Lord, Geller May Lose Big IBM Ad Account
The advertising agency best known for its IBM personal computer campaign appears in danger of losing a large part of its $220-million annual business after the defection of several key executives.
Court transcripts spelling out the troubles of the Lord, Geller, Federico, Einstein ad firm were circulated Wednesday despite legal efforts to stop it.
“People’s jobs seriously depend on whether this kind of information is published,” Martin Sorrell, chairman of Lord, Geller’s parent, WPP Group PLC, told reporters.
Lord, Geller was shaken in March when its founder, Richard Lord, and other key personnel, including Arthur Einstein, quit over what they said were disagreements with the way Sorrell was trying to manage the agency.
A court battle ensued with WPP winning a temporary court order blocking the new company, called Lord, Einstein, O’Neill & Partners, from soliciting any more business from Lord, Geller’s clients and from hiring any more personnel from Lord, Geller.
Lord, Geller officials have said their business is still sound, but transcripts of private testimony by Lord, Geller indicated that the agency was having a difficult time.
Despite a court order against their release, transcripts were distributed to several journalists of testimony by Timothy C. Elliott, head of Lord, Geller, who spoke in a session of state court last week that was barred to reporters.
‘Morale Not Good’
The transcripts showed that Elliott said a “notice of termination” had been received by Lord, Geller from International Business Machines Corp., which provided about $125 million, or more than half of Lord, Geller’s revenue last year.
For nine years, Lord, Geller has handled all of IBM’s personal computer advertising, creating a campaign that first featured a Charlie Chaplin character and later used actors best known for their roles in the television series M.A.S.H.
Elliott told the judge that other clients, including Dean Witter Reynolds and Anne Klein II, said they were growing dissatisfied with the agency where “morale is not good.”
The transcripts also showed that Lord, Geller submitted evidence that it said showed the agency is in danger of losing as much as 85% of its billings.
WPP seeks $40 million damages and a court order forbidding Lord, Einstein from taking business from Lord, Geller clients.
Attorneys for WPP on Wednesday asked Justice Herman Cahn of the state Supreme Court to file contempt of court charges against an employee of a public relations firm who distributed the transcripts, which contained public information as well as the closed-door testimony.
Cahn did not hold the firm in contempt.
Vetoed Bid for GM Account
Sorrell would not comment on the Elliott testimony, but said: “Different people can have different impressions of events.”
Sorrell was closely questioned by Thomas Schwarz, attorney for Lord, Einstein, about his role in running Lord, Geller’s affairs. Former Lord, Geller executives have said they chafed at Sorrell’s methods.
Sorrell testified that he was constantly working to protect the interests of all of the WPP Group. He said that was why in February he ordered Lord, Geller not to compete for the General Motors Corp. contract to develop an advertising campaign for GM’s new subsidiary, Saturn Corp.
Because another WPP company, J. Walter Thompson advertising agency, was handling advertising for Ford Motor Co., a GM competitor, Sorrell believed that it “would have been an impossible situation” for Lord, Geller to try for a GM contract.
Sorrell testified that on Feb. 3 he told Lord, Geller not to proceed with the Saturn bid. Despite this, Ford dropped J. Walter Thompson as its advertising agency.
Richard Lord resigned a few days later from the firm that WPP acquired last June in a hostile takeover of the JWT Group advertising empire, which included Lord, Geller as well as the J. Walter Thompson agency.
As many as a dozen other employees also resigned and at least two major clients, WNBC-TV and the New Yorker, closed their accounts
