Wunderman

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Wunderman

285 Madison Avenue
New York, New York 10017
U.S.A.
Telephone: (212) 941-3000
Fax: (212) 210-5454
Web site: http://www.wunderman.com

Operating Unit of WPP Group plc
Incorporated: 1958 as Wunderman, Ricotta & Kline, Inc.
Employees: 3,600
Sales: $376 million (2004 est.)
NAIC: 541810 Advertising Agencies

Wunderman is a New York City-based unit of Young & Rubicam Brands, which in turn is the advertising and media services arm of the United Kingdom-based media and communications services conglomerate WPP Group plc. Founded by a true advertising legend and member of the advertising hall of fame, Lester Wunderman, who coined the term direct marketing in the 1960s, Wunderman has evolved into a customer-focused marketing communications agency, practicing what can be described as “relationship marketing.”

It provides customer relationship marketing (CRM) services, the core of e-commerce and targeted marketing, helping clients to gather and analyze customer data to develop effective marketing plans that both acquire and retain customers. Wunderman is also able to execute these plans across all media, whether broadcast, print, or interactive. Some of the agency’s best known clients include Burger King, Citibank, Ford, Kraft, Lufthansa, and Pfizer. Well into his 80s, Lester Wunderman remains associated with the firm he launched, serving as chairman emeritus and contributing to a blog, The Lester Chronicles, which examines issues related to relationship marketing.

FOUNDER, NEW YORK CITY–BORN: 1920

Lester Wunderman learned the advertising business on his own without the benefit of textbooks or the classroom (although he would take many college courses over the years on a variety of subjects that influenced his thinking). He was born in the east Bronx section of New York City in 1920. When Wunderman was ten his father, a fur coat manufacturer, died, and with the Great Depression underway his family was hard-pressed to make ends meet. Though an academically gifted child who graduated from high school shortly before his 16th birthday, Wunderman was able to complete only a year at Brooklyn College, which offered free tuition, before he was forced to take a job as a $10-a-week office boy at a collection agency. Here he learned a valuable lesson for future reference when engaged in direct marketing; the highly effective dunning letters written by a coworker showed him how good writing (mixed with an effective blend of demands, threats, and appeals to reason) produced measurable results, that is, cash and checks that came in the mail.

When he was 19, Wunderman and his older brother, Irving, who had found a job as a production assistant at a foreign-language advertising agency, decided to go into business for themselves, forming Coronet Advertising Service, financed by the sale of their mother’s last piece of valuable jewelry. Still not quite sure what an advertising agency did, the brothers opted for the word “Service” to provide some wiggle room. They tried selling general printing services (counter cards, letters, brochures) but received countless rejections. Their first major break was a meeting with the manager of Specialty Salesman magazine, a publication that served the “direct selling” industry, essentially door-to-door salesman. During the course of the conversation Wunderman realized that while he was unlikely to sell printing services to the magazine, he might be able to position Coronet as an advertising agency that specialized in serving direct selling clients, a niche that mainstream agencies were not interested in. Wunderman landed the account and essentially began his career in direct marketing.

Coronet enjoyed some success, but the brothers still had a lot to learn about doing business. After two years they won a major account, budgeted at $10,000 a month. The agency paid the bills up front for two months but were never paid by the client, which suddenly went out of business. Left holding the bag, Coronet quickly followed suit, and the Wunderman brothers were out of work and thinking about taking jobs outside of advertising, believing that no agency would hire either of them. Resourceful as ever, Lester Wunderman decided to try a gambit that had always worked for them at Coronet, fashioning a buy-one-getone free offer. The brothers offered themselves as a team to an agency, which hired and paid one and received the services of the other brother for free.

In early 1942 the owner of a mail-order advertising agency, Casper Pinkster, found the offer too good to pass up and hired Irving, so that Lester became an unpaid employee as well. When Irving was drafted into the military later in the year, following the United States’ entry into World War II, Lester was put on the payroll at $55 a week. Rather than a salary, however, he wanted the money as a guarantee against commissions for the new business he brought in. While Pinkster did not consider what he did to be advertising (he saw himself as a mail-order man), Wunderman recognized that mail-order advertising, another area neglected by the large advertising agencies, held vast potential.

While working for Pinkster, Wunderman learned that there were many places to advertise that were neglected. Wunderman spotted one in comic books, which were just gaining popularity but were stigmatized as reading material for kids and halfwits. Wunderman realized that they were also being sold by the millions to soldiers and blue-collar workers and even white-collar workers on the sly. National advertisers wanted nothing to do with comic books, but the ad rates were cheap and Wunderman bought some ads for a few clients as a test. The results were extraordinary and he quickly convinced Pinkster to contract for the back covers for the most popular comic books. Other advertisers soon learned about the effectiveness of comic books, but because Pinkster’s agency had the prime slots locked up, others had to buy from it.

EMPLOYED BY MAXWELL SACKHEIM: 1947

After the war, Wunderman was ready to move on, and in 1947 he and his brother went to work at Maxwell Sackheim & Co., Inc., headed by the accomplished mail-order copywriter Maxwell Sackheim, who became Wunderman’s mentor, teaching him all there was to know about mail-order advertising. Wunderman became senior vice-president of the firm in 1951 and executive vice-president in 1956. Perhaps the most valuable lesson he learned during his time with Sackheim was the importance of testing an ad’s effectiveness. By running split ads, a control ad versus ones with different headlines, copy, and offers, a mail-order advertiser could measure the effectiveness of an ad by the business it garnered, and could then tweak the ad until it achieved maximum effectiveness. However, Wunderman disagreed with Sackheim in many areas, and in 1958 he resigned to start his own agency, leaving Sackheim under less than agreeable terms.

COMPANY PERSPECTIVES

With a rich heritage spanning more than 40 years, Wunderman is one of today’s most experienced, customer-focused marketing communications agencies.

Irving Wunderman and colleagues Ed Ricotta and Harry Kline also left Sackheim, and together with Lester formed Wunderman, Ricotta & Kline, Inc (WRK). They were able to lure away several of Sackheim’s clients and were soon turning a profit and growing. Within a year WRK’s roster of clients included the Britannica Press Division of the Encyclopedia Britannica; Columbia Record Club; and several book clubs, such as Basic Books, Grolier Society, History Book Club, Library of Science, Natural History Book Club, and Science Book Club. In little more than a year the firm became the world’s largest mail-order ad agency.

By this point, Wunderman was becoming discontented with the limitations of mail-order advertising. He began to think of a broader approach that included many of the lessons he had learned from mail-order advertising but included more progressive concepts as well. He called it “direct marketing,” a term he first used publicly in a 1961 speech to the Hundred Million Club of New York, an organization that served the direct-mail industry. Because of fierce competition for shelf space as well as the attention of consumers, who were being bombarded by advertising messages, Wunderman believed that manufacturers would seek to find ways to convince consumers to make a purchase at the same moment that they absorbed a sales pitch. Moreover, he believed that mail-order advertising as they knew it would “be replaced by Direct Marketing—a new and more efficient method of selling, based on scientific advertising principles and serviced by increasingly more automated warehousing, shipping and collection techniques.”

In 1961 WRK gained admittance to the American Association of Advertising Agencies, and Wunderman ceased to participate in mail-order advertising groups because his firm began practicing what was a new form of marketing, essentially using any method to bring sellers in direct contact with buyers. In 1967 Wunderman delivered a speech to the Boston chapter of the American Marketing Association at the Massachusetts Institute of Technology, which he titled “Direct Marketing: The New Revolution in Selling.” On that day in November 1967 he essentially declared that WRK was the world’s first direct-marketing advertising agency. His days as a direct-mail advertiser were over; mail was just one of a number of ways to sell directly to individuals rather than making a shotgun appeal to a mass audience. In 1971 Wunderman was asked to be the keynote speaker at an annual event called “Direct Mail Day in New York.” He agreed on the condition that it be renamed “Direct Marketing Day.” It was highly successful and received a great deal of press coverage, raising the profile of Lester Wunderman as well as the direct-marketing concept.

ACQUIRED BY YOUNG & RUBICAM: 1973

In the later 1960s WRK expanded internationally, opening offices in Canada, Paris, and London. By the early 1970s Wunderman decided that in order to further his crusade for direct marketing he needed to join forces with a major general advertising agency to gain access to their prestigious clients. After meeting with several suitors he opted in 1973 to merge with Young & Rubicam (Y&R), which was a forward-looking firm in its own right, envisioning an agency that could provide clients with public relations, sales, general advertising, and direct-marketing services, what would eventually be called “integrated advertising.”

As part of Y&R, WRK refined targeted relationship marketing (TRM), which sent tailored marketing messages to specific groups of customers or prospects. Over the next 20 years the agency worked for such venerable clients as American Express, Apple Computer, AT&T, Blockbuster Video, Chevron, Colgate-Palmolive, Du Pont, Ford, Kodak, Kraft, General Foods, IBM, Philip Morris, Sears, Sony, the U.S. Post Office, Time Warner, Viacom, and Xerox. In 1987 the firm changed its name to Wunderman Worldwide. In 1992 it absorbed Y&R sales promotion arm, Cato Johnson, and took the name Wunderman Cato Johnson. By 1995 it was operating 65 offices in 36 countries with billings of nearly $1.7 billion.

KEY DATES

1958:: Lester Wunderman establishes Wunderman, Ricotta & Kline, Inc.
1973:: Wunderman is acquired by Young & Rubicam.
1987:: Company’s name is changed to Wunderman Worldwide.
1992:: Cato Johnson operations are added to the Wunderman group.
1998:: Lester Wunderman retires as chairman.
2000:: Young & Rubicam is acquired by WPP Group plc, and Wunderman remains a unit of Young & Rubicam.

In 1998, at the age of 77, Lester Wunderman retired as chairman of the firm he founded, although he maintained ties as chairman emeritus. In that same year a new chief executive officer, Jay Bingle, was installed at Wunderman Cato Johnson and he began taking steps to reposition the firm as an integrated “customer relationship” agency. The company began emphasizing marketing programs that brought together telemarketing, database management, Internet, and consulting services, all of which had grown out of Wunderman’s direct-marketing efforts over the years. In keeping with this repositioning, Bingle and his management team devoted two years to coin a new name for the agency, one appropriate to the new identity. In February 2000 it was announced that Wunderman would be called “-ology.” Just before the change was about to be made, however, Y&R Chairman Ed Vick rejected the idea, forcing Bingle and his branding agency to scramble for a new idea. A few weeks later Wunderman Cato Johnson became Impiric, a name that was supposed to curry more favor as an e-media firm. It was also meant to convey a sense of “accuracy, exploration, and curiosity.”

Mostly what Impiric conveyed was puzzlement, however. Many in the advertising industry questioned the decision to abandon the Wunderman name, which retained a great deal of value as a brand franchise in the direct-to-customer industry. Moreover, Impiric’s Web business represented just a small part of the agency’s expanding revenues. Little more than a year later, in June 2001, the company admitted that the name change was a mistake and it became known simply as Wunderman. The agency’s new CEO, Daniel Morel, told the press, “I believe the brand can evolve without changing the name.”

Ironically, Lester Wunderman had been a longtime believer in the power of the Internet, which in many ways fulfilled his vision for direct dialogue with consumers. In a 2005 interview with New Media Age, the 85-year-old legend proclaimed: “Interactive is the greatest revolution we’ve ever had in media. Now the consumer can communicate with the advertiser, instead of only the other way around. Originally, all media and advertising was the provider saying, ‘This is what I make, don’t you want it?’ The call of the information age is consumers asking, ‘This is what I need, don’t you make it?’”

During the brief time Wunderman had been operating under the Impiric banner it became part of WPP Group, as that company acquired Young & Rubicam and became the world’s largest advertising group. With ample resources at its disposal Wunderman continued to grow and evolve. In 2003 its direct media group was merged with another New York City-based WPP subsidiary, Mediaedge:cia. In this way, Wunderman retained the unit’s creative capabilities while allowing Mediaedge:cia to include direct-response marketing services as part of an integrated buying package for its clients. Wunderman also beefed up its efforts in South America and in 2005 opened a new office in Seattle to handle the needs of Microsoft, serving as one of two of the global giant’s marketing agencies of record.

A year later the Seattle business was supplemented by the acquisition of ZAAZ, an interactive agency that offered Web strategy, design, development, and analysis. Later in 2006 Wunderman built up its presence in the increasingly important Asia Pacific region by acquiring Seoul, South Korea-based ComHaus Korea Ltd. and SRP Corporation Ltd., both independent marketing services agencies. As a result, Wunderman maintained 18 offices in a dozen countries in the region. Also in the fall of 2006 Lester Wunderman became a blogger, as the company he founded now hosted the Lester Chronicles, providing him with a platform to share his opinions on the evolving nature of relationship marketing while allowing him to interact directly with his audience. The more that Wunderman the company brought attention to Wunderman the person, the greater the value was added to Wunderman the brand.

Ed Dinger