When Shelly Lazarus started at Ogilvy & Mather in 1971, there were three television networks, the internet was decades away, and legendary adman David Ogilvy still governed his agency. Today, the media landscape has changed dramatically, and Lazarus is the chairwoman and C.E.O. of Ogilvy & Mather Worldwide, overseeing more than 15,000 employees in 125 countries. The agency, which takes in an estimated $2 billion a year in revenue, works with massive clients like I.B.M., American Express, and BP, yet must remain agile enough to keep up with the rapid changes in consumer behavior. It's a difficult balance, and the company has recently gone through management shuffles and layoffs (an estimated 4 percent of the New York office was let go). More publicly, it bid for several high-profile new clients, including Wal-Mart, Volvo, and Sprint Nextel, and lost out to competing agencies. Still, O&M won the assignment to introduce Johnson & Johnson to China, including a campaign that will accompany this summer's Beijing Olympics. We interviewed Lazarus in her Manhattan office, surrounded by the dozens of frog tchotchkes that decorate the space.
Cond� Nast Portfolio: American Express, a core client, moved part of its account to Crispin Porter & Bogusky in Miami. What could Ogilvy have done to keep that business?
Shelly Lazarus: As strong as the relationships are, clients like to dabble from time to time-you know, they like to see what another agency can do-and we have to be all right with that. I would feel terrible if the work we had done and the results we had achieved were substandard, but they weren't. The work was excellent, and the results were excellent. I have to accept that American Express wants to get an experience with another agency. We've lost bits of American Express before. We have to earn it back.
C.N.P.: Motorola just returned the bulk of its business to O&M, after sending part of its account to another agency. That's an example of something David Ogilvy always strived for: working to keep clients rather than constantly going after new ones.
S.L.: He actually said that all our focus should be on current clients. He felt it was almost dishonest to take your best people and have them chase after clients who weren't paying you. And so we have a very strong bias within Ogilvy toward current clients, and we don't pursue a lot of new business.
C.N.P.: But in the past couple of years, you've unsuccessfully gone after so many big accounts: Wal-Mart twice, Sprint Nextel, Volvo, and the U.S. Census Bureau. Why was there an uptick in the number of new business pitches?
S.L.: I don't actually think there's been an uptick. We went after Wal-Mart because, to me, there was no better example of a client that really needed a brand transformation. Sometimes you just look at something and you say, "This is our sweet spot. We know how to do this." We went after it because we thought we could really make a difference. With Sprint, it was a different reason: We'd had AT&T Wireless for years. It then became part of Cingular as a result of a merger and so we lost it, and we still had this group of people who had been in the wireless wars and were longing to get back into them again. And so Sprint was just, again, a great challenge. We did Volvo because we're a big Ford agency [Ford Motor owns Volvo], and they asked us to participate, and we did. We probably still do a lot less new business than other advertising agencies.
C.N.P.: I'm sure these were massive undertakings, requiring a lot of time and money, and recently Ogilvy announced some layoffs-
S.L.: I think any company has to always stay lean, but it wasn't because of that.
C.N.P.: Then why?
S.L.: Well, we're just always looking to be more productive. It's part of the nimbleness. And if you're lean going in, then you've given yourself the latitude to hire back in those disciplines.
C.N.P.: You won the Johnson & Johnson account largely because of your firm's background in China, which dates back to the mid-1980s. How big is your operation there today?
S.L.: We have more than 2,000 people. At the beginning, there were maybe 50 people in Shanghai and 100 people in Beijing. They're mostly Chinese, and probably the most eclectic group of employees that we have anywhere. We have physicians working for us, people who come out of the government who are population experts, and Ph.D.'s in various subjects. They're just interested in advertising.
C.N.P.: Ogilvy & Mather introduced Maxwell House, Tang, and some GlaxoSmithKline products to the market. What's the biggest difference between communicating with a Chinese consumer as opposed to an American?
S.L.: When I first went to China, I was told by lots of people that the Chinese would not respond to brands. Unlike other people in the world, they were much too rational. They had grown up, all of them, with a set of offerings based on functionality, so you just tell them what the product does and how much it costs, and they can make a choice.
C.N.P.: Almost the communist ideal.
S.L.: Yes. The truth is that from the moment brands were introduced in China, the Chinese responded exactly the same way people do all over the world. They don't have the brand experience, and they don't know all the brands-so much of this is new to them. But it doesn't make them any less responsive.
C.N.P.: Ogilvy & Mather used to have two co-presidents at its headquarters, in New York, but a single executive now oversees it all. Why the change?
S.L.: One of the things happening within Ogilvy North America-and other offices and regions are doing it as well-is that we're trying to bring all the disciplines much closer together. There used to be separate profit-and-loss statements and separate organizations, and we're finding that each month, the clients are asking us to work more closely together. They don't care if it comes from public relations or interactive. They just want to know, What do I do to introduce the new Maxwell House?
C.N.P.: Consumers change the way they get their information so quickly now, and Ogilvy is so large that it can't possibly change as quickly. How do you keep up?
S.L.: Well, I think you have to go in saying that you don't know how consumers are going to respond. We don't know which messages they're going to respond to more strongly or where they're going to find the messages. And so knowing that, you have to be ready to be able to bring the brand to life through all media and then retain the flexibility and the nimbleness to respond fast.
C.N.P.: Can you give me an example?
S.L.: I.B.M.?We did these minidocumentaries: One is about how the New York Police Department basically uses data to find a guy who holds up a pizza restaurant. We did one or two of them at the start, and they were so popular and they got so many hits that we've done five or six more. But then we made the concept into advertising too. When we saw the way people responded to the minidocumentaries, we just said, "Okay, we're now riding that horse as fast as it can go. Let's use them as advertising; let's use them for sales meetings; let's use them for seminars." They're doing them all over the world now.
C.N.P.: At the same time, I.B.M. is a core client, and I understand its spending on media is going down. The company spent $1.2 billion in 2006, down 32 percent from the high in 1999.
S.L.: I.B.M. is spending less money on mass-media advertising, but it's moving a lot of that effort into everything it does on its website. And so we do all that work too. It's not less, just different. If we had not, earlier in the history of this company, started to become expert and capable in all the new media and all the new ways people communicate, it would be a problem.
C.N.P.: Last question: I'd love to know if you have a TiVo or any other DVR, and whether you use it.
S.L.: I actually have a DVR. I use it, though I do watch the commercials. Since I rarely watch television in real time, it's the only chance I get to see them.Visit Portfolio.com for the latest business news and opinion, executive profiles and careers. Portfolio.com© 2007 Condé Nast Inc. All rights reserved.