It's been an eventful couple of years for Young & Rubicam. For its 75th birthday, this Madison Avenue company went public, with the largest IPO in advertising history in May 1998, after two years of planning and a massive restructuring of its New York headquarters. CEO George Georgescu brought in a new COO, CFO, and general counsel, and revamped Y&R's board of directors. In August 1997, Hellman Friedman, a San Francisco buyout firm, acquired a significant minority stake in Y&R, which gave the ad shop the cash to prepare for the IPO by increasing management's stake in the firm, and strengthening its new media and research divisions. Today, Young & Rubicam Inc. is the holding company which owns a number of marketing groups, but the company will forever be tied closest to its flagship agency, Y&R Advertising.

In the old days

Young & Rubicam was founded in Philadelphia by Raymond Rubicam and John Orr Young in 1923. Rubicam was the first "creative" ever to start an agency (Young was an account executive). One of Y&R's first major clients was General Foods, which was so pleased with the service they encouraged the firm to move to New York in 1926. They also threw their toughest account at the fledgling agency: a congealed fruit salad called Jell-O.

By 1927, Young and Rubicam had moved into a small office on Madison Avenue, and expanded slowly to take over the entire building. Y&R has been at that headquarters ever since. In 1932 Rubicam hired Dr. George Gallup to head the agency's research department. This was a first for the industry, and would be an important asset as the company diversified to offer branding and strategic consulting services to its clients. Y&R was a pioneer in a number of other areas: in 1951, it produced the world's first color television commercial, and it was the first agency to set up client sponsorship of daytime dramas, which would eventually become soap operas. (And you thought it was just coincidence that the agency shares its initials with The Young & the Restless.)

The early 1990s were marked by a few soap-like scandals at Y&R including charges of bribery, lawsuits over breakaway units, and a failed triumvirate with Dentsu and Eurocom, a French agency. The recession also prompted layoffs and a series of reorganizations. By the time Georgescu became CEO in 1993, the company was in turmoil, but he managed to turn things around. He increased revenue growth, and was instrumental in branding Y&R Inc. as a multinational, multidiscipline network of companies with an emphasis on consumer research.

Diversification and consolidation

Over the years, Y&R has diversified by acquiring a number of companies that specialize in a wide variety of services, including advertising, PR, direct marketing, branding, and promotional services. But until recently, each company tended to compete for, rather than cooperate, on accounts. Georgescu took several steps to change this, with the ultimate goal of winning entire integrated global accounts. First, he introduced the system of "key corporate accounts." He chose 42 important clients, and assigned a single executive to nurture the company's relationships with each of them and to win more business.

In 1997, the CEO created Y&R's "Network of Companies," which includes Y&R Advertising, Burson-Marsteller (perception management), Landor Associates (brand/corporate identity consulting and design), Sudler and Hennessey (healthcare marketing), and Wunderman Cato Johnson- now called Impiric (marketing and consumer research). In 2000, Y&R 2.1 was added to provide brand develpoment for dot.com's and other clients with Web presences. Georgescu's goal was to eliminate competition between the firms, and motivate them to collaborate on accounts. This strategy has been extremely successful - the corporation won the majority of global duties for Colgate, and the entire Citibank account. "Network" members coordinate everything from direct marketing and sales promotions to Citibank's sponsorship of Elton John's 1998 world tour. The only negative aspect of operating these companies in such a close network is the potential for client conflicts. For example, Wunderman Cato chose to resign its American Express business in anticipation of a Citibank win. Such issues could become messy in the future, especially when broad global accounts are at stake.

During the '90's, one of the threats that arose to multidiscipline marketing companies like Y&R was the consulting industry, which now offers market research and strategic advice on branding. To gain a competitive edge, Y&R developed a secret weapon, called the Brand Asset (TM) Valuator, in 1995. It's a worldwide consumer research program with proprietary software that contains information on more than 13,000 brands, gathered through interviews with 95,000 people in 32 countries. The company acquired Capital Consulting and Research in April 1998 after rival CKS Group pulled out on a deal with the CT-based firm. The business will be folded into the agency's Wunderman Cato Johnson unit.

One interesting fact about Y&R Advertising: the agency handles pro bono accounts. Among these are: The United Nations High Commissioner for Refugees, United Cerebral Palsy, The United Negro College Fund, and the Cancer Foundation in Latin America. In March 2000, Y&R was selected as the first full-service ad agency to produce the NFL/United Way Public Service Campaign. In addition, Y&R Advertising is collaborating with the Ad Council to launch a series of programs to benefit children throughout the United States, and a campaign to assist battered women.

Changing of the guard

In August 1999 Young and Rubicam announced that their chief executive officer, Peter Georgescu, would step down as CEO and assume the position of chairman emiritus. After only a year as Georgescu's successor, Thomas Bell, Jr. will also be stepping aside now that the largest communications services group in the world has been formed.

Y&R to be WWP