J. Walter Thompson: A year in the shadow of the Erin Johnson case

As the discrimination suit continues to wind its way towards court, the WPP agency attempts to regroup and stay focused.

J. Walter Thompson’s 152nd year was a rough one. Rocked by a salacious scandal, the world’s oldest ad agency sought to make itself anew, bringing in fresh personnel and instituting policies to promote gender and racial diversity. But change takes time, and the chrysalis is less dynamic than either the caterpillar or the butterfly.

In a year of transition for the agency, the diversity conversation happening in the industry has swelled to vocal despair and lamentation in society at large. The keen outrage felt in response to the comments alleged in the lawsuit a year ago has dulled to a persistent ache after Donald Trump—another brazen New York businessman with his own history of questionable innuendo—berated his way into the presidency. 

A year on, it’s worth taking a closer look at the fallout from the Gustavo Martinez lawsuit and how the agency has fared in its aftermath. As much as the case continues to color the agency’s reputation, it’s also helped drag the industry into a discussion it has been actively resisting for decades. JWT’s travails present a tactile blueprint for other agencies facing similar issues, and how they should (or shouldn’t) handle them. And for that, the industry should be at least a little grateful.

The Suit
"Thompson has gone quiet," said a senior executive at another WPP agency, characterizing the perspective of JWT’s holding company siblings. "They’re so crippled until this damn court case is solved."

But there is no end in sight for the damn court case. Chief Communications Officer Erin Johnson levied charges of sexual harassment at agency CEO Gustavo Martinez last March. A week later, Martinez was out, resigning his post and turning it over to WPP Chief Client Officer Tamara Ingram. In the 51 weeks since, the allegations have played out in legal filings and the press—racial epithets and rape threats, a video and sworn affidavits. WPP tried repeatedly to have the case dismissed until a judge finally denied the motion in December. 

A year later, the case still hangs like a cloud over the agency, with new information trickling out each time a court deadline looms. "If it were me, I would have settled it ages ago," the executive said. "[WPP CEO Martin Sorrell] is very territorial, always fighting to the end on this stuff. He never really settles anything."

"It’s a very traumatic thing to happen to a company—not just for the women that work there, but the men, too," said industry consultant Avi Dan. "People do want to move ahead." 

Sorrell’s determination to see the case through is a point of contention at the agency. "He’s very close to it and decided very early they were going to fight the case," said a former JWT creative leader who was at the agency at the time the scandal broke. "It’s gone on and on and on. Everyone would like it to be resolved."

Of course, a year into the dispute, there is no end in sight. "It’s so public. It’s not like they can quietly do a deal. Every move is scrutinized, which makes it more difficult to come up with a compromise," the creative added. 

However, the exposure that comes with a trial could spell disaster for JWT. Until now, much of the evidence Johnson’s lawyers say they have hasn’t been made public. But an actual trial could bring it all to light. "If you end up in court, that’s when you are really not going to look good," said Cindy Gallop, diversity advocate and former BBH chair.

As the case continues to drag on, Johnson has returned to work at the agency, though with much-restricted duties. And Martinez has relocated to Barcelona, working on projects in Spain and Latin America as a WPP consultant. That, as much as anything, demonstrates to some observers that while industry talk about reform has been loud, little has actually improved. "There has been zero impact, zero change," Gallop said. "[Martinez] is still employed. Fuck that."

The fact that Martinez is still working for WPP, coupled with the line of defense that WPP lawyers have taken to argue their case, "shows a lack of understanding about creating climates of inclusion," added Kat Gordon, founder of the 3% Conference.

Click here to read 'The Gustavo Martinez lawsuit: A timeline'

The Agency
JWT—particularly the New York office—has attempted to reinvent itself this past year. "Any new leader always comes in with the same priority to really listen to and understand the people and make sure they feel secure and galvanize them," Ingram told Campaign US.

The most lauded improvement has been the agency’s creative output. Under the auspices of Worldwide Chief Creative Officer Matt Eastwood, JWT had its best Cannes showing ever in 2016, taking home 80 Lions, when it only won 18 in total the year before. "We have made fantastic strides in the creative product through Matt and his team," Ingram said.

The agency was the 2016 Gunn Report’s "Biggest Mover," jumping from 14th to 7th place, and in October was named Cannes Lions Innovation Agency of the Year. However, many of these winning campaigns were created during Martinez’s tenure. A more fitting metric of the agency’s recovery will be its awards showing later this year.

In May, the agency welcomed a new chief employee experience officer, Celia Berk, the first person to hold that title. One of her charges is the internal employee hotline, created in May to let workers air grievances before they become actionable. Then in October, Maria Gianoutsos joined the New York office as chief creative talent officer. The agency has instituted a blind recruitment program for new hires and now provides unconscious bias training. 

"There’s no question that there was soul searching at the agency and that the allegations were taken incredibly seriously," said a former JWT executive. But there was confusion about what to do about it. "To have two C-level people at war with each other in the press, and to have it elevated to the WPP level even before it hit the press, made it very, very difficult. I don’t think there was any precedent for how to deal with that, so I don’t think anyone knew the right course."

That confusion manifested in other areas of the business, with the agency expending effort to keep from losing ground. "They’ve gone inward and focused on their existing global clients and tried to maintain relations there," observed Greg Paull, founder and principal at consultancy R3 Worldwide.

To be sure, JWT has won accounts in the last year, including Rubbermaid and Sharpie from BBH, the creative and strategy account for Splenda, digital strategy and content for Unilever’s Lux and Wild Turkey. But just two months after the lawsuit, Macy’s moved holiday creative duties from JWT to Figliulo & Partners and BBH New York. In January, Leo Burnett took back the US Special K creative account from JWT, a year and a half after losing it to the agency. And the same month, JWT lost lead brand duties on HSBC to Saatchi & Saatchi after a review. 

It’s impossible to draw a causal link between the lawsuit and accounts losses, because even if the controversy had played a part in a shift of business, "clients are subtle," said the former creative leader. "They won’t say that’s why they’re leaving."

But "how could it not affect client relationships?" asked Gordon. "You don’t think about their client roster or the amazing Helen Lansdowne Resor Scholarship [for female creatives], you still think about Gustavo Martinez."

Ingram, however, points to "a pretty good new business year," with client gains added monthly. "The question is who would know if we could have done better?" she said. "Of course there has been some noise, particularly in the New York marketplace. We don’t know the answer to the question, but I do know that our clients have been very loyal."

Still, according to R3 Worldwide's analysis of agency new business activity last year, the agency’s global new business revenue fell from $77.7 million in 2015 to just $15.7 million in 2016, dropping the agency from 7th place to 25th in that metric worldwide. The agency disputed that number but declined to cite specific revenue gains. And while the publicity around the ongoing Johnson case makes it "tough for new business," said one new business consultant, JWT’s long-standing clients are often blue chips who will stick it out through a crises.

While some talent may not consider employment at JWT because of the controversial case, recruiters say Ingram herself has been a draw for new hires. "People are very impressed with her great point of advocacy for the brand," the recruiter said, adding that the lawsuit "wasn’t a massive deterrent, as people saw the opportunity to work at an iconic shop."

That’s a perspective shared by some people of color in the industry, too, said Taylor Yarbrough, manager, diversity & inclusion at the 4A’s and head of the organization’s Multicultural Advertising Intern Program. "We have a lot of [MAIP] alums at JWT, and I haven’t heard them say they don’t want to work there. People look at it as an individual that made a mistake," she said. "It’s not like Uber, where so many individuals made so many mistakes that it must be a cultural thing."

The Industry
Whatever the fallout at JWT itself, the advertising industry has been forced to confront its own demons, exorcised by the unforgiving process of legal discovery. The agency’s successes, as well as its mistakes, have helped shape a dialogue that’s now commonplace.

"There is license to have a lot of very honest conversations about the state of gender in the industry, and to a certain extent diversity in general," said Nancy Hill, the outgoing chairman and CEO of the 4A’s. The organization’s annual conference was held just two weeks after Martinez resigned, and Hill didn’t shy away from the controversy. "This was something the industry needed to hear to wake up," she said. "Prior to this tipping point, there was a belief that there were a lot of isolated incidents, that this was not pervasive." 

In a male-dominated industry like advertising, it’s too easy to dismiss claims of harassment. "It is not your experience, and you don’t get how truly appalling it is," Gallop said. "The same goes for racism and everything else." The allegations in the lawsuit appeared to have opened many people’s eyes, some seemingly for the first time. Hill said male CEOs approached her after her speech looking for ways to improve gender diversity in their agencies.

It’s hard to imagine that subsequent scandals at Saatchi & Saatchi and Rapp would have been resolved as quickly as they were if WPP’s litigation hadn’t still been dragging its way through the courts. Alexei Orlov was gone five weeks after the Rapp lawsuit emerged, and Kevin Roberts went from stupid comments to resignation in four days. Now, brands need to be prepared to say something about events like International Women’s Day, the senior recruiter said, and agencies are specifically asking for female candidates. 

While the elevated conversation can’t be attributed solely to a single lawsuit, it’s been influenced by a wider cultural trend. It’s a post-truth, alt-right world out there, and the progressive bubbles at most ad agencies are reacting with passion verging on panic.

"It’s a larger societal thing that’s happening, especially after the presidential election," Yarbrough said. Agencies are being more outspoken about where their values lie. "This past Black History Month, so many agencies did so much more than I have ever seen," she added. "The whole office is having the conversation, not just the black affinity group. We’re seeing a shift in the way society is understanding diversity and inclusion and the problems of people outside of their communities."

The Future
Thompson, however, must continue to labor under the yoke of the lawsuit. There’s the added burden of the reputational hit, as well, said the former agency executive. "They have to do more than everyone else. I believe they have to overcompensate."

But there may be—as JWT New York CEO Lynn Power said last year—a silver lining. JWT has the responsibility to examine its fundamental principles. But it also has an opportunity to overhaul processes and lines of thinking that have become set over a century and half. "Recognize a moment of change is always a moment of fragility, but also a moment of excitement and seizing an opportunity," said Ingram. 

The scandal, for better or worse, has increased the agency’s visibility. "If they take this heightened awareness and continue to do actions that speak to their support of diversity, continue to push the creative," the former exec said, "they can turn negative to positive."

Click here to read 'The Gustavo Martinez lawsuit: A timeline'

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