Leo Burnett Company, Inc. History

Address:

35 West Wacker Drive
Chicago, Illinois 60601
U.S.A.

Telephone: (312) 220-5959
Fax: (312) 220-6533

Private Company
Incorporated: 1935
Employees: 6,950
Billings: $5.4 billion worldwide (1996)
SICs: 7311 Advertising Agency

Company Perspectives:

Headquartered more than a thousand miles from Manhattan, the Chicago-based Leo Burnett Company creates unique advertising campaigns grounded in traditional American values and traditions. The majority of its clients are large, consumer-driven corporations, marketing everything from fast food to cigarettes to frozen foods.

Company History:

No other advertising agency in the world has created so many memorable and marketable "product characters" as Leo Burnett Company, Inc. The Jolly Green Giant, Morris the Cat, and Charlie Tuna are all Burnett inventions. And that is only the beginning of the list. The near-unemployed Maytag repairman, the Pillsbury doughboy, Tony the Tiger, and the legendary Marlboro Man are also examples of the Leo Burnett agency's talent for giving a product an image that endears it to the consuming public.

The operating philosophy at Leo Burnett does not, however, involve instructing agency staff to merely foster recognizability for a client's product. Equally, if not more important, is the concept of "familiarity." In its advertising campaigns the Leo Burnett Company tries to establish a special rapport between producer and buyer and between agency and client. For this reason, Leo Burnett has been consistently more successful than its competitors in retaining customers for extended periods of time. Of its 31 accounts in the United States, half of them have been with the firm for 20 years or more.

Currently, the Chicago-based Leo Burnett Company is the 10th largest advertising agency in the world, the eighth largest in the United States, and one of only a handful of top-ten American agencies not headquartered in New York City. Ironically, the firm has never made growth one of its major goals or priorities. Rather than actively pursuing numerous, varied accounts, or increasing business by extending its services through diversification, it tends to take a more conservative approach to the business of advertising. It concentrates on winning a few "blue chip" accounts and keeping them for decades. Then, as the business and advertising expenditures of its clients expand, Leo Burnett also grows.

This approach to advertising is characteristic of the company's founder. Born in St. Johns, Michigan, on October 21, 1891, Leo Burnett attended the University of Michigan where he graduated with a degree in journalism. After college he obtained a position with Cadillac as the editor of an in-house publication and then became advertising manager in 1919. Later, he worked at Homer McKee Advertising in Indianapolis. In 1930 he was hired away from McKee by Erwin Wasey & Company of Chicago to assume the position of vice-president/creative head. Five years later Leo Burnett left Wasey & Company to form his own agency.

When Burnett first started his business in August 1935 he had one account, a staff of eight, and a bowl of apples on each desk in the reception lobby. The agency's only client was the Minnesota Valley Canning Company, which had formerly been with Leo Burnett's old firm. It had moved over to the fledgling Burnett agency because the management at Minnesota Valley liked Leo Burnett personally. "I want the little guy with dandruff and the rumpled suit," said the president of the company. To reward this display of confidence and loyalty, Burnett created the Jolly Green Giant.

In an industry centered in the high-fashion area of Madison Avenue in New York City, the Leo Burnett Company of Chicago was something of an oddity. Its ads tended to reflect a certain mid-American homeyness rather than eastern sophistication. The Green Giant and Kellogg campaigns typify this technique. Both have historically been aimed at the emotions of their respective audiences, portraying the products with a large degree of human warmth. Burnett used what he himself called "sodbusting corniness"--language and imagery that drive home a point by conveying a feeling of straightforward honesty. However, the "Chicago School" was more than just a creative philosophy. It was a commitment to a certain type of research and brand of workaholism.

Burnett was a firm believer in research but often felt that the questions traditionally asked in consumer surveys did not provide the advertising agency with enough information. Most surveys were conducted in order to determine which products and therefore which advertisements sold most effectively. While recognizing the importance of this type of investigation, Burnett wanted more. He wished to know whether his ads were "liked" by the consuming public. Always seeking a combination of image and language that would evoke the most positive emotional response, Burnett was one of the first to seriously use Motivational Research (MR) in advertising. This is not to say that the Burnett agency put advertising popularity above product sales. Burnett simply felt that if he could find out what people liked, he could more successfully create effective ads.

Motivational research became popular among a number of advertising firms in the late 1940s and 1950s, but the technique itself came under fire in the 1960s with the rising power of consumerism. Motivational Research was thought to be what gave advertising agencies the ability to influence buying patterns and behavior through psychological conditioning. That, of course, was not what Leo Burnett meant when he spoke of motivational research. He was constantly making public speeches imploring the advertising industry to be socially responsible and never to surrender the invaluable commodity of integrity. Nevertheless, motivational research was all but abandoned in the 1960s, although during the interim Leo Burnett had learned some of what he wanted to know about the American consumer's likes and dislikes.

During this time the atmosphere around the agency ranged from the hectic to the frenzied. Stories abound of Leo calling up his copywriters at various Chicago bars on Saturday nights to ask them to come in Sunday morning to rewrite still imperfect ad campaigns. What is more, the stories go, the writers were always eager to take Leo up on his "invitation." Leo Burnett either surrounded himself with like-minded, overly industrious people or his workaholism was contagious. He himself described the grueling creative review committee meetings as "being nibbled to death by ducks." The work, however, always paid off with ad campaigns that "stuck" in the mind of the consumer. Don Tennant, former worldwide chief creative officer, says of the agency, "They put their stamp on these brands and put a stamp on the American consciousness."

During the decade of the 1950s, the years of "I like Ike" and Pax Americana, the Leo Burnett Company was able to reflect the American values of strength, tradition, comfort, and family in its advertising campaigns. This talent won for the agency a number of new and profitable clients and secured those accounts already in the Burnett agency. A good example is the work the agency did for United Airlines. United, although it had a large market share of the passenger air travel business, was feeling the pressure of new carriers coming into the industry. For years United had been associated with the cold stainless steel of its airplanes and began for the first time to worry about its image. When it received the account, Burnett focused on the people who ran the airline rather than on the plane itself. This gave rise to the "Fly the Friendly Skies" campaign. Similarly, the thematic catch phrases of "the best to you each morning" for Kellogg's and "you're in good hands" for Allstate carry with them a familial warmth and all-American appeal.

Marlboro Man Takes to the Trail in 1964

As successful as these campaign images were, none compares with the impact of the most famous Burnett creation, the Marlboro Man. In his book, On Advertising, David Ogilvy writes that, "Without any doubt, Leo's greatest monument is his campaign for Marlboro."

In the 1950s cigarette manufacturer Phillip Morris was having trouble selling its new filter-tipped Marlboros to an American public that had grown accustomed, during and after World War II, to smoking Lucky Strikes. Filtered cigarettes were viewed as unmasculine, and Marlboro could never claim more than 1% of the market share. So Burnett went to work creating a different image for it. He came up with a character that exuded masculinity and American heritage, namely, the cowboy. After the ad campaign's introduction in 1964, sales increased dramatically and Marlboro became and has remained the number one-selling cigarette brand in the world. What was particularly striking about the ad campaign was that it translated so well from television to magazine print and billboard advertising--an absolute necessity after cigarette commercials were banned from network television in the United States in 1970. The Marlboro brand was inducted into the Marketing Hall of Fame in 1994, due to its "enduring success in the marketplace," a success resulting from Burnett's work.

On the strength of its work for Phillip Morris, the Leo Burnett agency expanded to London by purchasing an interest in the firm of Legget Nicholson and Partners. In 1967 the company merged with Detroit-based D.P. Brother & Company, a move that added G.M.'s Oldsmobile to the company's list of accounts.

Continuing and Refining the Burnett Legacy: The 1970s

Leo Burnett died in 1971 at the age of 79. He left behind more than a successful advertising agency. He also left a personal legacy and a philosophy that encompassed both the business and creative aspects of advertising. The motto at the Leo Burnett Company was and remains, "Reach for the stars; you may not get one, but you won't come up with a handful of mud either." Nothing could possibly capture the homespun wisdom of Leo Burnett better. He kept a file called "Corny Language" and added entries to it whenever he overheard something in a passing conversation that struck him as honest and poignant. Most fundamental to the Burnett creative philosophy, however, was what Leo called "inherent drama." He thought every product possessed this quality and that it was up to him and his copywriters to uncover it. Inherent drama, he said, "has about it a feeling of naturalness which gives the reader an emotional reward. It is what the manufacturer had in mind in the first place when he conceived the product."

Yet the discovery and display of a product's inherent drama was not supposed to make the ad more striking than the product itself. The Burnett agency tried not to impose a "Burnett look" upon its customers. Instead, the specific client was given a "look" with Burnett's help. Also, the agency tended to measure the effectiveness of its creativity by way of sales rather than awards, an attitude that would occasionally draw criticism from the new breed of "idea" men in the industry. And the agency would sometimes be criticized for being overly cute, or for creating bland, homogenous advertising. The "Chicago School," some contended, was an antiquated concept that resulted in provincial, childlike campaigns. "Sod-busting" honesty, Burnett critics remarked, was passé.

New Directions, New Approaches Characterize 1980s and Beyond

Such criticism would not go unanswered. Both in the creative and business spheres, the Leo Burnett Company became increasingly more aggressive. It pursued and won the lucrative McDonald's account (stealing it away from Needham and Harper), began actively seeking foreign markets, and also ventured into the areas of service industries and high tech. From 1985 to 1988 the firm serviced computer peripherals giant Hewlett-Packard as a client, adding Noxell's Clarion cosmetic line, Proctor & Gamble's Bold detergent, and Hallmark Cards in 1988, and Pillsbury mixes in 1989. On the down side, accounts with candy giant Mars Inc. were lost to other agencies during the decade; in the face of declining profits, McDonald's would return part of its advertising business to Needham in 1990.

Industry-wide recognition for Leo Burnett's creativity also came to the firm during the 1980s. For instance, the Leo Burnett Company won more music awards at the 1985 Advertising Age magazine awards banquet than any other agency except J. Walter Thompson. The shift in posture and attitude symbolized by such increased recognition did not represent a change in fundamentals, however. The company had no intention of risking the "blue chip" clients among its 31 domestic accounts by altering the conservative campaigns that made those large, consumer-oriented accounts profitable. Agency heads did not wish to alter Leo Burnett in any way, just allow it greater latitude in dealing with changing industry trends. Said chairman and president John Kinsella, "I'm not against growth, but growing just to be bigger is not a goal at all."

During the 1990s the agency continued to experience a fluctuation in campaigns as well as clients. On the heels of a four-year slide in sales, long-time client G.M. dropped the "This is not your father's Oldsmobile" campaign and put its $125 million national account up for review in 1992. Noting that the Big Three automaker's action was the first client review that Burnett had ever participated in, Wall Street Journal reporter Joanne Lipman characterized the company as "a patriarchal empire which spawns devotion among employees and clients alike... known for coddling clients better than any other agency in the U.S." In what the Wall Street Journal characterized as a "stunning coup," Burnett ultimately retained the G.M. account. Equally symptomatic of the decade's fluctuating client base, Sony stayed with Burnett for three and a half years before placing its $40 million account in review; H.J. Heinz left the agency in 1994 after a long relationship, followed by Tropicana juice a year later.

However, Burnett gained votes of confidence from Phillip Morris and Miller Beer, who awarded the agency accounts for both the Benson & Hedges and Miller Lite products, respectively. In 1991 the Beef Industry Council chose the agency to handle its $25 million account, Fruit of the Loom joined the agency roster in 1992, and Seven-Up gave Leo Burnett the job of reviving its reformulated Diet Seven-Up brand soft drink, which Burnett continued until a conflict of interest forced the agency to resign in 1995.

Still Privately Owned, After All These Years

In an era of corporate giants, it had become unusual for a company with more than $2 billion in total billings to be privately owned. During the 1990s Burnett felt the pressure of such advertising conglomerates as the Interpublic and Omnicom groups, which could offer expanded services. When other major advertising agencies began to publicly trade shares, Leo Burnett was one of the few who did not. Instead, the company responded to the conglomerates by expanding its electronic services, producing online and Internet home pages through Giant Step Productions, which it acquired in 1996.

Leo Burnett also began to take its distinctly American approach to marketing overseas, gaining both the Vatican and Fiat motorcars among its several European clients, and exploring expansion opportunities in opening Asian markets, particularly for American cigarettes. In 1993, under the leadership of newly appointed CEO William Lynch and COO James Jenness, the company also began to streamline, cutting costs by trimming its work force through staff reductions and voluntary early retirement, and reorganizing its top managers into a six-member "global management group" led by Lynch.

The second half of the 1990s proved to be as unstable for Burnett as the first half had been, with Phillip Morris, under fire from President Clinton for its cigarette advertising, continuing to lose sales ground despite the agency's work for both Benson & Hedges and a revamped Marlboro campaign. In 1996 the company lost several of its blue chip accounts, including Miller Lite and United Airlines, whose announcement that it would be changing advertising agencies after 31 years with Burnett rocked the advertising world. Also in 1996 came the embarrassing news that Burnett had underestimated the McDonald's advertising budget to the tune of $20 million, forcing the firm to scramble to retain the fast-food king's confidence in the face of rising competition from other agencies.

On the plus side of the balance sheet, in 1995 Burnett won the account for Coca-Cola's Fruitopia, followed by the account for Surge, a new high-caffeine citrus beverage produced by the soft drink giant. Other clients gained during the second half of the 1990s included Reebok International, Rockport, Max Factor cosmetics, and United Distillers, who handed Burnett its global Johnnie Walker Black and Red Label Scotch whiskey accounts worth $80 million.

Due to the growth of worldwide billings during the decade, Burnett instituted a management shakeup in 1996 that created several new posts within the company in order to reapportion responsibility among an increased number of top-level executives. The following March, almost on the heels of the 1996 restructuring, the company ousted both its top management officials, and returned former chairman and chief creative officer Richard Fizdale to the CEO position he had held from 1991 to 1993. Calling the move a "coup" engineered by Fizdale, the Wall Street Journal noted that "morale at Burnett [had] slumped" due to the loss of United Airlines and Miller Brewing, and that the coup was in response to CEO William Lynch and COO James M. Jenness's efforts to "rein in lavish spending habits at the agency" at the request of the board of directors. While Lynch's cost-cutting measures led to three years of record profits, they also generated red tape and meetings, with morale dropping as more attention was spent "counting pennies" than pleasing clients.

Spirit of Company Founder Still Determining Factor in Future

Though Leo Burnett has been dead for several decades, his presence is still felt at the agency. Bowls of apples still grace office desks. His picture--a bald man with sloped shoulders, double chin, and a formidable lower lip, wearing a crumpled suit--hangs in every office, of which there are 38 in more than 32 countries. His words, "Steep yourself in your subject, work like hell, and love, honor and obey your hunches," still direct the work of the agency's many staff members. New CEO Richard B. Fizdale, a longtime Burnett veteran, as well as his vice-presidents and executive heads, remain dedicated to the Burnett method of advertising, where building long-term client relationships is primary. Nearly all of the chief officers at the firm began their careers with the Leo Burnett Company, which still rarely goes outside its own doors to hire its executives.

Despite the increasing competition by younger, leaner, aggressive firms, confidence in Burnett remains strong among the agency's many clients, inspired by the sales figures Burnett uses to gauge the effectiveness of its work. "Personality" and "warmth" are the two words which most accurately characterize the company's advertising campaigns, and clients know that such characteristics will not soon go out of style.

Principal Subsidiaries: Giant Step Productions.

Leo Burnett Company, Inc. History

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