THE BUCK STOPS HERE 
These days ad agency CFOs are far more than glorified bean counters. Their unique skill set puts them right at the heart of the action 

By Jason Macdonald
Marketing Magazine
June 25, 2001 

Bean counters. Money guys. Super suits. Pick any ad agency in the country and, chances are, its chief financial officer has been called one or all of these things at some point during their career. Most would probably tell you that these names at once say everything and nothing about the true nature of the role they play in the lives of their respective shops. 

At the end of the day, of course, CFOs are bean counters, responsible for managing the agency's finances and creating a financial forecast for the year ahead. Ken Wong, professor of marketing and business strategy at Queen's University School of Business in Kingston, Ont., says that has created an unfair image of the CFO "as the source of 'No' in the agency." 

But being the agency's financial brake is just a part of what they actually contribute. Today's CFOs are expected to stay on top of new business trends, dabble in human resources and information technology issues, and foresee potential pitfalls long before they happen. With all the changes in the agency world-from initial public offerings (IPOs) and industry consolidation, to increasingly complex compensation schemes-that require their expertise, CFOs are now emerging from behind their calculators to claim a place alongside the agency's executive management team during strategy and planning sessions. Today's CFO not only keeps the books, but is also expected to play a role in authoring the agency's future. 

"In the past, their role really was, to be blunt, that of a glorified bean counter," says former agency executive Alan Middleton, now assistant professor of marketing and associate director, International Executive Development at York University's Schulich School of Business in Toronto. "Gradually, as the big conglomerates began to emerge, three extra roles emerged for the CFO. 

"One, international reporting and working with CFOs around the world to maximize (the agency's) efforts. Secondly, acquisitions and mergers. As advertising became more like the clients' businesses, they looked for opportunities to grow not just by accounts but by acquisitions. (CFOs) became part and parcel of the decision-making team. 

"The third thing is emerging now: (compensation). They are much more involved in the management team in determining fees and ways of working with clients (than before)." 

As a result, CFOs "are now a key, and in some ways a more than equal, strategic partner in the management team," Middleton says. 

And with more and more shops-or the holding companies that own them-publicly traded, investors and analysts are starting to watch those who watch the money more closely, forcing the CFO to play a more visible role outside of the agency. 

My, how things have changed. In the past, "finance guy" was a synonym for bookkeeper; an important function, no doubt, but one focused more on systems than strategy and more on accounting than creativity. As such, when the time came to plot a course for the future, CFOs were low man on the totem pole that is the agency's management hierarchy. At the top sat the real glory hogs, the president and creative director. Beneath them, in no particular order of importance, were the account managers and media directors. Then came the finance guys. 

To be fair, finance people have toiled in relative obscurity because of the nature of the ad business, rather than as a result of a concerted effort to keep them out of the spotlight. Luckily for them, staying out of the light may be one of the reasons CFOs survive for years in the ad game-often, and almost unheard of in any other agency role, with the same agency. The reason? From the perspective of the client paying the bills, advertising is about service, creative thinking and, above all else, the work. Thus clients are more interested in dealing with the practitioners of advertising's arts: agency presidents and creative directors. 

They're not the only ones, either. Creatives, for instance, are celebrated in the trade press and, increasingly, in the popular media as well. The problem with spending so much time under the bright lights, however, is that you risk getting burned when things get too hot. When trouble strikes an agency-and it almost always does-fingers are most often pointed at the creative directors, presidents and even CEOs first. 

"That's because we're most visible," laughs Dom Caruso, president and CEO of MacLaren McCann in Toronto. "They (the CFOs) are tucked away in a back office, out of sight." 

Although Caruso is joking, there is an element of truth to what he says. Until recently CFOs have played a behind-the-scenes role of forecasting, tracking and reporting the fiscal successes and failures that arise from the activities of the agency's real stars. Ultimately, the CFO is not responsible for the two key activities that keep agencies afloat: bringing in new business and keeping the business the agency's already got. 

In a service-based industry like advertising, the latter of those two tasks can be just as challenging as the former. Maintaining a healthy client-agency relationship depends not just on the quality of the work done, but on the soundness of individual interpersonal relationships. Traditionally, CFOs have had few opportunities to interact with clients, leaving little chance that they would get blamed should a relationship go south. Clients, on the other hand, have been known to drop agencies because they couldn't get along with the creative director or creative team working on their business. 

There is also the question of accounting skills and training to consider. The CFO function requires a relatively specialized skill set, which, when combined with agency experience, makes them tough to replace. Just look around the industry. In the last couple of decades the CFO position has been one of the most secure in the ad business. MacLaren McCann CFO and group executive vice-president Erwin Buck has been with the agency for 20 years, 11 as CFO. His predecessor stayed in the job "for probably 15 years or more," Buck says. During Buck's tenure, the agency has seen four CEOs come and go. That, he points out, isn't exactly a scandalous turnover rate. But it's still four times the number of CFOs to come through the agency's doors during the same period. 

Buck is now something of a fixture at MacLaren, a constant in a world that cherishes youth and flux. For better or worse, creatives and account people jump from one agency to the next in search of higher-profile accounts to work on and a step up the corporate ladder. Presidents are moved around too, often to gain international experience and exposure within the same agency family. As pressure mounts on brand managers to fatten bottom lines and show a return for every marketing dollar spent, clients are also quick to make moves of their own, perhaps changing agencies sooner than they might have in the past. In such a young and fluid environment, it's important to have someone around who's been through it all before. Because they tend to stay in one place, that person is, more often than not, the CFO. 

That's certainly the case at MacLaren McCann. Buck's 20 years of experience make him the agency's unofficial "keeper of the culture," says Caruso. "Oh, he plays a real role in the culture of the place. (And) he's definitely a senior partner and a counsel (to me), not just on issues related to finance." 

A dedicated marathon runner, Buck's tall, lean frame, capped with a shaved head and salt-and-pepper goatee, lends him a certain look of wisdom befitting one who fills the role of money man and mentor. That's a role growing numbers of CFOs may find themselves playing as the makeup of the industry's management ranks gets younger and younger. Granted, creativity and youth are inextricably linked in the agency mix. But there is no equal to years of experience when it comes to sorting out some of the grittier business issues, like staffing, investment and growth opportunities. Balancing the need to mentor and nurture young talent with the demands of fiscal responsibility and planning requires a deft hand and excellent people skills. 

According to one agency consultant, who spoke on the condition of anonymity, "control is a key issue in an agency, a (very) young environment." As a result, "you have to be sensitive to accountability (issues)." 

Civia Lee Verstraete, also a consultant and the finance practice leader at Mandrake Management Consultants in Toronto, notes that "there is a strong people element to agency CFOs that runs counter to the 'numbers people' stereotype. 
"In advertising...the inventory rides the elevator every night, and if they don't like the values and vision of the organization they simply leave. Consequently, good CFOs bring stability to agencies by understanding both the people and the products." 

In part, it's the type of people advertising attracts that appeals to Buck, and they're one of the reasons he's stayed in the business for so long. 
"People excite me," he says. "There's always something moving and you get to deal with creative people." 

Similarly, Lou Quattro, executive VP and CFO at BBDO Canada in Toronto, says the agency environment helps satisfy his own creative impulses. The opportunity to work in an environment where creative thinking is feted is what lured him to advertising 24 years ago. 

"I just graduated with a professional accounting degree and, because of my temperament, which is more right brain than left brain, more a creative temperament, I basically lucked into the environment," Quattro says. "I like it and it suited me. The people I work with are by and large creative, so I get along with them and the environment appreciates creativity." 

Quattro proved just how creative he can be-and just how valuable his brand of creative thinking is-during the last recession. While there were few pieces of new business up for grabs, Quattro managed to find a way for the agency to turn a profit. 

"I presented a plan during the recession to buy a piece of land, build a building on it and fill a building (in Toronto). We then sold the building and made five million bucks in the process," he laughs. 

The same opportunities for thinking out of the box may not present themselves as readily to the CFO working at, say, a large packaged-goods company. Middleton argues that that's why finance people with a creative bent have gravitated to agencies. 

"Why else would they stay at an agency if they could go to better-paid jobs on the client side?" he asks. "Agencies are full of interesting people, so it's an attractive environment." 

And CFOs, the good ones, are only going to be more attractive as agencies recognize the true value a combination of financial experience and expertise can deliver. But to ensure that there are enough good people around to step in when the industry's finance veterans retire, says Middleton, agencies have to start planning for the future now. More importantly, he adds, they have to show just how vital a part of the agency a strong finance department is. 

"Involve (young finance people) in strategy for the overall organization. Early in their careers give them a chance to be a part of strategy and planning sessions." 


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