says of Honeyshed. "The reality is, clients were enthusiastic, but from being enthusiastic to writing a check, there was a difference. We are in a business. We understand that."
Still, he thinks the Droga folks are finally ready to plunge ahead. "There's a French word, tâtonnement," he says. "It's when you are in a dark room and don't know where the armchair is, or the table is, and you bump your knees. Boom! Boom! In the end you find your way, and the light is on. I believe the light is about to be on."
But he says, as we're leaving the restaurant, "Give me a call when you get back from L.A. An honest assessment. Please?"
A Long, Slow Launch
Nobody's even bothering to break for lunch at the Honeyshed production studios on a hot afternoon a few days later. Set on a side street near Melrose Boulevard, the place looks like your typical startup in countdown mode: random bagels, a jar of peanut butter, and other breakfast detritus lie on the counter; the young staff, in jeans, T-shirts, and earbuds, are hunched over laptops, grinding through the chores leading up to launch.
Yet despite the endless hours, there's a remarkable cheerfulness about the place. All of the Shed's little bees are convinced they're present at the creation of something groundbreaking, mind-blowing, or, if all that's a little hyperbolic, just baseline hilarious.
Under the direction of Brian Beletic, the 33-year-old director from Smuggler, who created music videos for the Black Eyed Peas and commercials for Adidas,
Droga's original plan was for each segment to be devoted to a single brand. But because clients have proved reluctant to plunge in, the site was redesigned to launch with a series of "curated" bits, sort of a Lucky magazine for the Web, with a variety of sneakers, or DVDs, or 12 great bras from different manufacturers. To find the best stuff for each "show," a team of Honeyshedders crawls the Web, tracking down the latest in sexy lingerie, handbags, gadgets, and hoodies — all, of course, attached to brands, some big, some obscure. "The goal became to launch with a mother lode of content that would attract a mother lode of traffic," says Droga5 CEO Andrew Essex. Potential clients would see how their products would be featured on the site, in nonsponsored segments, along with those of their competitors. By phase two, they'd be asked to pony up, or risk seeing frisky mentions of their wares disappear into the ether. Essex insisted at press time that Honeyshed already has paying clients, but refused to name them.
The goal now is to establish a Honeyshed editorial voice, "to build our reputation as tastemakers," says Kim Howitt, 33, the head of development, who came to the enterprise after stints at Nickelodeon and the N, the nighttime network for teens. "Everything that goes through our doors, whether it's a paying client or not, is cherry-picked. At the end of the day, if we're really good at our job, we'll have the ability to make something hip." Going forward, "sponsored" content will likely commingle with "editorial" choices.
Honeyshed itself does the programming, mixing products and themes based on feedback transmitted through the site's digital backbone. A chat window alongside the programming lets viewers talk about what they're seeing. Each item featured will have an I WANT IT! button, and viewers can roll over it to get more information, or hit it to be connected to the relevant page on Nike.com, for example, or Sephora.com. A STASH button lets users save items to a kind of wish list, then email it to friends or drag it into a chat window or even a Facebook page.
Honeyshed hopes to induce its young target demo to open the site and leave it running on their desktops — forever. The idea is to forge such a visceral connection that the cast members become constant companions, whether they're hawking from the corner of your PC screen or from your cell phone. "We want the site to have a family feel," Howitt says. "In this audience, shopping is a much bigger experience than just exchanging money. There's a social currency to just being informed, and expressing yourself through the things that you love. We want to embrace all that."
The Master Plan
B ack in new york, Droga knows that wish-listing alone ain't gonna cut it. In a world where you live and die by the numbers, he needs traffic — and conversions. Last spring, Kenny sent a crew to Honeyshed New York to drill into everything from production workflow to platform architecture to online analytics. "Our advice was to make sure the experience extended beyond the site," he recalls. "So we suggested they create more social-network linkages, and construct the site so that pieces could be pulled into MySpace pages or linked to widgets." Now every product segment can be plucked from the Honeyshed site and passed along through any number of social media, self-propagating messages powered, Droga hopes, by the creative juice behind them.
"It's a very transparent model," he says, sounding remarkably Kenny-like. "Clients pay for time spent, for clicks. You're only paying for definitive eyeballs, not the promise of eyeballs. If people aren't clicking through, no one's being charged." He knocks wood. "Heaven forbid."
Droga may not yet know how this experiment ends, but in spirit, at least, it's true to Lévy's master plan. Sitting between his two Davids last spring at the Microsoft summit, Lévy had foretold a technology-enabled tsunami that would change media, consumer behavior, and access to content — and have a massive disruptive effect on his industry. Accountability and creativity would work in unison, he said. The old silos would fall.
That's certainly a vision that resonates with Penry Price, Google's VP of advertising sales for North America. "Digital is a microcosm of the whole industry," he says, calling Kenny a leader not just in digital advertising, but industrywide. "It's a world in which leverage doesn't come from size — it comes from knowledge." Kenny intends to serve up that knowledge. Droga hopes to exploit it.
"Ultimately," says Kenny, "we need all the consultants and operational folks we can get. But we also need artists and poets." If both sides can truly merge, Lévy might have his revolution after all.
Correction: While Publicis Groupe is an investor in Honeyshed, it has no ownership stake in Droga5 itself.