Opinion

A slow motion car wreck: The unravelling of Droga5 Sydney

droga5In just seven years of existence Droga5 Sydney experienced dizzying highs and crashing lows. Steve Jones looks at how it became Australian marketing’s cautionary tale. 

“This was obviously a very difficult decision, both professionally and personally, and as a proud Australian, it was a bitter pill to swallow,” admitted David Droga in the announcement his Sydney operation was to close.

No other agency has launched with so much hype, garnered so many headlines along the way, and fizzled out so quickly. But does the blame lie with management or clients?

A few weeks after Droga5 Sydney and Woolworths confirmed their split, David Nobay, one of the agency’s trio of founding executives, insisted the “fog had cleared” and the business was on course for “very smart waters”.

While conceding the previous year had been a “fucking grind”, the upbeat tone was “more than convenient spin”, he wrote in a trade media column.

Less than 18 months later, after a period which saw no material improvement for Droga5, a bitterly disappointed David Droga ran out of patience and pulled the plug on his Australian venture.

Droga, who had founded the New York-based agency which carried his name in 2006, was candid, bordering on damning in his assessment, describing the Sydney office as one that “no longer consistently represents the Droga5 brand”.

Worse, boardroom level sources in New York likened the Sydney operation to a “slow motion car wreck” which had troubled David Droga “for years”.

It was a brutal end for the local agency, and a salient reminder that an industry leading name above the door counts for little if you make the wrong choices, fail to get the mechanics of the business right and, critically, don’t produce good enough work.

So what went so wrong for the office which launched amid such fanfare at the start of 2008?

Unsurprisingly, the underlying reasons for the failure of Droga5 Sydney are varied and complex, with poor client choice, a risk-averse advertising market, top heavy structure and a divisive figure in the form of Nobay all seemingly playing roles in its downfall.

Yet there is a school of thought that suggests Droga5 Sydney, just like Droga New Zealand before it and more recently London, was almost on a hiding to nothing from day one, paralysed by the expectations created by the reputation David Droga had carved out across the Pacific.

Reputation

Gohil

Gohil

Chief executive and founding partner Sudeep Gohil referred to the Droga5 brand as a “blessing and a curse” at the Mumbrella360 conference in July, revealing how the name opens doors but also sets an “incredibly high bar for us to live up to”.

The uncomfortable reality is that while it did create opportunities, the Sydney office ultimately failed to match the hype and produce campaigns that worked or clients liked.

One former senior creative at Droga5 said few people outside the agency appreciated the pressure of being the sister of the “world’s most famous advertising agency”.

“The pressure that put on the business, to live up to the performance of New York, was inordinately difficult. It was a pressure that even the guys in New York probably didn’t operate under,” he told Mumbrella.

“It led to decisions that probably looked to deliver short term success in order to justify the name on the door.

“What clients want and what will pick up awards are two things you have to balance. But as Droga5 Sydney, to be in the same ball park as the NY guys, you had to make decisions where other people may tread more carefully.

Basically you had to produce a style of work that would perform well at awards shows as opposed to thinking ‘what is the single best thing I could do for my client’.

“The number one motivation became ‘how can we live up to the Droga5 name’.”

That pressure and expectation was sometimes applied by the client, but more often than not by the agency itself as it strived to match the hype.

“It was never ‘here’s an interesting start-up, let’s see how they go’. From the day it opened the doors it was ‘you are Droga5 Sydney, now prove it’.”

Another senior member of Droga5 agreed the agency almost suffocated under the weight of expectation and argued the “big sexy agencies” – Droga among them – have historically been good at selling clients but even better at selling themselves.

In Droga’s case that was not limited to Sydney but even New York, where the “reputation was bigger than the work justified”.

“New York has done some edgy stuff, of course it has, but the reality is that most of the work was standard work for the likes of Prudential, Diet Coke and cereal brands,” the strategist said.

“When you look at what pays the bills, what keeps the doors open, it’s not fake spray painting Air Force One (a reference to a viral 2006 campaign for fashion designer Marc Ecko which put Droga NY on the map), it’s the bread and butter stuff which Droga doesn’t seek publicity for.

“They have done a spectacular job of PR-ing the sexy stuff so everyone was saying ‘we’ve now got this cutting edge and dangerous agency in Sydney’. The reputation was always going to outstrip the reality of what could be offered.”

Not that Droga5 lacked the senior management talent, or confidence.

It is generally considered that Nobay, regarded as the best creative brain in Australia at the time with a brash and supremely self-assured personality, Gohil, an experienced and respected strategic planner and Marianne Bess, who worked closely with Nobay at Saatchi and Saatchi, was a strong team to launch the business. She was managing director, but left the business in mid-2012 to return to the US.

Marianne Bess

Bess

Duncan Marshall, one of the founding partners of Droga5 New York, was also parachuted into Sydney in 2010 to further bolster the senior ranks.

One source who worked in the business for almost three years told Mumbrella the ability of the senior talent was never in doubt. It was the rank and file and the ability to “get down in the trenches with clients” that was sometimes missing.

“They were absolutely phenomenal at winning pitches. The clients were eating out of their hands and thinking ‘this is going to be amazing’,” the source said. “But the tricky thing was setting up teams around those pieces of business, to get down in the trenches with the client when things were not so amazing. Sometimes you need juniors to do the hard work…it was quite a top heavy structure which threw things a bit.”

In addition, there was not enough support “through the ranks”.

The result was a frustrated client, blown away by the quality of the pitch, often disappointed with the levels of service.

Not helping this scenario was Droga’s rapid growth. A common belief among industry commentators, former staff and New York sources is that it took on too much, too soon with little infrastructure in place to effectively support the clients.

Infrastructure was built, but hurriedly and at times haphazardly.

Droga5’s foundation client was Australia’s most iconic beer, Victoria Bitter, a win which saw the agency grow from “three people and a dog in a garage to 12 people overnight”, according to Gohil.

The early years

The work for VB which appeared in mid-2009 saw the brand’s iconic ‘Hard-Earned Thirst’ tagline replaced with ‘The Regulars‘ as Droga and Foster’s sought to reinvigorate the brand and stem declining sales.

The response to the campaign was mixed, and it failed to hit the mark with drinkers, although the ill-advised decision of Foster’s to reduce the strength of the beer was hardly conducive to winning the market share battle with Lion Nathan.

A Hard-Earned Thirst was later reinstated under Clemenger BBDO Melbourne after it won the account from Droga in early 2012, and the beer returned to full strength. However, Droga was also behind VB’s Raise A Glass campaign for ANZAC Day which continues to run.

A former planner at the agency claimed the experience with VB was symptomatic of a trend which saw clients use Droga almost as a testing ground.

“It’s too easy to blame the agency. The client wanted to walk away from ‘A Hard-Earned Thirst’, it wasn’t Droga5 going to them and saying ‘this campaign is done’,” he said. “Was it a mistake? Yes, it really was, but that is as much on VB as it was on Droga.”

He added: “I feel clients experimented with Droga and through that process learned what they are really about. Droga was the mechanism via which clients learned what worked and what didn’t. They grew up through the process of working with Droga and then shot Droga.”

However, senior creative sources in the industry questioned the work of The Regulars arguing the cast of thousands were not so much regular as a collection of “losers and freaks”.

“Why would you make all those people in that ad look like losers not winners?”, one said. “The original hard earned thirst ads contained regular people. What Droga made out to be regular people were all the freaks on the outside. They didn’t know how to celebrate ordinariness.”

Not that clients in the early years were dissatisfied, with former Virgin Mobile and Telstra executives telling Mumbrella they were more than happy with Droga and its work.

Working with Nobay and Gohil was “exciting and dynamic”, one executive said.

But as the marketing department at Telstra continued to evolve the agency fell out of favour, losing its spot on the roster in 2013.

The real problem came when other agencies began catching up and playing in Droga’s space.

“Droga was doing brilliant stuff particularly in areas where Nobby and Duncan were involved,” the executive said. “At Virgin Mobile they did the YouTube ‘Right Music Wrongs’ campaign with Vanilla Ice and people were saying ‘that’s crazy, you’re doing stuff on YouTube? Where’s the advert?’

“It was unique and Droga was at the forefront of bursting out of the 30-second paradigm and at that time seemed a new media agency. It had the ability and foresight to do multi-media creative work.

“But that’s hardly radical anymore. Droga’s skill set lost its uniqueness and even the big classically boring shops started looking at different mediums and enrolling people in the idea and not just communicating at them.

“Droga pioneered it but others caught up.”

Board level sources in New York also said the early work coming out of Sydney was promising, if not ground-breaking. It also became apparent that some of the ideas tabled in Australia were being knocked back by clients in favour of safer executions. In effect, some of the agency’s best work lay on the cutting room floor.

“What we were getting from Sydney was ‘the clients don’t want it’ and we did see some potentially great work that we knew was being presented but wasn’t being made,” the New York source said. “But overall we thought the work was getting to the right place, Virgin for example. Then it stalled.”

Commentators said Droga needed to press on, build on the early momentum and keep innovating to stay ahead.

Instead, they took on Woolworths.

The Woolworths effect

Woolworths logoIf there is one moment that set Droga’s downfall in motion it was the day they signed the contract with Woolworths.

It was a deal that surprised the entire industry. A small, sexy boutique agency taking on a behemoth traditional retailer with, by the nature of its sector, an insatiable appetite to advertise.

Sources said then general marketing manager at Woolies, Lizzy Ryley, was against the hire from the start but was overruled by more senior management.

“The political back story is that you had a woman who didn’t want Droga and actively didn’t like Nobby,” said one source with knowledge of the account.

It was a clusterfuck from day one. Initially Droga didn’t want the business and only agreed after Woolworths said they were genuinely committed to change.

“But it was a disaster waiting to happen because they were culturally the wrong fit. If Droga thought they could make a difference they should have looked at every other agency that has gone that path with Woolworths. You can’t make a difference.”

Another source who worked at Droga during the Woolies days said: “Woolworths is bloody good from a financial aspect but a bad choice for any agency that is creatively led. Droga became the Woolworths agency very rapidly. It took over the culture faster than anyone expected.”

At one point, Woolworths represented 40 per cent of Droga’s revenue, but sucked far more in terms of resource, energy and attention by virtue of its size and relentless marketing churn.

One former Woolworths marketer admitted the supermarket, with its “down and dirty” retail work, virtually “destroyed the culture of Droga”.

“It was naïve of Droga to accept the business and naïve of Woolworths to give it to them,” the insider revealed to Mumbrella. “Leo Burnett [which won the account from Droga] may not be the most creative agency in the world but what they have is amazing account service delivery and that’s what Woolworths needed.

“The difference between Droga and Leos on that front was night and day. I could see Droga struggling to get the work done but I wouldn’t blame Droga even though they didn’t put in the investment in terms of people. They under-estimated what it involved and it was a mismanagement of culture.

“They were a true creative shop and I could see their creative people almost compromising what they believed in to deliver stuff for Woolworths. It wasn’t in their DNA.

“Woolworths also believed that advertising and marketing was going to fix all their problems. That was never going to happen. I don’t think Droga could ever have delivered the miracle Woolworths was hoping for and it led to frustrations on both sides.”

Where Droga erred was not having a “mature discussion” with Woolworths and withdrawing far earlier when it became clear the account was smothering the agency. Instead, driven by the lure of revenue, it stumbled on, all the while sucking its energy and attention.

One source said: “No one joined Droga to work on press ads for the Bendigo Advertiser and that’s what it became about.”

Another senior industry source with close dealings with Droga and Woolworths said: “My personal belief is that Droga chased business and revenue they should never have chased rather than doing the campaigns they loved.

“The fact is, VB backed them to do something different and had they continued with that philosophy they would have been fine.

“They should never have gone after Woolies. It sucked the life out of them.”

Other senior creative sources questioned the impact, arguing it was the work that was seriously flawed. “Droga chose to do Monday, Tuesday, Wednesday campaign. It was Droga who chose not to do a great new Fresh Food People campaign, not Woolworths,” the source said. “If they were as smart as they thought they were Droga should have done the world’s best ever Fresh Food People campaign because that is what Woolworths owned. No one knew what listing the days of the week was all about. It was a complete waste of money.”

Not that New York appeared too concerned, at least not initially. David Droga himself was said to be optimistic – he has described himself as the eternal optimist – and was impressed with the “energy and feel” of Droga’s first major work for Woolies.

But it became clear after a while that Woolworths was smothering the agency, with New York sources describing it as a “tsunami” that swept through the business.

David Nobay: A divisive character

Midway through the churn of the Woolworths account, in 2013, David Nobay appeared to lose focus and interest. His first stage play, Moving Parts, was performed in Sydney and by his own admission he was “itching to try some new things outside the immediate industry”.

He also appeared on Channel Ten’s Recipe to Riches, a branded content program from Woolies.

All of which suggested a man losing his zest for the advertising industry.

David Nobay

David Nobay

“Nobay stepped away, he took his eyes off the business and it was largely left to Sudeep,” one industry commentator said. “And there was some conjecture whether Sudeep was the right man. He was a great planner and strategy guy but maybe running the business was not his forte.”

New York was none-too-impressed with Nobay’s outside interests, believing he was alarmingly distracted from the job he was paid handsomely to do.

Furthermore, a feeling had crept in that he was being “seduced by what the brand stood for rather than actually living up to it”.

He was paid a ton of money and you can’t be doing TV shows and writing plays and all that stuff and not living up to the Droga5 name,” one well-placed source said.

“You can’t have the leader of the agency spending more time on their personal brands. That was a major problem not only for the fellow partners but for the morale of everyone.”

That Droga failed to act was the result of his loyalty, enduring optimism and a fundamental belief that Nobay was still the right man for an Australian industry that still adopted a “who knows who” mentality.

“Nobby was known to be a good client builder. He wined and dined clients and developed strong relationships,” one source said.

“But yes, he wandered off. People were buying into Nobby but not getting Nobby. That hurt them.”

When Steve Coll left Droga in July this year after 15 months as executive creative director, the agency said Nobay was returning full time to oversee its creative product.

Nobay for his part acknowledged that “it’s impossible to be half pregnant”.

“You’re either 100 per cent out or 100 per cent in. I chose the latter,” he said.

But for many, the writing was on the wall.

“For Nobby to come back at that stage and say ‘I’m committed’ was too late,” one advertising veteran said.

Irrespective of the lure of personal projects, Nobay from the outset was described as divisive. Outspoken, brash, arrogant and creatively brilliant, some clients loved him, others were not so enamoured.

“I hardly know anyone who says ‘yeah, Nobby’s alright’,” one former colleague said. “You either absolutely love him or hate him. And that was part of the problem at Woolies. The marketer from Woolies who worked with him fell into the latter camp.”

Another source said: “Clients bought Droga and got Nobby and the arrogance. He followed the spotlight. He would walk in to clients and tell them he was the greatest creative director in the world. I’m not sure David Droga even knew Nobby before he appointed him, I think he went by his reputation.”

Qantas and the end of Woolies

Droga came onto the Qantas roster with some fanfare in June 2012 along with several other agencies including R/GA. The fact that David Droga himself was involved in the pitch Unfortunately for them it was a time when the brand was shying away from the big brand campaigns it is synonymous with, as it suffered reputationally and financially through a number of problems.

At Mumbrella’s Travel Marketing Summit earlier this year its top marketing exec Olivia Wirth explained the reason for the lack of presence: “You can’t launch a campaign in a void. You need to realise what the context is, what environment the business is operating in.

“It has been a challenging time for Qantas. There were lots of conversations going on about some difficult issues the business was confronting, including conversations with government.

“It was not the right time to spend money on a brand campaign. It is very important that the audience is receptive and open to the type of messages that we wanted to put through.”

That limited the agency’s chances of doing something interesting for the brand, with the Mars rover “curiosity” work in mid-2013,  a push in December that year focussing on the new uniforms, and more Frequent Flyer work in March this year.

The mars curiosity campaign received a lukewarm response, with one creative describing it as “soulless”.

“They were indulged by their clients. There was not a single person in the curiosity campaign. It looked like a bomb disposal advert. You are talking about Qantas, the Spirit of Australia. Where was the soul? Where was the humanness.”

When the chance did come for a big brand campaign at the end of last year the agency was overlooked with the airline selecting Neil Lawrence instead and launching the ongoing ‘Feels Like Home’ campaign.

The split with Woolworths in March 2014, which had been on the cards for a number of months, came as little surprise to many. Instead, Woolworths turned to Leo Burnett in a move which coincided with the arrival of new CMO Tony Phillips.

It was followed out of the Droga door in the first half of 2014 by Sunbeam and ING Direct.

Steve-Coll-234x293

Coll

This, despite the arrival of Steve Coll from Havas Worldwide in March.

Coll, well liked and respected and with a host of awards to his name, had effectively been left in no man’s land in a business with a dwindling list of clients and limited opportunity to exercise his undoubted creative muscle.

Initially enticed by the sexy, edgy, strutting attitude of Droga5, clients, both existing and prospective, had fallen out of love with the agency.

“People in this industry are quick to say ‘look at them, they’ve gone from strength to weakness, and Nobby wandering off didn’t help,” one observer said. “Steve was on a hiding to nothing.”

Another former senior employee said Droga “was always going to have to answer to its swagger”, with clients irked by the cockiness of Nobby and relative juniors “without a track record or experience to back it up”.

“These were people who aspired to move to Manhattan or London. They were arrogant but weren’t checked and these were people interfacing with clients,” he said.

“That said, I saw a business constantly trying to re-orientate but it just wasn’t able to connect with clients. The problem is what the market starts to think of you and that was a critical factor in the final nine months. It couldn’t win a trick.”

One analyst described Droga as entering a “death spiral” as staff left, confidence evaporated and invitations to pitch dried up.

The fact is, when Steve Coll joined they weren’t left with a whole lot of business. If you’ve got two or three other reasonably sized clients and you start producing great work people start to take notice. But they had very little left to work on, so how do you showcase your value when you have nothing to show?”

A risk-averse market

While mistakes were clearly made by Droga, many observers and former staff remain adamant that clients should take some responsibility for its demise.

When campaigns flop or work fails to resonate, clients are quick to blame the agency when they are equally, if not more culpable, one brand consultant observed.

“This market is not a market that supports really insightful high level strategy and creative,” he said. “Everyone talks about it but there is a dumbing down all the time, so anyone who criticises the quality of the work should also take a look at the clients.

“Droga had some great ideas for ING and won the business but the client stifled those ideas, watered them down and compromised them until the point they fired Droga.

“The industry can point as much as they want at the agency and say they didn’t produce great work but it says as much about the client as it does about the agency. At the end of the day you can only produce the work that the client will let you produce.

“Woolworths, like most clients, say ‘we want the big, challenging idea’, the agency would deliver it but the politics and the culture of the place would kill it.”

One strategist suggested the creative talent at Droga New York is aided by a more open culture among progressive American clients who are ready to take risks. Australia on the other hand is mired in conservatism.

“If we’re being honest there is not much ambition here at all,” he said. “We were often working with clients who didn’t have the appetite to go somewhere uncomfortable but they didn’t work that out until the end of the process.”

The view is shared by another former Droga staffer who suggested many clients aligned themselves with Droga to be “cool”.

We have an extraordinarily conservative group of clients in this country. They think they want edgy work but ultimately they don’t.

“Clients go from agency to agency, they get shit work and haven’t figured out they are the cause of it.”

But that was doubted by one leading creative in Australia who said Droga was the common denominator, not the clients.

“Show me one campaign they did that worked?” he said. “So many major brands walked away from them. Can they all be wrong? Droga didn’t know to reach out and touch the common person. They were afraid that if they didn’t do something tricky or smart then no one was going to say it’s amazing.

“These companies don’t stop you from doing good work. Where you fail with these companies is if you don’t do anything that does work.”

He added that the assumption is that work apparently rejected by clients would have been the right work. “I ask you. With all those clients getting rid of them maybe the assumption should be that Droga was getting it wrong.

“They did not put the clients’ interests first.”

The end

Droga

Droga

The decision to close Droga Sydney was, as David Droga confessed, a “bitter pill” to swallow for the Australian.

Droga had won Netflix in Australia and had come out swinging, pledging to invest in startups and looking to the future.

So there was an element of surprise when he shut up shop, but New York sources said it had “run out of runway” as the initial launch flurry of Netflix work dried up.

“There were some exceptional people there, but there were some, not many, who were content to live off the brand as opposed to contributing to it,” the source explained. “David just felt it was time to let it go.”

It is also felt it could have benefited from greater involvement from Droga himself, something it is understood that he accepts. After all, it was his name above the door.

“It needed some attention and tough love from across the Pacific,” said one Sydney-based consultant. “You put an experienced, supposedly talented team in place who you are convinced can do the job, and reward them handsomely, so to some degree you have to let them get on with it. You can’t hold their hand all the time.

“But at the end of the day, David is one of the contemporary greats and none of the Sydney team were David Droga.”

  • Steve Jones is chief reporter of Mumbrella
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