IBM Is ‘Reviewing’ Its Ad Agency Situation
International Business Machines Corp. said Friday that it is reviewing the advertising assignments currently being handled by Lord, Geller, Federico, Einstein Inc., an agency rocked by recent top-level defections.
The computer giant said that Lord Geller would be one of a “small number of advertising agencies” invited to participate in the review and that it expected Lord Geller would “continue as one of the company’s advertising agencies following the review.”
IBM is Lord Geller’s biggest client, reportedly accounting for about half of the agency’s estimated $200 million in annual billings.
In a statement, Lord Geller said it had “always assumed that IBM would review its agency situation after the events of the last few months.”
Securities analysts said the review could have serious implications for Lord Geller.
Emma Hill, who follows the advertising business for Wertheim Schroder & Co., said she was “not very hopeful that Lord Geller is going to keep the bulk” of the IBM business. “If I was working at Lord Geller, I’d be pretty nervous,” she said.
Charles Crane, the media and advertising analyst for Prudential-Bache Securities, said: “For Lord Geller, this is clearly a serious incident.”
“IBM provides a lion’s share of Lord Geller’s revenue stream and is its most prestigious client. If that client walks, it doesn’t speak well for that agency’s viability on an ongoing basis,” he said.
Agency in Turmoil
Lord Geller, a unit of the British concern WPP Group PLC, has been in turmoil since mid-March when six top agency executives, including Chairman Richard Lord and President Arthur W. Einstein, walked out to form their own agency, Lord Einstein O’Neill & Partners.
The defectors complained that they were not given enough autonomy to run the agency after it was acquired as part of WPP’s purchase of the holding company JWT Group Inc. last summer.
WPP’s chief executive, Martin Sorrell, fired back by charging in a lawsuit that the defectors had breached their duties to the agency and conspired to take away business from Lord Geller.
Two advertisers--New Yorker magazine and WNBC-TV--left Lord Geller for the new agency. IBM itself said in mid-April it was giving a number of short-term advertising assignments to Lord Einstein while keeping the bulk of its work at Lord Geller.
A state Supreme Court judge subsequently issued a temporary order barring Lord Einstein from accepting any more Lord Geller clients and employees. A hearing on that order has been under way for several weeks.
Created Chaplin Ads
An IBM spokesperson, Theo Chisholm, said there was no timetable for the review. She said Lord Einstein would be invited to participate if there were no legal impediments, but declined to identify any of the other invited agencies.
Lord Geller first went to work for IBM in 1979, and created a memorable series of ads that featured a Charlie Chaplin-type character who used IBM office equipment to create order out of chaos.
More recently, Lord Geller assembled an ensemble of actors who once were in the television series “M-A-S-H” for a new line of IBM products.
Its current assignment also includes creating corporate image advertising.
