16261: Dysfunctional Disconnection From Verizon…?

 

Advertising Age published a lengthy lambasting of former Verizon CMO Diego Scotti, painting him as a head-butting butthead prone to bullying behavior. The report also presented all that is wrong with Adland, including exclusive parties in exotic locales attended by CEOs of White holding companies.

 

Additionally, Ad Age quoted anonymous executives who charged Scotti exhibited dual identities—a Jekyll and Hyde whose self-hype sharply contrasted his self-absorption. An example of the two-faced tendencies involved Scotti’s alleged dedication to DEI, which turned out to be performative propaganda—as evidenced by his partnership and partying with systemically racist White holding companies.

 

Inside Verizon CMO Diego Scotti’s Exit—How His Creativity Clashed With The Company’s Cost-Efficiency Focus

 

The former chief marketer built a reputation for driving big creative ideas but his agency relationships were tense and Verizon leadership was losing faith in his ability to deliver

 

By Lindsay Rittenhouse

 

Argentinian native Diego Scotti celebrated his 50th birthday in late February with a swanky soiree in Buenos Aires—and the guest list is indicative of his stature in the industry. Bigwigs flying in to help him celebrate included former American Express Chief Marketing Officer John Hayes, Interpublic Group of Cos. CEO Philippe Krakowsky, Publicis Groupe CEO-Chairman Arthur Sadoun and MediaLink CEO-Chairman Michael Kassan, according to two people at the party.

 

His status as a high-profile marketer is among the reasons that his recently announced departure as Verizon CMO has the industry talking—not just about what is next for Scotti, but what marketing direction the telecommunications giant will take in the coming months.

 

Scotti, whose exit was announced on May 15 after an eight-year stint, closes a tenure that saw him push big creative ideas while establishing his reputation as one of the most high-profile names in the marketing industry. He is also regarded for championing diversity, equity and inclusion efforts.

 

He is seen as a stalwart of creativity, but is also known to have a brash style and tense relationships with ad agencies, according to three people who have worked with him. As such, the leadership change might be welcomed by roster shops, although they might also have to guard against agency changes under a new CMO.

 

One thing is certain: Scotti’s exit signals big changes coming for the telecommunications giant as it deals with market share losses and pressure to spend marketing dollars more efficiently, according to multiple people familiar with the company.

 

Some argue that Verizon’s next CMO will need to be far more data-driven, a departure from Scotti, who is best known for big brand campaigns such as overseeing star-studded Super Bowl commercials from 2018 to 2022.

 

It’s unclear if and when Scotti’s successor will be named. One person close to Verizon said the company is considering taking different approaches, including implementing a new structure that would embed marketing into different business units, and not appointing a new CMO at all. Chief Strategy Officer Rima Qureshi has taken on an interim leadership role over Verizon’s marketing organization in the meantime.

 

“Verizon is awash with data and needs to leverage it in a more effective way to better measure outcomes,” said Greg Paull, co-founder and principal of consultancy R3. “Diego arrived at the right time with the right mindset, but the industry has changed dramatically in eight years. The new leader needs to have analytics at their heart.”

 

The wireless service market is becoming increasingly saturated with competition ramping up from new players including Meta and Google, which have introduced rival services that let consumers make calls through home internet services, according to market researcher IBISWorld’s “Wireless Telecommunications Carriers in the U.S.” March report.

 

According to the report, in 2022, Verizon Wireless held the No.1 spot in market share, at 21.9%, among its competitors, including Deutsche Telekom and AT&T. But it still shed about 1.4% annually in market share from 2018 to 2022 as wireless carrier rivals such as T-Mobile and AT&T ate away at its customer base.

 

In its most recent first quarter, Verizon reported losing 127,000 wireless phone subscribers. As part of its plan to win back subscribers, the company recently announced it would cut the costs and number of its wireless plans from six to two to make its offers less confusing for consumers.

 

Verizon CEO-Chairman Hans Vestberg implemented a new cost-cutting initiative last year that is expected to save the company $2 billion to $3 billion annually by 2025.

 

One former executive at Interpublic Group of Cos.-owned R/GA, which is a Verizon roster agency, suggested the company would be better off investing more in promoting its Verizon Fios cable business than wireless, “since it lost so much ground on the cellular network side.”

 

The former R/GA executive said Verizon also doesn’t need the type of flashy advertisements for which Scotti advocated. This person argued Verizon needs to focus on traditional sales tactics, such as making co-op deals with city apartments that would give every tenant in one building access to Verizon’s cable packages for a lower cost.

 

“That’s traditional marketing,” the former R/GA executive said. “Someone needs to be working on old-school marketing. Get back to basics is what they need to do to compete. I’ve lived in three New York apartments and they all did that with [Charter Communications’] Spectrum.”

 

Scotti did not return requests for comment for this story.

 

“We aren’t going to comment on industry speculation,” a Verizon spokesperson said in a statement. “As our CEO Hans Vestberg stated in his announcement of Diego’s departure, we have benefited from having Diego as our CMO during a time of critical importance for our company. His impact on our brand and our business has been immense, and we are grateful for his energy, partnership, and leadership.”

 

‘Fiercely defends creativity’

 

Scotti has been seen in the industry as a more traditional marketing leader who believes in the power of big brand ideas, and that’s not something Verizon is likely to look for in its next marketing head.

 

The three executives who spoke to Ad Age for this story, including the one who used to be at R/GA, said Scotti had started to butt heads with Verizon over that thinking as the company focused on cost efficiencies.

 

“He fiercely defends creativity and is a strong advocate for the need to invest in brand building,” said an executive who has worked with Scotti and spoke on condition of anonymity. “[Verizon’s] marketing has been challenged to gain momentum on a clear strategy due to shifting leadership and priorities. Within the marketing team specifically, there has been a shift to cost-efficiency.”

 

For example, this person said last year Verizon consolidated all of its media under Rafael Rivero, senior VP of media and marketing effectiveness, who has been leading a lot of the company’s cost-cutting initiatives within its marketing department. The executive said it was “not a popular move” among those in Verizon’s marketing department who want to see the company investing more in creativity.

 

Scotti’s exit also comes nearly seven months after the departure of Andrew McKechnie, Verizon’s chief creative officer, an Apple alum who built the company’s in-house agency.

 

Verizon still spent a record $3.6 billion on advertising in 2022, “an increase in advertising expense of $454 million primarily due to the inclusion of TracFone [which it acquired in November 2021] results and brand marketing, including the launch of the 5G Ultra campaign in early 2022,” according to the company’s annual regulatory filing.

 

The former R/GA executive said Scotti, in general, doesn’t make quick decisions and Verizon leadership was feeling like he “and his team weren’t coming up with ideas and so budgets weren’t getting provided.”

 

This person said that was the reason Verizon didn’t run an ad in the Super Bowl this year; Scotti wanted to air a Big Game ad, but Verizon leadership wouldn’t approve the ideas or budget. It was the first time the company sat out of the Big Game in five years.

 

Under Scotti, Verizon ran Super Bowl commercials such as the McCann-created 2022 spot that starred Jim Carrey reprising his character from “The Cable Guy.”

 

In a big shift around this year’s Super Bowl, Verizon aired a 30-second post-game spot that emphasized how the wireless carrier helps coaches better communicate with each other in NFL stadium.

 

As a result of the inner turmoil, the former R/GA executive said Scotti was putting even more pressure on Verizon’s agencies to come up with ideas that would win over leadership, souring already tense relationships.

 

Verizon’s roster agencies include R/GA, WPP’s Ogilvy, which won the company’s business-to-business account in December of last year, along with Interpublic Group of Cos.’ McCann. Verizon late last year consolidated media under Publicis Groupe following its acquisition of Tracfone.

 

While still under Scotti’s direction, an agency team led by Ogilvy New York created its most recent 30-second ad, “It’s Your Verizon,” for the launch of the company’s new flexible plan, called “My Plan.”

 

Scotti has garnered attention for his focus on diversity, including leading Verizon’s Responsible Marketing Action Plan, which implemented last year the tracking and reporting of Verizon’s diversity and inclusion data within its various marketing teams and advertising spend.

 

But according to people who have worked with him, Scotti can be difficult to deal with. “He can be temperamental and fosters a relentless culture that is deemed as being unsustainable,” said the executive who has worked with Scotti.

 

Both the former R/GA executive and the executive who worked with Scotti said his public persona and how he handled business relationships didn’t always add up.

 

The former R/GA executive said there’s been high turnover on the Verizon account across agencies with people often asking to be removed because of his temperamental nature.

 

“It bothered a lot of people; the profile the world sees and who he really is,” the former R/GA executive said. “He’s formed an image that he’s a nice guy but it’s completely the opposite.”

 

The former R/GA executive said specifically he often yelled at executives in front of other people. “He would constantly move deadlines and call people out for not meeting them. He was constantly undermining people. It was demeaning,” he said.

 

Regardless of how agencies viewed him, the former R/GA executive said Scotti was the connective tissue keeping shops including R/GA and McCann on Verizon’s roster. He said Publicis Groupe’s Sadoun is the only holding company CEO who has a close relationship with Verizon’s CEO, Vestberg, and that might ultimately save that network’s business.

 

One consultant who works with Verizon, and spoke on condition of anonymity, said that the company isn’t immediately looking to replace Scotti and predicted there will not be an agency shakeup anytime soon.

 

“They’re not likely to have a leader in the short-term to make that decision,” the consultant said. “Every agency is assuming that they’re going to get fired, or they're going to get the business as a result [of Scotti’s exit] and they’re trying to line up and jockey to the extent that I don't think [Verizon’s marketing executives] want to go to Cannes because they just don't want to be followed around by every agency under the sun.”

 

Still, it’s common for a company to launch an agency review under new marketing leadership, meaning Verizon's agencies are likely on shaky ground.

 

Verizon is a major client for its agencies and a loss of its size will be monumental. It would be an especially bad hit for R/GA, which just underwent a second significant round of layoffs in the U.S. in under six months.

 

“The ripples of this will be huge,” the former R/GA executive said.

 

Contributing: Judann Pollack

 

~ ~ ~

 

CORRECTION: A previous version of this story incorrectly referred to a former R/GA executive as still working at the agency.