Interview: Steve Hayden, Ogilvy & Mather Worldwide

By Scott Kirsner

Steve Hayden has shaped advertising campaigns for a remarkable roster of global brands, from Pizza Hut to Toyota to Intel to Ford to American Express. But his involvement in the creation of a single 60-second spot sometimes overshadows his other accomplishments.

Hayden is credited as the mastermind behind Apple Computer’s “1984” ad, which ran during that year’s Super Bowl. You remember the spot: A woman incites a rebellion by slinging a hammer at a giant video screen during a Big Brother-esque speech. Some saw the ad as a rallying cry for technology that would serve the individual; others saw it as a dig at IBM’s bland, beige personal computers. Advertising Age dubbed it the single best communication of the past 100 years.

These days, Hayden, a classically trained cellist and former TV sitcom writer, is vice chairman of Ogilvy & Mather Worldwide, a division of the WPP Group. In an ironic twist, he now oversees all worldwide advertising for IBM, as well as working with Ogilvy clients such as Motorola, Eastman Kodak and Unilever’s Dove brand. While Hayden is a strong advocate of the power of breakthrough creative work in advertising, he also proselytizes about the importance of R&D, product design and customer service; one of his favorite aphorisms is, “Don’t write a check with your advertising that your product can’t cash.”

In January 2005, CMO visited Hayden in his midtown Manhattan office for a conversation that touched on several topics, among them the future of advertising, how clients and agencies can work better together, and the role and challenges of the CMO.

CMO: One of the theories you see floated these days is that if the 20th century was about mass media and consolidating huge audiences, then the 21st will be about fragmented audiences and micro-media. You might have a blog or a newsletter that goes only to 15 people, but they’re the right 15 people. Is that the prism through which you see the world?

Hayden: Yes. In 1994, I was saying, as all media becomes addressable, all media becomes refusable. You have control over content. Once you have that control, then I have to make a deal with you to say, “I’ll give you this content in exchange for your attention,” which has always been the model of mass advertising. But now, I’ve got to make that deal on a person-by-person basis. Concepts like prime time will become meaningless. The catch phrase I used in 1994 was: Direct is the future of advertising, and interactive is the future of direct.

In a world with TiVo and so much advertising that can be refused and tuned out, do events such as the Super Bowl and the Oscars and the Olympics become more important for marketers, offering some of the last ways for them to have a megaphone?

There’s always going to be a place for real-time, shared experiences. You may have different views of those experiences, though. Events like the Super Bowl or the Oscars become incredibly valuable. But being on CSI on a certain night at a certain time is meaningless. DVRs [digital video recorders] and PVRs [personal video recorders] will explode. You’ll see people not watching advertising as they have in the past.

Video-on-demand companies talk about serving ads based on where you live and what you watch. Because the cable company knows that if you watch a lot of Sex and the City, you might be more responsive to a Gap ad featuring Sarah Jessica Parker. Or if we know what ZIP code you live in, we serve ads that appeal to your demographic.

I’m interested in the addressable commercial that takes more of you into consideration. If you’re interested in skiing, I can take the car commercial and rephrase it to be skiing-thematic. I want to superimpose geographically relevant data. Where is the car dealer? What are the ski conditions at your nearest ski area? The technology is right here, but getting the investment to do the experiments is a little challenging.

The unerasable gigabyte might become the new 30-second spot. The gigabyte that you as the consumer can’t touch. I can’t force it down your throat, but I can address a message to you that I think will be interesting.

The unerasable gigabyte would be an ad that sits there on your PVR?

Yes. It’s that portion of the PVR that you can’t erase, because it’s for sale. People may be pissed off about that, but it’s already happening. TiVo already has those showcases available. They’re highly addressable, they’re very expensive, and people are just learning how to do the form. The challenge we face with that, especially because it’s still in test mode, is that clients are unwilling to spend the production dollars necessary to really fill that gigabyte with compelling, targeted information. The technology is making it increasingly easier to provide the local dealer with his customized spot. It’s on the horizon. But at the moment, what people are doing is using repurposed content.

What about Internet advertising? These days, you never hear people talk about some great interstitial that they just saw on the Internet, or some great banner ad. Has there not been great creative? Or does Internet advertising just have different goals?

There was watercooler talk about SubservientChicken.com. And there have been a number of instances where people found something either so outrageous or so interesting that it got e-mailed around the world.

Was there a strategy behind SubservientChicken.com, and did it work for Burger King?

It remains to be seen. The strategy was “Have it your way,” which was a strategy that BBDO came up with in 1974. It’s a very clever way of doing “Have it your way.” Whether that translates into Burger King beating McDonald’s remains to be seen.

Some of the Nike stuff is very sharable. We’ve done some stuff for Ford that was quite shared. But we shouldn’t talk about that. I’ll get fired. [Hayden is referring to a rather gruesome Ogilvy clip, showing a cat being decapitated by a car’s sunroof, which was circulated around the Net last year. Ogilvy said it was never intended for public consumption.]

What I’m most interested in is how you get maximum impact for the minimum investment. That’s pure creativity.

Let’s talk about that. If you’re not IBM or American Express, how do you do great stuff?

We did this thing for Fanta in Denmark. I think the total production budget was $6,000. It was ridiculous.

What does $6,000 buy you in Denmark?

The creative group got a bunch of C-level Bollywood movies, in Hindi. And they put silly captions, like, “What’s up tiger lily?” about Fanta Shokata, which was the flavor they were launching in Denmark. They ran a couple of the commercials on TV to drive people to the website. The game [on the website] was, edit the film and make your own captions, and then send it to your friends. That program took off incredibly well, with next to no investment. They were getting so many hits to the website that they couldn’t all have been from Denmark. It was something like 1.5 million visitors in the first 30 days.

Does e-mail marketing work, or is e-mail such a polluted communications medium that people don’t want to hear from any company via e-mail?

The interesting thing about e-mail will be if there’s something like LinkedIn [an online networking service], where you have trusted advisers who tell you, “I really think you’ll be interested in XYZ.” The problem is you’d better be interested in XYZ, or else they’ve just added to the pollution.

In e-mail, as with lots of other kinds of advertising, there’s just an incredible amount of clutter. You have to really make an effort to do something that’s noticed.

Yes. This gets us back to the saber-toothed tiger days of advertising, right after World War II. With the advent of television, you had a lot of people thinking large.

One of the biggest advertising ideas of the last century was the idea of using diamond rings for engagements. Precious stones were used in the Victorian era. But the idea that it had to be a diamond came from an advertising guy who worked for N.W. Ayer, who happened to be connected to the Oppenheimer family, of De Beers. He had an idea: Let’s make the diamond ring the engagement ring of choice for the world. They started off with Anglophone countries, and then moved to Japan and China and everywhere else. It increased the value of that market billions of times. The idea came before the line, “A diamond is forever.”

That’s kind of what we’re looking for in partnership with CMOs. How do you come up with those game-changing ideas? Sometimes it’s a problem of change that requires you to come up with really big thoughts.

Let’s say you are the new CMO at Company X. How do you think about how much you keep versus how much you throw out the door—or pick a new agency, a new logo, a new tagline?

That’s the million-dollar question. Typically, when a new CMO comes in, they want to put their mark on an organization. But the easiest way to get into trouble is to walk away from equities. My counsel would be, try to find out what’s of value that you can build upon.

In the case of IBM, there was serious discussion about changing the name of the company. You have to remember, when we started with IBM, they had negative $50 million in brand value. People would pay more for a box with no name on it than they would for an IBM product. That’s just how far down brand value had gone.

What took the latent value of what IBM used to be—the trust, “Nobody ever got fired for buying IBM,” the globality; the size; all of which had become a negative—and turned that around into a refreshed new company, a company with a different attitude. That was much easier than changing the name from IBM to HAL, and starting all over again.

And telling people what that new brand meant.

Yeah. Because generally, you’ve got a certain customer set that’s rooting for the old you to come out—whatever was successful. The task is always, How do we take this brand, which is perceived as part of the past, and change it into something that’s part of the future? Usually, people try to do this in a very flat-footed way. You hire the hippest rock group; you get young, creative people; you do something wacky and silly that your board of directors won’t like. That’s not it. You need to take whatever is sincere and rephrase and repurpose that. You get brand transformation from building on latent values, not by starting with a blank sheet of paper.

I’m sure there’s always the battle between the CMO and the agency. If you bring in a new agency, they want to bring in lots of new ideas. If you keep the old agency, they want to protect a lot of what they’ve done.

But I think that if you have responsible counselors, they’ll try to figure out what equities you have, what strengths you have to build on. The hard decision is, What do you have to let go of? What is it you’re doing or being that has to be abandoned if you’re going to have a future?

The worst thing that happens is people firing and hiring based purely on ego, or abandoning campaigns that were proven successful, just so you can put your own stamp on things. That’s what happened with Burger King. Burger King has a long and ignoble history of firing ad agencies. In fact, they fired BBDO because BBDO insisted that they stick with “Have it your way.” The agency said, in a world with McDonald’s, “Have it your way” is your best possible positioning. It is, and it always will be. And the new marketing guy came in at Burger King and said, “There must be something better. People are sick of it.” So BBDO got fired, and [Burger King] hired probably about 12 other agencies. And now, ironically, through SubservientChicken.com, they’re back to “Have it your way.” Which is the right thing for them to do. Sorry to all those people who lost their jobs.

What are some of the things that can make the CMO-agency relationship work really well, versus some things that can sour the relationship?

Where it has really worked well for us is when you have a CMO who inspires you to bring talent to the party. They can be abusive; they can be harsh; they can be temperamental. But if they’re challenging you to do your best, and giving you that opportunity, then it’s amazing the nights and weekends that you can get out of people.

IBM has helped us retain talent by creating opportunities for people and by bearing with them—by saying, We’ll let you do that experiment if it means a lot to you.

Are there a million ways that the relationship can go awry? Frequently, you hear the story of too much client intervention: “Let me tell you what the script for this 30-second spot should be.”

Yes. There was a great David Ogilvy saying: “Why keep a dog and bark yourself.” The biggest single problem we have is the “slow no.” You don’t want to hurt the creative people’s feelings. You’re balancing this thing about building a talent pool and sometimes CMOs interpret that as, “Don’t say anything bad in front of the creative people,” even if they actually hate something, and it will never see the light of day. You get, “Well, we’re not sure; maybe you could change this or that, or polish it a little over here.” As opposed to saying, “No. That’s never going to work. That’s completely wrong. Go back and bring me something else.”

Are marketing and advertising becoming too metric-centric? Do people want to analyze everything and have a dashboard that tells them how every ad moves the needle?

I’m one of the few creative people who actually believes in research. It can help you make the work better—and target better—and have an understanding of the marketplace that you might not otherwise have had. That said: I would hazard a guess that 90 percent or more of the research dollars is basically spent in cover-your-ass research to justify failure.

What do you mean by that?

There’s a lot of lip service to applauding experimentation and reasoned gambles. The fact is that you can get fired if something doesn’t work out. So what people tend to do is test the hell out of a commercial before it’s done. Test it as an animatic. Test it; test it; test it. And they come out with a mediocre product, because most research methodologies knock the interesting edges off of everything. But the research says, “It should perform in such and such a way.” It goes into the marketplace, and if it doesn’t have a result, the boss comes down and says, “What the hell happened? I just spent $10 million!” You say, “But, I did all this research, and it told us to take all the edges off. You can’t fire me, because I did everything that was responsible.”

The challenge for the CMO is to have that entrepreneurial courage to take a flier once in a while, in hopes of moving the marketplace.

Talk a little bit about the relationship between strategy and creative. Are there some cases where you can have great strategy that doesn’t necessarily lead to great creative, or you can have a horrible marketing strategy that somehow manages to produce great creative?

In categories like soft drinks and beer, one commercial can make a campaign. In that case, execution is strategy. That can move the marketplace. In other instances, you can have god-awful creative, but if you have the correct strategy, you’re going to put it over the finish line. The example I love to use is baking soda. There is no great creative associated with using Arm & Hammer baking soda to deodorize your refrigerator. Regardless of how you communicated that, it was going to shift your market share and change things for the better.

Part of that can be inviting your best thinkers—agency people and creative people—into your strategic problem. You have to be willing to share what keeps you up at night. What tools can you bring? What ideas can you bring to help me solve my worst problems? Often, what companies will do is order a quart of milk as opposed to saying, “I’m dehydrated.”

It’s probably impossible to interview you and not bring up the “1984” ad. Do clients want an ad that has that kind of impact? Is it possible to repeat it, or were the circumstances around that ad so unique that it’s like the passing of a comet?

Clients are always asking for the most impact they can get for their investment. There are a number of caveats that always go with that: You have to show the product, we want people to remember the sub-brand. But everybody wants maximum impact, and they should have that. More important than the “1984” commercial is the health of the brand.

“1984” was a brand-defining experience, but it couldn’t have happened without the brand essence of Apple. There aren’t a lot of people who can solve problems better than Steve Jobs can. The way he used his tools was to say, “I want something that will stop the world in its tracks and let the world know that the launch of Macintosh has happened.” The combined solution was the “1984” spot and the fact that it was on the Super Bowl. Steve wasn’t sure about that, because none of his friends watched the Super Bowl. He couldn’t imagine that would be the right place to run the message, but he was willing to take that gamble, and support it with his board, with a good amount of trepidation about it.

Has advertising played a role in the iPod frenzy?

I think iPod accelerated out into the world much faster because of the advertising. The iPod concept, coupled with iTunes, was fantastic. That was the idea. But the advertising accelerated it by a factor of three, four or five times and got it to a broader audience. It also helped the overall brand health of Apple, which suddenly became hot again. It’s funny, because it was no small thing for Steve to move from the white space, Garamond look that he’d had ever since “1984” to the outlined figures on a colorful background. But the decision to do that was evaluated as a huge gamble.

That gets to this notion of risk. How could you ever research that and say, If we show you this outline of someone with their white headphones dancing, does it say Apple to you?

You could not research it. It’s very hard, if you’re not the founder of a company, to take that kind of huge risk and realize that kind of huge reward.

Are we in the the midst of a fundamental shift in how people relate to media and advertising?

Absolutely. The reason I was talking about things like De Beers and baking soda and the iPod is that the consumer used to have enough time to absorb a complex story in a print ad or a TV commercial. But now, because you’re time- and attention-starved, you either have to be educated by a friend—listen to my iPod, or let me show you something on the computer—or you have to be reached by other means. You have to pick up knowledge in an almost poster-like way. Brands become even more important in an information-overloaded society. Brands are a form of compression. Supporting brand health, to me, actually becomes more important than product features or whatever this week’s story is of product advantage.

The world you’re describing is one in which marketers don’t have as much control, if a consumer is reading a blog to see which is the best flat-panel TV to buy or getting an e-mail from someone recommending a movie to see this weekend. That’s really scary; it’s hard for a CMO to manufacture that.

And if you do [manufacture it], you can get into trouble.

But you’re not saying that everything will be that hard to control?

There are certain areas where you quest for information. Fashion magazines aren’t bought for editorial—they’re bought for the advertising. Your car magazine is not nearly as much fun without the ads. There’s going to remain a demand for advertising, per se, but as a different perspective, a romancing of the proposition, versus the real data that you’re questing for when you talk to a friend or when you go to a blog to see what they think of the new Ford Focus.

Are there some challenges that you think all CMOs have to deal with?

Every CMO faces some common challenges because they’re trying to justify these huge expenditures to their CEO and their board. Management everywhere tends to expect instantaneous results, rather than the long-term brand-building that is of real value. There is a great temptation to focus on the quick hit, the rebate, the promotional offer.

The product is ultimately the brand statement. Nothing builds brand value like success. If I’m there telling the board, “OK, if I just run pictures of rocks and trees, ultimately this will sell computers,” I’ll probably get fired. But if I can say, “Hang in there with me for six months or a year, and when we have this great new product, we’re going to shift all of the horsepower behind that,” that’s OK.

Before Bob Lutz was at Chrysler, I was talking to one of the marketing directors at Dodge. I asked who the typical Dodge customer was, and he says, “We market to pods.” I said, What’s a pod? He said, “Poor old dumb shits.” The company was so demoralized because they had no good product. Lutz came in and said, “We have to do something that will give people faith that we know how to build cars.” He went and built the Viper, before they had anything else. That was the flag on the hill that said, “This is the direction the company is going in.” Now, Dodge is a hot brand again. You can’t do great advertising over the long term if you don’t have a great product. You can ask people to have faith, but there’s no substitute for innovation on the product side.

We often make a great mistake because marketing is easier to do than product development. We spend our brand capital because it’s easier to put together an ad campaign that says “quality is job one” than it is to make quality job one. But ultimately, if you can hold off and not write checks with the advertising that your products can’t cash, if you can keep the faithful faithful until the good stuff happens, then you can build on top of that. There are cases where you should take the ad budget and put it in R&D. If you’re running ads for a product line that doesn’t work, you’re just wasting money. That’s a tough judgment call for CMOs, because it’s not always rational. Rationality would say, Take your advantages and bang away at them.

You’re saying CMOs should abdicate the marketing budget to the R&D group? That sounds unlikely.

It’s true that once a budget goes away, it can be very hard to get it back. This is case-sensitive. In each company, you have to play the game of how you get your budget back. The best example I can think of is Geoffrey Frost, now the CMO of Motorola. For the “Hello Moto” campaign, Geoffrey had to get involved with product design because he knew that until the product changed, successful advertising wasn’t going to get him anywhere. He was intimately involved with the design of the new Moto Razr V3; he virtually creative-directed that product. Now, that one hot product has the power to transform a whole brand.

So CMOs need to think about where to allocate their energy?

Yes. Where are you going to have the greatest impact? CMOs probably have to work harder than anyone in the organization because of the complexity of the job—that mix of vision and execution.

It seems like there’s no uniform job description for what a CMO does. When you encounter them, what sorts of roles do you see them playing?

There’s such a tremendous spectrum of behaviors. On one end, there are people who are very much involved with routes to market, pricing, competitive evaluation. On the other extreme, you have people involved with product design and innovation—coming up with new products. People tend to do what they’re most comfortable doing. If you have someone coming out of an advertising background, they’ll tend to focus on that.

The best people, and I’m not going to name names, are those who are as curious and interested as the CEO would be in adding up all the facets of an organization to create a brand out of it. How do all these things—from how you answer the telephone to what the packaging happens to be to what your retailer relationships are—impact a brand? These are renaissance people who are curious about a lot of stuff that might not be in their background.

They have that drive to be the utility infielder and learn how to do new things?

Yes, they want to learn about all sorts of things. Traditionally, you’ve seen people stepping into the CEO role out of an operations background, out of finance, occasionally out of sales. Very seldom have you seen advertising people step into the CEO role, unless it’s a purely advertising-driven company. But as marketing becomes ever more crucial to a company’s survival—especially in commodity markets, and it’s hard to think of what isn’t [a commodity] these days—it becomes ever more likely that the CMO role will be the last stop before running a division or running a company.

Scott Kirsner is a freelance writer based in San Francisco.

From CMO magazine (a publication of CXO Media, Inc.), April 2005