Frenemies: The Epic Disruption of the Ad Business (and Everything Else) (6 page)

The anxiety of the advertising community is revealed in the gibberish or verbal smokescreens they now employ. Just before the millennium, advertisers began to refer to themselves as “brand stewards,” as if the brand had a soul. Nike, as an amused Naomi Klein observed, announced that its mission was to “enhance people's lives through sports and fitness”; Polaroid said it was selling “a social lubricant,” not a camera; IBM was promoting “business solutions, not computers.”

All this begs a fundamental question that comes up often in the advertising and marketing community: Are they sufficiently alarmed about the menace they face? There is a lot of brave talk, but it's reasonable to wonder to what extent much of the community is simply kidding itself, living, as Robert Louis Stevenson once wrote, not “in the external truth among salts and acids, but in the warm, phantasmagoric chamber of his brain, with the painted windows and storied wall.”

At advertising confabs
like Cannes, Unilever's Keith Weed will often wear ostentatious chartreuse sports jackets. He is less the showman when seated in his London office in jeans and a long-sleeved grey button-down shirt. “There's been more change in the last five years
than in the previous twenty-five,” he says. In his early days, a media plan consisted of a couple of pages. Today it is as thick as a book. “The complexity of choice is brilliant, but equally challenging.”

The challenges of the advertising and marketing world and the erosion of trust between agencies and clients are often the subjects discussed at MediaLink's weekly staff meetings. President Wenda Millard sits at the head of a long, rectangular, reddish-stained white oak table facing two large wall screens, one of MediaLink employees in Los Angeles and one in Chicago; in New York, MediaLink staffers occupy black leather swivel chairs and stand along every inch of wall space. At sixty-two, Millard is the elder in this room, but her dark, pixieish pageboy and exuberance are that of a much younger person. JC Uva, a MediaLink managing director, thinks of Wenda as Felix to Michael's Oscar. “Felix was the neat one. That's Wenda. You can literally tell time by Wenda's schedule. Michael is a moving target.”

Millard called this February 2016 staff meeting to order at precisely 2:30
P.M.
About four dozen MediaLink execs gathered in the glassed conference room. Michael Kassan was to be present via video feed from Los Angeles. After attending the Mobile World Congress in Barcelona, he had slipped away with his wife to a spa in Germany. Not seeing him on the screen, Millard said, “We'll wait for Michael.”

“The spa did me good because you don't see me!” Kassan announced. He was smiling from the Los Angeles table, casually attired in a grey crew-neck sweater over a pale blue shirt.

Millard asked him to share his interpretation of the bad blood that Jon Mandel's 2015 speech had inspired.

“It reminds me of the gallows humor of being at a spa in Germany and of how the world has changed,” Kassan said. “Now Jews are paying Germans to put them in rooms and not feed them!” Kassan's humor does not bat one thousand, but it is always enthusiastic. He went on to explain the unease MediaLink's ad clients were feeling about
what they believed to be a lack of agency transparency. “More of our clients are saying, ‘I'm getting screwed by my agency. At the end of the day I might want to deal directly with publishers.'” He cited how programmatic ad buying, run by machine algorithms that target desired audiences, “may be able to cut out the agency. The agency/client/marketing model is being challenged now the way it has never been challenged before, based not only on technology potentially disintermediating . . . but when you break down the trust barrier,” because the client doesn't know how its money is being spent, the disintermediation accelerates.

So what stance, an executive asked, should we take with clients?

“I harken back to my baseball days: get a cup,” Kassan answered. To protect MediaLink, their task is to serve as “a bridge between the buyer and the seller. We shouldn't harbor any side here. We're on all sides. We are also very close to all of the agencies.”

“I get calls every day,” interjected another executive, “from people at agencies saying they want to leave the agency.”

“They're all running for the exits,” Millard observed. “It's extraordinary how many people want out. Their margins are all getting squeezed. One of the big issues we have is, if I can make forty thousand dollars at an agency as a media planner but I can make sixty thousand at Facebook, what am I thinking? This is not a happy industry.”

Millard could have cited results of a 2016 survey by
Campaign US
, a global business magazine focused on the marketing world, that found that 47 percent of those who've worked in advertising and marketing more than five years say their morale is low, the primary reasons being “inadequate” leadership, “lack of advancement” opportunities, and “dissatisfaction with work.” A LinkedIn survey the same year, with a vast sample size of three hundred thousand, found that when nine industries were ranked by ten questions, advertising came in last in “work/life balance” and “long-term strategic visions,” and
next to last in “comp & benefits,” “strong career path,” “job security,” and “values employee contributions.” Advertising had mediocre rankings in each of the four remaining questions.

Dark clouds may hover over agencies, but Kassan saw only azure sky for MediaLink. “I would hope you all see,” he concluded, “why that continued chaos and disruption is kind of a blessing in disguise for us. Actually, I don't think it's in disguise. It's a blessing.”

What Kassan saw as bright sky, others would describe as the eye of the storm, but that didn't faze him. The current turbulence was nothing compared to some of the ordeals he'd endured in the past, which on some days seemed like another lifetime and on others, he would admit, seemed like a shadow still chasing him in his rearview mirror.

Michael Kassan is advertising's Dolly Levi, the matchmaking lead character in the musical
Hello, Dolly!,
whose score he loves to hum.

Wenda Millard likes to say of her partner that he believes that everything is a yes, symbolized by the two-word sign above his desk:
ALL GOOD
. Millard has more shoes than Imelda Marcos, she says, “but my shoes have dents in the toe from shoving my foot into his shoe because I know he's going to say yes.” An oft-told MediaLink story illustrates Kassan's skill at pleasing others. He carries in his black Tumi backpack multiple portable devices—a Samsung Galaxy, two iPhones, a BlackBerry, an iPad, along with phone chargers and connector wires. Several years ago, the brand stamped on the back of his cell phones was either Verizon or AT&T. The latter was a client, and he had flown to Dallas for a dinner meeting with an imposing AT&T senior female executive he barely knew. After dinner, as they stepped outside the restaurant his phone rang. Reaching into his bag, he pulled out the Verizon phone.

“Michael, you didn't just take a Verizon phone out of your pocket, did you?” she exclaimed.

“I think to myself, ‘You fucking idiot, Michael Kassan!'” Instantly, he flung the Verizon phone to the pavement, smashing it into pieces with his heel. Turning to her, he exclaimed, “Excuse me, was there a question?”

She smiled. He smiled. He explained that he needed a Verizon phone in Los Angeles because AT&T service there was patchy. “It was a bonding moment,” he recalls.

It is also a moment shared by more than one MediaLink executive as emblematic of their boss. “He has this perpetual smile on his face,” says Robert Salter, who was Kassan's second chief of stuff, as he calls his chief of staff. “When he does something that is so clearly wrong, he does it with a smile and in a way that somehow earns the affection of the person on the other end. He manages to charm them. He's able to make awkward conversations very easy.”

He gets the charm from his father, Michael's wife, Ronnie Kassan, observes. “The teller of jokes. His mother was very tough, and had a very shrewd business sense. Michael has that too.” He was raised in a modest two-family home in East Flatbush, Brooklyn, that they shared with his mom's dad and aunts and uncles. “It was basically a shtetl,” Michael recalls. He had two older sisters, and his mom focused on raising the three children while helping his dad run several dry cleaning stores. “My dad was a stand-up comic in the Catskills. It was a very, very, very sad thing that he did not follow that.” Asked what he sees in himself of his parents, Michael says, “I have a million jokes in the file cabinet of my brain. My dad had an extraordinary quick wit and humor. That's the strongest gene I have from my father.” When the kids were older, his mother became a successful real estate broker. “My mother refined the use of Jewish guilt to an art form,” Kassan jokes. She played on the insecurities of potential customers.

His dad sold the dry cleaning business and relocated the family to Los Angeles when Michael was three, and started a thriving new chain of dry cleaning stores. Michael was gregarious and a good student, but never terribly tractable; the only bad marks he remembers receiving were in classroom cooperation. “I was a wiseass,” he says. “I would never raise my hand in class if I wanted to speak. I was a showman.”

His sister's husband told him that the University of Miami had the best parties, so he enrolled there, but at the end of his freshman year he transferred home to USC for a year, then to UCLA, where he graduated as an English major. He stayed in California to get a law degree at Southwestern Law School.

In his second year of law school, Kassan met the Bronx-born Ronnie Klein, who had moved to Los Angeles after receiving a psychology degree from the University of Miami and an MA in counseling from New York University. She took a job as a school counselor in Los Angeles. They met when Michael had to fly to New York for a February wedding but didn't have a winter coat. He remembered that a friend who lived in San Diego owned a really nice camel hair coat and he asked to borrow it. The friend happened to be coming to Los Angeles and was happy to drop it off. When Michael returned from the wedding, the friend told him that another friend was driving south to San Diego the next weekend; could Michael call her and drop off the coat? That friend was Ronnie Klein.

When Kassan called Ronnie she said she'd be at her apartment in the early afternoon. He didn't ring the bell until 6
P.M
. Annoyed, she took the coat from him and hurriedly shut the door in his face.

“I felt he was a little difficult. I was doing him a favor, and he was a pain in the ass,” Ronnie says.

“She had the most beautiful blue eyes,” he says. “I saw those eyes and went, Whoa!”

Michael phoned and asked her out the next weekend. Ronnie brushed him off by saying she couldn't plan anything because she might be going to Palm Springs that weekend. She would let him know. “I never heard from her,” Michael says.

On Friday afternoon he was crossing Beverly Drive and Wilshire Boulevard on his way to lunch and they almost collided on the crosswalk. “Well, I guess you didn't go to Palm Springs,” he said.

She was speechless. “I didn't have an excuse. I was so embarrassed,” she recalls.

“I guess we're going out then,” he said, shaming her into saying yes.

In early February 1974 they went to the theater and dinner. “It was a really nice evening, much to my surprise,” she remembers. He kept calling. They started going out twice a week. She'd kiss him goodnight, but made excuses why he couldn't come in. They dated other people, and while not yet lovers they were becoming close friends. He brought her to Passover dinner with his parents in April.

“At dinner in early May, he told me he was in love with me,” she says. “I told him I appreciated it, but I wasn't there.” By mid-May, “I slept with him for the first time.” In late May, they spent a weekend together and “I realized I had feelings for him.” She had another date the next night but phoned Michael and asked if he could stop by her apartment because “I want to talk to you.”

“I just want to tell you I think I'm in love with you,” she announced.

They kissed and embraced. She mentioned that she was flying to New York in June to be matron of honor at her friend Randi's wedding. “I should go to New York with you,” he told her.

He wasn't invited, she said. Besides, Randi didn't know him or even know she was dating him.

“Tell her you're bringing someone,” he persisted.

She dialed Randi. Cupping the phone as it rang, she asked him, “Who do I tell her I'm bringing?”

“Tell her you're bringing your fiancé.”

“Randi,” she blurted, “I have to call you back. I think I just got engaged!”

They married in December 1974 and moved to New York. He enrolled in NYU law school's Master of Law (LLM) program in tax law; Ronnie supported them by working various jobs. They went back to Los Angeles in 1976. With his mother orchestrating the search, they tried to buy a house, but lacked the money to get what they wanted, so they rented an apartment. The next day “Michael went out and bought a Porsche, which was a little irresponsible,” Ronnie says. Then his mother discovered a great house in Sherman Oaks, which they were able to purchase with a helpful loan from his cousin, major Disney shareholder Stanley Gold, and from their parents.

Ronnie might have been exasperated by the Porsche, but by now she understood her husband. “Michael feels that everything will work out all the time,” she says. There is a reason the epigram at the end of each e-mail he sends reads ALL GOOD.

Michael was doing tax law for a firm; Ronnie was pregnant with the first of their three children. His salary was $1,500 per month, plus a percentage of any new business he brought in. He recruited twelve new clients the first month. “Being a rainmaker was easy for me,” he says. In 1977 he joined another firm, and a year later he and some friends opened their own law offices. Michael was restless. “He always wanted to be in business,” Ronnie says. “I think he felt that through some client somewhere something would happen. And it did.”

He became counsel to his law firm in 1986 when one of his clients, International Video Entertainment, at the time the largest independent home video company, distributor of such popular fare as
G.I. Joe
and
The Transformers
, enticed him to become president and COO. The company was run by Jose Menendez, one of the few individuals Kassan will not volunteer a kind word about. “He was very tough,” he says. “He had a chip on his shoulder the size of Cuba. And he used it always. ‘Good morning' to him was adversarial.” Kassan helped engineer the sale of the company and left in 1987, two years before Menendez and his wife were famously murdered by their two aggrieved sons. He returned to his law firm, but still yearned to be a businessman.

Some years before, while attending a children's birthday party at Harry's Open Pit, the owner asked if he knew anything about franchise law because he wanted to franchise his rib restaurant. Michael said he did, and told him a first step with a franchise was to hire an accountant to prepare an audited financial statement for the state Division of Corporations. He put him in touch with an accountant, and some months later the accountant called Michael and said he was working with the owner of a Mexican chicken restaurant, El Pollo Loco, who wanted to franchise. Michael became both their lawyer and a believer. “I tasted the chicken in the guy's garage and said, ‘This is unbelievable.' It was healthy, nonfried fast food.” He recruited some of his law partners as fellow investors. He went to the American Heart Association and persuaded them, he says, “to put the heart-healthy logo on a fast-food restaurant. It had never been done.” The healthful and delicious Mexican chicken franchise would take off. Over the next fifteen years El Pollo Loco opened forty franchises, and Michael branched out by investing in Rally's Hamburgers. He also continued as a law partner at his firm.

But he made a classic business mistake. The chicken franchise expanded too rapidly. “We took the concept to Las Vegas and we got our clock cleaned,” he says. They poured money into Vegas, and soon the business plunged from profit to loss. In California, the vast
Hispanic population might eat at El Pollo Loco three times per week; in Vegas, with a relatively minuscule Hispanic population, one visit per month was more common. To shore up the franchises in Vegas and prevent its bankruptcy, Kassan became more engaged. They borrowed more money from the banks, and without seeking board approval transferred monies from El Pollo Loco franchises in California, weakening them. He had shifted monies from healthy California chicken franchises, albeit not to enrich himself, but to fortify cash-starved Las Vegas franchises. On the books, Kassan did not camouflage this act, recording these as loans. Soon the business could not meet the bank loan payments. Kassan drained $150,000 from his own pocket to help make the payments. In January 1994, investor Joel Ladin, one of the four partners in the law firm and the best man at Michael and Ronnie's wedding, confronted Kassan with evidence of the unauthorized withdrawals. After Kassan admitted that he withdrew the funds, he was terminated. The next month Ladin filed a formal complaint against Kassan to the police, charging him with embezzlement. Kassan quickly repaid the entire $240,000 he had borrowed from the healthy El Pollo Locos, plus interest. “There were nights,” Kassan says, “Ronnie would say to me, ‘I just want to keep the house.' It was Armageddon.”

In June 1995, a Superior Court judge found him guilty of “grand theft by embezzlement,” but ruled that his motive in taking the money was not personal greed but a desire to keep El Pollo Loco alive. Kassan won a measure of leniency when he reached an agreement with prosecutors to withdraw a planned not guilty plea. He says he did not know that a guilty plea resulted in automatic legal suspension in California, and he would not have pled guilty if he knew this. He received a suspended sentence, was placed on probation for three years, and ordered to perform five hundred hours of community service. He knew that if he
successfully completed the terms of his probation, California law allowed him to change his plea to not guilty, and his felony conviction was reduced to a misdemeanor and eventually expunged. The State Bar of California, however, offered no leniency; he was formally suspended. In June 1996, after completing a year of probation, Kassan's felony conviction was reduced to a misdemeanor and erased from his record. But the shame continued to haunt him.

Kassan was despondent. He poured out his hurt to a psychiatrist—four times each week, he says. He was determined to appeal the State Bar ruling, not because he cared to practice law again—he says he did not want to—but because he couldn't bear the thought of his Jewish mother knowing her son could not practice law. “My mother always said, ‘You need something to fall back on.'” He appealed to the Supreme Court of California, challenging his suspension from the State Bar. “The one and only chance to tell my story was by challenging the California State Bar,” he says. After hearing the case, in April 1999 the state's highest court ruled in his favor, finding:

In the matter before us the record is clear that respondent's primary motivation was to save the various El Pollo Loco operations. . . . In respondent's case there was no attempt to hide this conduct, and when confronted he immediately acknowledged his actions and made immediate arrangements to make good his theft. . . . We make no effort to minimize the seriousness of respondent's criminal misconduct. He fraudulently converted a large amount of money to his own use in violation of a most fundamental rule of honesty. Nevertheless, considering the circumstances surrounding the criminal conduct, twenty years of blemish-free practice prior to the misconduct, respondent's immediate restitution, recognition of wrongdoing
and genuine remorse we believe the record demonstrates that disbarment is not required to achieve the goals of attorney discipline.