Diane Francis Business Profiles

Friday, June 30, 2006

Thaler Q&A

Diane francis column Friday post June 29

New York advertising executive Linda Kaplan Thaler started as an actress, then music professor and now runs the fastest growing advertising agency in the Unites States, with 175 employees and US$1 billion in billings last year.

She is also the only woman in advertising who is both CEO and Chief Creative Officer of a major agency, the Kaplan Thaler Group, Inc., which is America's 34th largest.

She launched the venture out of her Manhattan brownstone in 1997 after 20 years with J. Walter Thompson and other agencies. Her only client at the time was Clairol and within two years later her company was bought by the Publicis Groupe in Paris, the world's fourth largest agency holding company.

She is a delightful and sunny creator and talked in a lengthy interview recently in her New York City office about her career and the changes underway in advertising. Her firm is best known for its enduring and entertaining campaign for a formerly obscure Georgia insurer, American Family Life Assurance Co. Her agency came up a mascot for the company: a duck that quacked the company's acronym, "Aflac". Sales and consumer awareness jumped immediately.

Q. What's the state of advertising these days?

A. Every week there is something new and the business is in a state of flux. People are withholding funds for television commercials because of the tsunami wave of emerging media. They're wondering where's everyone and what are they watching and doing? We used to produce a 30-second television commercial and some print. Today, agencies produce 30-second and 15-second television ads; 60-second and 30-second radio ads; billboards; print; online banners; webisodes [mini sitcoms on the Internet]; content integration [product placement] and brochures. This means that compensation is a big issue. Media [placement] companies charge 10% fees, but agencies have no model yet. We are still missing our 15% commission. We are paid by the hour which I find confusing. We're not a lawfirm and an upside bonus is a good idea.

Q. You started off as an actress. How did you get here?

A. I studied theatre and was in the road company for "Stop the World I Wanna Get Off" and "Hair" -- but I would not take my clothes off so they fired me. I have a Masters in Musicology. I taught music at college for awhile. I play piano, guitar, flute, banjo. My husband's a composer. I got into advertising because my father, who was an engineer, knew someone in an agency. I began working there. Wrote some jingles and enjoyed it.

Q. Has your unique theatre background influenced your agency?

A. I apply the theory of improvisation. I always say yes and then make it happen. You in improv that you cannot say no to anything, any idea. I remember advice that Quincy Jones gave my husband after he landed a big project: "You only need to remember four words: first-get-the-gig. Then figure it out." We get the gig, then figure it out. For instance, Red Cross was a client and promoting itself only through public service announcements at 4AM on television. We suggested that Red Cross do a telethon. We picked Christmas Eve 1998 and figured it out. At the end, it was a Gala that every celebrity wanted to be on and CBS carried it. It was a great hit for a couple of years. This company is built on the entertainment industry model. There are no titles, no layers, no vice presidents. We swarm around a project, like writers around a show. We gather, brainstorm, go away, then gather again.

Q. You are known for your unusual "pitches" (or presentations to clients to get their business).

A. We had to pitch Panasonic for a shaver and realized that the message could ?be that guys don't like to shave. So eight of us sang a parody called ?"Shaving sucks" and the client hired us. We call advertising the Theatre of Persuasion. Another time we were pitching an anti-depressant. We realized that the most depressing people in the world are comedians so we auditioned stand-up comics to do the pitch. Only one was funny and he works here now. We have a collection of backgrounds here including a couple of novelists, potters and painters.

Q. How do you get your clients' messages across in a crowded and noisy world where the average person is bombarded with 5,000 advertisements a day?

A. It's about the "E" factor, the Entertainment Factor. People will follow the funny. We are an Entertainment culture. We are also an ADD [Attention Deficit Disorder] culture. The kids today get their buzz from anywhere, their friends, websites.

Q. Is your approach different?

A. We once brought in a criminologist who talked to us about lateral thinking, problem solving. He said don't tamper with the evidence. Look at the research. Don't over-interpret. You leave too many unhelpful fingerprints. Pre-supposing during an investigation, or when trying to understand any problem, is not a good idea. Also I believe that one of the most intelligent things you can do is shut up and listen. And when someone is talking really listen to them when they say the word but...that's when they tell you what they really think. This product is fine but...

Tuesday, June 27, 2006

The Aflac Attack

Diane francis column for NY Sun Tuesday June 27



In the 1970s, Linda Kaplan Thaler refused to take off her clothes onstage as an actor in a road show production of "Hair" and was fired.

She taught music for awhile but soon began writing jingles for advertisers after her father introduced her to friends in an agency.

She ended up working for 20 years at J. Walter Thompson and others until 1997 when she launched her own company out of her Manhattan brownstone.

Now her company, the kaplan thaler group, inc., is the fastest growing agency in the United States with $1 billion in billings and 175 people. Among her many blue-ribbon clientele these days is Clairol, Aflac, Trojan, US Bank and Revlon.

Her secret, in a world where people are bombarded with 5,000 messages daily, has been to bring together her worlds of advertising and entertainment.

"It's about the e-factor, the entertainment factor," she said in a recent interview with The Sun. "People will follow the funny. We are _an ADD [Attention Deficit Disorder] culture and we are an entertainment culture."

She said humor has always been an important part of selling. Stock market brokers always opened their daily client calls with a new joke. Now advertisements must be funny to be memorable. Music is also key. She and her husband are both accomplished musicians _and composers which has helped her create entertaining presentations to clients, known as "pitches", which are designed win their business.

"We had to pitch Panasonic for a shaver and realized that the message _ould be that guys don't like to shave. So eight of us sang a parody _called `shaving sucks' and the client hired us," she said. "We call advertising the theatre of persuasion."

One of her team's most entertaining and enduring campaigns involved an obscure Georgia insurer called American Family Life Assurance Co. The agency came up with a duck as a mascot which quacked the company's _acronym "Aflac". Sales and consumer awareness jumped immediately. _"We've staged quack attacks on shows, delivered live ducks to hosts," _she said. "Actor Ben Affleck brings up our campaign and that he's _subject to quack attacks on talk shows. He's done so many bad movies he ends up talking about the friggin duck to change the subject about _his career."

Besides being funny, ad agencies must multi-task more than ever.

"We used to do a 30-second TV spot and a couple of print ads for clients," she said. "We still do that but now we have a second job and a third job and a fourth job. Today we will produce a 30-second and 15-second television ad; a 60-second radio and 30-second radio ad; billboards; print ads; online banners; webisodes [entertaining vignettes for websites]; content integration [product placement] and brochures."

Her firm is a reflection of herself, an eclectic mix of backgrounds, and employs musicians, actors, artists, a stand-up comic, novelists, potters and painters.

"We use the entertainment industry model. There are no titles, no _layers, no vice presidents," she said. "We swarm, with our various skills, around a project, like writers on a show. We gather, brainstorm, go away then gather again."

This is the best framework for what she believes is the next _"convergence" in the industry which is that agencies and their clients _are becoming content-providers. This is also an outgrowth of what's known in the trade as "product integration" or "product placement" but goes beyond paying a producer money to use a certain brand of car or cola in a movie made for TV.

For instance, her firm and a sister agency called Mediavest (both are _independent units with The Publicis Groupe, the world's fourth largest _agency holding company) worked with writers and producers of a show called "What I Like About You" on behalf of Clairol's Herbal Essences.

"The show's episode was about a contest to pick a "Herbal Girl" and the main character competed. There was Herbal Essences signage everywhere throughout the program and ends with the star watching a Herbal Essences commercial," she said. "We have someone in Los Angeles doing these deals."

Not surprisingly, Mrs. Kaplan Thaler, a diminutive and sunny mother of _two teenagers, is funny herself. _"I had my first child at 41 years of age and my second at 44 which _makes me the only woman I know who gave birth to grandchildren," she _said. "Kidding aside, this business is in a state of flux but if you _keep your humor, and your kids are fine, nothing can bother you."

Saturday, June 03, 2006

Eliot Spitzer and MMC

Diane Francis column for Saturday Post June 2:

Michael Cherkasky gave Wall Street nemesis Eliot Spitzer his first job as a young prosecutor in New York City busting rapists, robbers and racketeers.

Today Mr. Spitzer is running for governor while Mr. Cherkasky is CEO of MMC, a US$12-billion conglomerate comprised of insurance broker Marsh; management consultant Mercer; risk consultant Kroll, among others.

Ironically, Mr. Spitzer sued MMC in October 2004, just three months after Mr. Cherkasky took over its reins. Eventually, MMC agreed to pay US$850 million restitution to clients.

"When I told my wife we settled for that huge amount she said only cigarette companies pay that much, then added sarcastically 'thank God Eliot's a friend'," said the jovial Mr. Cherkasky in an interview yesterday in Toronto.

"The allegation was that Marsh employees were steering business to underwriters who paid them higher fees, which was not necessarilly in the best interest of clients," he said. "The allegations were true and this involved a small group of Marsh employees and a breach of trust. The fallout was serious. MMC lost US$10 billion in market capitalization and there was concern about our survival. Now 18 months later, that's off the table. Our stock has been flat for 18 months [from mid-US$40s to US$28 now] but we are focusing and growing the business."

MMC is the world's only "risk play". Its professionals assess everything from financial to terrorist, logistical, climatic, legal, political, economic, currency, supplier and employee risks, then devise strategies to avoid, mitigate or insure against risks.

"We look at enterprise-wide risk. For instance, after 9/11 the bridge between Detroit and Canada was closed for three days, which disrupted just-in-time manufacturing at considerable cost to manufacturers," he said. "Recently, a corporation, in the Fortune 500, told me that if they received just one envelope of anthrax they would be out of business because of the structure of their mail center."

MMC itself was a victim of terrorism in 9/11 when 300 of its employees died in its World Trade Center offices. Despite the attack, Mr. Cherkasky said he wouldn't hesitate to rent space in that location once new towers are erected.

"In the last five years since 9/11, less than 5,000 people have died from terrorist attacks, excluding Iraq which is not terrorism but a war," he said. "About 250,000 people die worldwide in car accidents every year and three million die from smoking so I always say `do your seatbelt up, don't smoke and go about your business'."

On the other hand, there are enhanced risks in terms of doing business, he said.

"Take globalization. Imagine these days you give your intellectual property to someone you do not know, who you never met, who can't understand your language to use in a country with different laws," he said. "That's risk."

MMC helps companies assess country-specific risks, employee risks, logistical and outsourcing risks. It's foolish to put all your eggs in one basket, such as China, and not deal with suppliers in other jurisdictions to avoid total supply disruptions.

Other risks are internal and MMC's Mercer -- the world's third largest management consultant -- works with companies in a wide range of areas.

"Not paying the right amount to employees, pension assessment problems or increasing health care costs can impact the viability of any corporation," he said.

Then there's the change in the weather.

"We are in for a more aggressive storm season for the next ten years. The models are wrong," he said. "It's silly, as a world community, to not recognize that some of the things we're doing appear to be changing the climate."

The result is steep coverage in coastal regions of the United States and less underwriting capacity available. Another reason for shortages is the increased cost of real estate worldwide which is using up capacity too.

"In the 21st Century the insurance industry will be different. There are hedge funds and banks with plenty of capital who want to play a role," he said. "And they are." Currently, half of MMC's business is in North America and the rest divided around the world. Plans are to diversify and restructure. MMC has sold US$800 million worth of businesses.

"This company was built by acquisition and left in silos," he said. "We want to provide seamless solutions on a global basis." Plans are to expand in Greater China and Eastern Europe then grow the business organically.

"Unfortunately for the world, we're in the right spot," he said.