BW Online | January 17, 2001 | To Ad Veteran Bob Schmetterer, Digital Means Dollars

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JANUARY 17, 2001

MOVERS & SHAKERS
By Heather Green

To Ad Veteran Bob Schmetterer, Digital Means Dollars
That belief has helped the CEO of Euro RSCG push his agency into advertising's top five

Bob Schmetterer: CEO of Euro RSCG

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If Bob Schmetterer hadn't liked cars so much when he was a kid, he probably wouldn't be where he is today. In his early 20s, Schmetterer was working at British Motor's offices in New Jersey, running systems analysis for the company's spare-parts inventory. He took the job to pay the tuition for a degree in psychology he pursued at night at New Jersey's Fairleigh Dickinson University. Schmetterer came up with an idea based on his infatuation with British Motor's Austin Healy and MG sports cars: Wouldn't it make sense for the carmaker to also offer all the must-have accessories, like key fobs, leather gloves, and car racks? Schmetterer sent the idea off to the head of marketing, who liked it so much he put Schmetterer in charge of the project.

That curve in the road lead Schmetterer to a successful career in advertising. And if, at 20, Schmetterer intuitively understood marketing, the urbane 56-year-old New Yorker has since risen to the top of his profession. As chairman and CEO of Euro RSCG, owned by France's Havas Advertising, he directs a mammoth New York-based ad agency that employs more than 10,000 people in 75 countries. Since being promoted to those posts in 1997, Schmetterer has completed 68 acquisitions and relentlessly pushed his message that ad agencies need to work as consultants with clients -- helping them communicate in innovative ways using technology and across a wide variety of mediums. With that approach, Euro RSCG has moved from the 14th-largest ad agency in the U.S. in 1997 to the No. 6 slot last year, and from the seventh-largest worldwide to the fifth.

The Internet has been integral to the company's success and will be essential to its future growth, Schmetterer says. It's not just lip service. In 1994, Schmetterer's agency spearheaded MCI's pioneering TV commercials, using child actress Anna Paquin (of The Piano fame) to promote the Information Superhighway. The firm also encouraged MCI to buy the first round of online ads ever on edgy news site Hotwired. Now, the firm is the eighth-largest interactive ad agency, according to Adweek. Revenue from interactive clients -- including Red Lobster and Intel -- is expected to jump 23% in 2000, to $152 million, or about 10% of overall revenues. Schmetterer believes the Net is fundamentally changing how companies link their communications and business strategies.

NEW DIMENSIONS. That's not a commonly held view among many traditional advertisers. Taking advantage of the Net's importance has been slow going for many. This year, revenues in the Net ad industry are expected to remain unchanged at about $8 billion, down from growth estimates just six months ago of 30% to 40%, according to newly released estimates from Merrill Lynch & Co. And the precipitous drop-off in dot-com advertising hasn't been offset by a dramatic increase in spending from traditional advertisers. Schmetterer says both advertisers and online publishers are to blame for not figuring out the potential payoff. "One of the reasons that the acceleration of online advertising has had some bumpiness has been the fact that, creatively, it hasn't really been cracked yet," he says.

Schmetterer has some definite ideas about how to crack it. Banner ads aren't enough. Ad agencies, online publishers, and advertisers need to work with what is unique to the Net -- its interactivity. The Net is best used for marketing, especially direct marketing, using e-mail, very specifically tailored offerings, and information-rich campaigns. "Online advertising is to advertising what MTV was to music. It added a dimension to music -- a visual dimension that was never there before," says Schmetterer.

This kind of thinking was behind the recent marketing push that Euro RSCG crafted for Volvo. The auto maker wanted its third car launch of 2000 to stand out. At the same time, it wanted to target a younger, more technology-oriented group of consumers. So Volvo made a radical decision: For the first time in industry history, it introduced a new car model, the S60, solely online. Through a partnership with America Online, Volvo co-sponsored a sweepstakes for six S60s, mailed out 500,000 CDs loaded with info and pictures, and offered a free-accessory promotion -- worth $2,100 for items such as fancier radios and speakers -- exclusively to AOL users. It's still too early to gauge the effect of the campaign, but since the Oct. 15 launch, about 21,000 people have configured cars online and asked for quotes, and 3,000 cars have been sold. This kind of break-the-mold advertising, though, is still a rarity online.

"A TENDER CHICKEN." Schmetterer doesn't hold back when it comes to giving the ad world a piece of his mind. Last June at the International Advertising Festival in Cannes, he delivered a speech scolding the audience for mostly just rewarding creativity in TV. That tendency is leading the ad industry to give less attention to how it can be creative online, Schmetterer argued. Equally to blame are the online publishers who haven't been pro-active enough in understanding how traditional advertisers want to use the Net and what kind of creative programs would make that happen. "Media companies need to reexamine their role in this process and recognize they are not just selling space, they're enabling ideas," Schmetterer says. He thinks media companies should work creatively with advertisers and propose new areas and special promotions. For instance, eBay helped create buzz late in 1999 around the launch of BMW's new X5 sport-utility vehicle through an online auction, with the $159,000 in proceeds going to charity.

It's a long way from pitching key chains. Since he got his start in marketing at British Motor, Schmetterer gradually worked his way up in the ad business. Born in the Bronx, he grew up in New Jersey, just outside New York City, during the '50s and '60s. Though he studied psychology in college, he never pursued a career in the field. Instead, he found his way first to marketing and then to the advertising business. After finishing his undergrad degree, Schmetterer took a job in market research at Volvo in the U.S. But to avoid being locked into the car industry, he took another research job at ad agency Scali, McCabe, Sloves in New York.

He quickly became entranced with the creative part of marketing, finally rolling up his sleeves and jumping into account management. One of his first clients in the early 1970s was Frank Purdue. Schmetterer helped Purdue break out of the commodity chicken industry by stressing the quality of Purdue products in a campaign that coined the now-classic tag line: "It takes a tough man to make a tender chicken." Schmetterer spent 13 years at Scali, McCabe, Sloves and three more as the president of European ad agency HCM before joining, in 1987, with a group of former colleagues to form their own agency, Messner Vetere Berger McNamee Schmetterer. In 1989, the firm sold a minority interest to European competitor RSCG, which then merged in 1992 with rival Eurocom, owned by Havas, one of Europe's largest media companies.

Schmetterer's goal for the next three years is clear: gain market share and offer an ever-widening array of ad and marketing services. Increasingly, through acquisitions of direct-marketing, international, and PR firms, companies like Euro RSCG and Ogilvy are moving toward this new model. To get there first, Schmetterer says he'll do more of what he has done in the past: scout for acquisitions, encourage more interaction among different divisions on accounts, and work to get clients on the right foot in the rapidly changing world of advertising. It's a tall order, but so far, Schmetterer has shown the creativity and drive to make it possible.