DDB Needham Worldwide
Address:
437 Madison Avenue
New York, New York 10022
U.S.A.
Telephone: (212) 415-2000
Fax: (212) 415-3562
Statistics:
Wholly Owned Subsidiary of Omnicom Group
Founded: 1925 as Maurice H. Needham Co.
Gross Billings: $6.7 billion
Employees: 6,726
SICs: 7311 Advertising Agencies
Company History:
DDB Needham Worldwide is one of the largest advertising firms in the world, with 183 offices representing over 1,200 clients in 75 countries. It was formed in 1986 through the merger of Doyle Dane Bernbach and Needham Harper Worldwide.
Doyle Dane Bernbach was founded in New York City in 1949 by Ned Doyle, Maxwell Dane, and William Bernbach, who acted as president. Bernbach and Doyle had worked together at Grey Advertising during the mid-1940s; Dane had been running his own small advertising firm. DDB initially had 13 employees and $500,000 in billings. Its first ads were done for Ohrbach's department store and appeared in New York daily newspapers. Initially, most of the company's clients used small budgets to promote little-known products, but it became one of the most influential firms in advertising history.
DDB quickly became known for stylish advertisements that relied on catchy slogans and witty humor rather than the repetition and hard sell used by many competing firms; its "soft-sell" approach stood out. By 1954 the firm had grown sufficiently to expand to the West Coast by taking over Factor-Breyer, a Los Angeles agency. Gradually it built spin-off DDB/West around it.
In 1960 the agency won the account of Avis, then the number-two auto rental company. Bernbach penned the slogan, "We Try Harder Because We're Number 2." In 1961 DDB opened its first international office in West Germany, where an important client, Volkswagen, was based. One of the firm's more memorable slogans, done for Volkswagen, was "Think Small," and featured a tiny photograph of a Volkswagen Beetle surrounded by blank space. Ads like this were widely imitated, bringing the firm international acclaim and new clients. In 1966 the firm signed Mobil Oil, a major client for the next two decades with advertising budgets in the tens of millions of dollars.
Meanwhile, the firm continued to build its overseas network. Its London office was particularly strong and employed leading creative talents during the 1970s. In 1968 the firm named Bernbach chairman and chief executive officer; in 1976 it named him chairman of the executive committee. Under his leadership DDB often ignored rules followed by other agencies, relying on instinct and brainstorming sessions rather than research and marketing plans. It also tried to keep creative personnel separated from business pressures that account executives and clients fretted over. This philosophy won and kept many of the most creative people in advertising as employees.
However, this successful formula collapsed after Bernbach's death in 1982. Some personnel became arrogant and difficult to manage; many clients left, as did some high-profile talent. The firm's earnings fell to $7.6 million that year, a 30 percent decline from the year before. By 1986--despite worldwide billings of about $1.67 billion, 3,400 employees, and 54 offices in 19 countries--some industry observers thought the firm was in serious trouble.
Needham Harper Worldwide started in Chicago in 1925 as Maurice H. Needham Co. It had two clients, with billings totaling $270,000. Billings reached $500,000 in 1928, and the following year the firm reorganized as Needham, Louis and Brorby, Inc. Billings reached $1 million in 1934, the same year the agency signed Kraft Foods. Hollywood was becoming the center of the production of network radio programs, and NL&B opened a Hollywood office to produce clients' programs, which included "Fibber McGee and Molly," and "The Great Gildersleeve."
In 1951 the agency opened a New York office to concentrate on the rapidly expanding television industry. To strengthen its still weak New York base, the firm merged with Doherty, Clifford, Steers and Shenfield in 1965 and changed its name to Needham, Harper & Steers. In the meantime, the much stronger Chicago office was adding clients like the Morton Company, Household Finance Corporation, and General Mills. In 1966 NH&S won the Continental Airlines account and opened a Los Angeles office to handle it. The firm soon added Frigidaire to its client list.
In 1972 the agency opened an office in Washington, D.C. It initially handled advertising from local McDonald's owner/operator co-ops, but soon it was winning government, media, and local retail clients. The firm was successful in the late 1970s, and in 1978 it was named Advertising Agency of the Year by Advertising Age. In 1980 NH&S started an Issues & Images division to concentrate on corporate, government, and association advertising.
Keith L. Reinhard, who had headed the agency's Chicago office, became president in 1982 and made improving the New York office one of his primary goals. Despite some successes, the firm was struggling in New York. The jingle-based advertisements that had won clients like McDonald's in the Midwest were not working well in the New York market. In June 1982 the firm restructured, citing the preparation for future growth. NH&S became the holding company for three smaller companies: Needham, Harper & Steers/USA, Inc., had offices in New York, Chicago, Los Angeles, and Dayton, Ohio; Needham, Harper & Steers International, Inc., became responsible for all NH&S operations outside of the United States, operating in 32 world markets; NH&S/Issues & Images, Inc., became a separate corporation including NH&S/Washington and the public relations firm of Porter, Novelli & Associates, which had offices in Washington and Los Angeles.
In 1984 NH&S bought the DR Group, Inc., a large direct-response advertising company with offices in New York, Boston, and London. Because of client conflict problems, in May 1984 the New York office of NH&S/Issues & Images became a separate, unaffiliated company called Biederman & Company. The Washington office of Issues & Images became a division of NH&S/USA. The public relations arm of Issues & Images was renamed Needham Porter Novelli. Soon after, the agency ended its holding company experiment and consolidated back to one company, now called Needham Harper Worldwide, Inc.
The company expanded its California presence in 1985 with the purchase of Lane & Huff Advertising, based in San Diego; Needham Porter Novelli bought the Public Relations Board, Inc., of Chicago. As it approached its merger with Doyle Dane Bernbach, Needham Harper had its headquarters in New York, with major offices in Chicago, Los Angeles, and Washington and secondary offices in Phoenix, Sacramento, San Diego, and Baltimore.
During the mid-1980s many public companies were snatched up in hostile takeovers, and public advertising firms, including the weakened Doyle Dane Bernbach, worried about their futures. Though their positions were stronger, Needham Harper and another large firm, BBDO, also worried about being taken over. Led by Needham head Keith Reinhard and BBDO president Allen Rosenshine, in 1986 the three firms--DDB, Needham Harper, and BBDO--agreed to merge into the Omnicom Group, which would act as a holding company. BBDO remained a separate company, but DDB and Needham Harper merged further into a new company called DDB Needham Worldwide. Needham Harper had been weak in New York and Europe, precisely where DDB was strong, and DDB had wanted to strengthen its Midwest operations. Together the two companies boasted clients like General Mills, Amtrack, GTE Telcom, Volkswagen, and Chivas Regal Scotch, with billings of $2 billion. Strategically the merger made sense, but getting employees and their different styles to mesh proved difficult.
That task was spearheaded by Reinhard, who became president of the new firm. He soon found that the DDB New Yorkers resented the merger and considered him a country bumpkin, since he had grown up in Indiana and worked in Chicago. Morale was low in New York because of the years of decline following Bernbach's death; it fell further as a result of layoffs. The staff of the former DDB was cut to 700 from 1,100. Both firms had London offices, which heard of the merger via facsimile, and each office started telling newspapers it would head the combined agency. Reinhard made six trips to London, fired most of the Needham managers, and put DDB managers in charge. Critics charged that the merger had no creative vision, and the New York office signed no new clients; many employees started to leave for other agencies.
Problems also arose because of competing accounts held by Needham and DDB. For example, because of DDB's historic ties to Volkswagen, Needham's Los Angeles office, which had the $100 million Honda Motor account, was spun off as Rubin Postaer & Associates; the $32 million RJR Nabisco account, which had been DDB's, was let go because of Needham's General Mills account.
After a period of introspection, which included reading William Bernbach's writings about advertising, Reinhard decided the new firm should be a creative leader but for larger clients, leaving truly adventurous advertising to smaller competitors. He started using teams for each client project, including employees from media buying and account planning in addition to the usual creative staff and market researchers. The teams were to stress relevancy, originality, and impact. Many industry observers felt that incorporating media planning into the creative process was an important innovation, and the firm became known for it.
In the fall of 1987, with a creative direction chosen, Reinhard replaced executive creative director John Noble, who had been a divisive advocate of DDB methods, with the team of Jack Mariucci and Robert Mackall. They managed the firm's 105-person creative department. Copywriters and art directors were not assigned to specific clients but rather were used by the department's six creative directors as needed. The staff learned to work together and the firm's talent flight stopped. It began to win important new accounts like the $42 million campaign for Sears's Discover credit card. The firm grossed $358.5 million in 1987 on billings of $2.6 billion.
In 1988 the firm continued to win new accounts, like the $18.5 million contract to create advertisements for the New York State Lottery and a $25--30 million account for a global campaign for Seagram's Martell cognac. It also won a Clio award for a print ad created for Colombian coffee. As with any ad agency, it also lost accounts such as the $20 million Hasbro account. But the firm was now rolling, and it was the leading U.S. advertising agency in 1989 in terms of newspaper media billings.
In a move that raised eyebrows throughout the advertising industry and beyond, DDB Needham offered in 1990 to guarantee the results of its advertising, making its compensation for an ad campaign partly related to the client meeting its sales goals. For three years the firm had been test marketing parts of the program, which called for a bonus of up to 33 percent or a discount of up to 30 percent on firm charges. Advocates claimed the plan would result in more accountability and many clients liked it; critics pointed out the difficulty of scientifically proving the effect of advertising on sales. In any event, few clients signed up.
Meantime, the U.S. economy and the economies of many of its trading partners were in recession, leading to a drop in advertising billings. Accordingly, the firm lost the accounts of some important clients like Clorox, Campbell's Soup, and Maybelline. Still, the firm scored some victories. It won the $40 million Reebok shoe account and the $12.5 million Canon 35-mm camera account. Nevertheless, the early 1990s proved to be a difficult time for the firm: it laid off 29 of 700 employees at its New York office in mid-1991, 45 more in mid-1992. In 1993 it dropped from being the third-largest agency in the United States to sixth-largest, with revenues declining to $229 million on sales of $1.9 billion.
In May 1992 the firm brought in Andy Berlin as president of the New York office. Berlin had been CEO of Goodby, Berlin & Silverstein, a San Francisco agency, which he left because the firm would not grow fast enough for his ambitions.
At the beginning of 1993 DDB Needham announced that it would no longer take, at least temporarily, any new business. Already possessing a good-sized roster of longtime clients, the firm felt it best to make certain their needs were met rather than seek new business--and thereby risk alienating favored customers who could feel slighted. One reason for this move was the rumblings of dissatisfaction from Volkswagen. Berlin personally took over supervision of the U.S. portion of the account, which had $50 million in billings (the account had been supervised by DDB's Troy, Michigan, office). Even with the extra attention, however, in March 1993 Volkswagen put its $100 million German account up for review.
At the same time, the firm moved forward with a plan to centralize its media buying. In September 1992 DDB combined about $200 million worth of national television buying from the Chicago and New York offices. It opened a branch called USA Media, which bought airtime for all of Needham's U.S. offices.
Tensions persisted. The Chicago office, which long had a base of packaged goods manufacturers that preferred conservative advertising, was luring high-profile executives from other firms to begin flashier, higher-profile ad campaigns that might win awards and new clients. But the effort was lagging by mid-1993, and billings in the Chicago office had actually been declining slightly for the past several years. The office lost the $20 million Audi account and the $25 million American Dairy Association account, and the creative talent that had come up with cutting-edge ads for gym shoes had a harder time selling boxes of cereal.
DDB Needham restructured the office, but laying off 14 percent of the workforce there badly hurt morale. Other advertising agencies were going through similar problems, but DDB Needham's management kept on the Chicago office--still its largest and most profitable. Starting around the beginning of 1994 things came together for the Chicago office, and it won new clients including Helene Curtis, S. C. Johnson, and Budweiser. Billings grew to $670 million, up about $75 million from 1993. The advertising industry in general was recovering from the lean years of the early 1990s, and DDB Needham's clients in package goods, health care, and telecommunications were buying more advertising. At the end of 1994 DDB Needham won an important new account when Sony Europe chose it for a $120 million ad campaign.
Further Reading:
Borden, Jeff, "Once an Ad Agency Star, Needham Loses Its Shine," Crain's Chicago Business, June 21, 1993.
Lafayette, Jon, "Still Awaiting Liftoff," Advertising Age, October 26, 1987.
McFadden, Robert D., "William Bernbach, Advocate of the Soft Sell in Advertising, Dies at 71," New York Times, October 3, 1982.
Mussey, Dagmar, "DDB Needham Wins $120M Sony Europe," Advertising Age, December 12, 1994, p. 1.
Sherrid, Pamela, "The Bernbach Legacy," Forbes, June 20, 1983.
Sloan, Pat, "DDB Needham Selects its First U.S. President," Advertising Age, November 1, 1993, p. 2.
Stern, Aimee L., "A Merger Clicks, Painfully," New York Times, July 16, 1989.
Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.
