Dethroning the King (12 page)

Anheuser-Busch devoted so many hundreds of millions of dollars to advertising each year that it could afford to sponsor all of those neighborhood leagues and still lock up the exclusive advertising rights for key events. In 2006, it secured the rights to be the only Super Bowl alcohol advertiser through 2012, extending the chokehold it held on the world's largest single sporting event to a run of two dozen years. It reached a similar deal that year for advertising exclusivity during the NCAA college football Bowl Championship Series through 2010. By the time other beer companies decided to follow Anheuser's lead in sports marketing, they found it impossible to gain the same kind of access, and complaints from Stroh Brewing led the U.S. Justice Department to investigate whether it was legal for television broadcasters to let advertisers freeze their competitors out. Nothing came of the investigation.

The Third didn't just dictate Anheuser-Busch's overall marketing strategy—he commanded the group from the trenches. And while marketing is one of the more touchy-feely business disciplines, The Third presided over his marketing department with a sledgehammer. Getting an idea past him was never easy, and unlike many corporate CEOs who leave all but the most large-scale marketing decisions to others, he was the final arbiter on pretty much everything.

“When I saw him deal with his own people, and deal with the agency people who had been working with Anheuser and had built careers at the agency, he just bullied them,” said one former agency executive. “It was a complete bullying attitude.”

“August III could be very snap with his judgments, which was tough,” said a former top marketing executive. “At times you could prove him wrong, and he'd be very complimentary afterward, but it was hell to live with him during the process.”

Still, the heartache and stress were worth it for a crack at one of the world's largest corporate advertising budgets, and for a chance to run gutsy creative work nationwide that many other companies would tone down. Ad agency staffers battled for the chance to work on the Anheuser-Busch account despite the client's often irrational demands, and in the end, the spots they created were the type that swept the advertising industry's awards each year. Who wouldn't want to watch an ad he created air during the Super Bowl, rather than having it pasted on the back of a public bathroom stall?

Despite The Third's affinity for data-driven business school grads, his favorite way to test ad campaigns was to drag executives into the boardroom and fire around the table one person at a time, quizzing them on their views. The challenge, if your point of view countered The Third's, was to figure out how to present it gently enough to avoid getting fired.

Still, he was usually right. “He was instinctively good at creative work,” said one former agency head. “In my judgment, he was stronger than The Fourth in that area or than virtually anybody else in the company. This is a guy who I didn't like, personally. But he had an ear for music, an understanding instinctively of what would appeal to young men—the target audience—and he knew that advertising drove his business. He wanted cutting-edge, leading stuff. He wasn't always right, but I can't pick an instance . . . where I thought he was wrong.” Anheuser-Busch hit the advertising jackpot time and time again during the era of August III, which ultimately led to its victory over Miller in the 1990s during the era's so-called beer wars. It showed how a company could use advertising to separate itself from the pack without changing much at all about the product it actually brewed.

“There are certain things that are kind of commoditized about the beer industry, and image is the tiebreaker,” said Bob Lachky, acknowledging that he'd be labeled a heretic for admitting that most beers are pretty similar. “Marketing was just intrinsically in our bones as a company.”

The Third's triumph over Miller looked even sweeter after factoring in the war chest Miller had at its disposal. “August, if you think about it, was the David against Goliath,” Charlie Claggett said. “If you imagine how intimidated he must have been when, as a young man, he's taking over this company and facing Philip Morris, with all of their market power and deep pockets. He doesn't know what to do, he's never been to college. And he's got to somehow face this giant and kill it, because if he doesn't, they're going to turn around and kill him. And by God, he did it.”

The Third spared no expense on marketing, which ranked alongside the brewing operation as the two areas in which quality mattered to him most. He routinely demanded things people felt were impossible, refusing to compromise on the final product because of the finite number of hours in a day or the amount of money something might cost. As they shot and reshot expensive commercials and raced around the country on private jets, his staffers got the sense that money and time didn't matter.

“He let costs get out of control,” said a former ad agency head. “But there was no question that he was going to spend what was necessary on advertising, in media, on promotions, and in production of the advertising to make it the world's best. And he did. It helped create some of the best advertising of all time.”

The company's marketing dollars weren't spent solely on the consumer—Anheuser spent a good chunk of change making its own employees and beer wholesalers feel special, too. It operated what it called a “three-tiered” distribution system that consisted of the company itself, hundreds of distributors who served as regional middlemen, and the retailers who bought beer from those distributors. A critical part of the system's success was keeping the distributors happy. And one of the company's most tried-and-true ways of doing that was its annual wholesaler convention. The conventions technically served as a forum for sharing information and presenting upcoming ad campaigns. Anheuser-Busch's real agenda seemed to be hammering home that it was the biggest, most powerful brewer in the world. Its distributors—mainly men who were millionaires or on their way to becoming millionaires—would arrive dressed in black tie, their wives decked out in furs and jewels, to celebrate the success of the past year and pay tribute to the company that was helping them get rich. “The Third made so many of those wholesalers multimillionaires that they would have followed him anywhere,” said one person who attended the conventions. “There was a huge amount of deference paid, a huge amount of respect. Nobody second-guessed a Busch decision, even in a three-tiered system, which is odd.”

To mark the festivities, Anheuser-Busch would put all of its company-branded toys on display—its hydroplane, its race car, its hot air balloon—and use the power of its name and pocketbook to draw the attendance of Hollywood legends such as Lucille Ball, Frank Sinatra, Sammy Davis Jr., and Paul Newman. Marketing honcho Mike Roarty rubbed elbows with them all, and even co-emceed one evening's glamorous events in 1988 alongside Bob Hope and a bevy of showgirls who paraded in front of a curtain of dangling gold beads. When the conventions took place in California, the crowd and the nighttime performance roster were so thick with A-list movie stars that “you just got sick of it after a while,” said one attendee.

“What we wanted to show was the big picture—to let people see that we're number one,” said an aging Roarty 20 years later, as he reminisced at his home in an upscale suburb of St. Louis. “It was a great success, and it gave us an opportunity to say to our wholesalers: ‘We're number one; make no mistake about it.' ”

Two drawings of Roarty by Al Hirschfeld, the world's most sought-after caricaturist, hung carefully framed on the wall not far from where he sat, and his entire house was filled with photos of him hobnobbing with the rich and famous—a testament to the connections Anheuser-Busch had in entertainment, sports, and politics. A glint flashed in Roarty's eyes as he recalled filming a commercial with Frank Sinatra, one of several “Rat Pack” members he knew well. “We had a lot of fun, Frank and I,” Roarty said, repeating that comment five minutes later in reference to Milton Berle. Movie stars, sporting legends, and powerhouse political figures were key to Anheuser's efforts to show distributors that their devotion to Anheuser-Busch was well worth it.

The conventions weren't always easy, however, for Anheuser's marketers. The Third liked to stage viewings of the year's upcoming commercial lineup in front of a packed convention hall to whip up excitement and send his salesmen home in eager anticipation. Each TV spot usually elicited thunderous applause as the giant screens at the front of the room went black. But that wasn't always the case.

During one of the company's annual conventions, the audience posted a muted reaction to an avant garde Budweiser commercial D'Arcy had produced. Gauging the crowd's disappointment, August III stood up. “How many of you dislike this advertising as much as I do?” he asked. As the comment elicited 5,000 collective “Boos,” D'Arcy's advertising staffers shrunk into their chairs.

“I tell you what I'm doing right now,” The Third said, motioning for D'Arcy's top executives in attendance to stand so the crowd could see. “I'm putting that agency on a plane tonight, they're going back to St. Louis, and they're going to create new advertising for Budweiser.” As the crowd roared in approval, the chastised D'Arcy team marveled at how deftly The Third had been able to turn the meeting into a power-solidifying, tribal spectacle.

The Third held his marketers to incredibly high standards of both performance and behavior. “It was a family-run business with a ton of tradition and a ton of ego,” said one former agency executive. “It was slightly like working with royalty. There was a certain amount of decorum that had to be practiced. You spoke when spoken to, you made your point once, but you never made it a second time. Once it was settled, it was settled.” August III liked to put every new staffer to the test right away, prompting some of them to compare it to boot camp for the Marines.

Marketing was The Third's go-to tool in tough times, and it usually worked. Right before Christmas in 1976, he pulled a bunch of marketing managers into a conference room, flipped on the overhead projector, and slapped a transparency onto it that showed Miller's sales coming on like a freight train. He pulled out a grease pencil, smashed its soft point down onto the screen, and then dragged it out to the right, extending both lines to show that Miller was soon going to overtake Anheuser-Busch. He turned his icy glare out toward the men in the room, staring them down one-by-one. “If these trends aren't a whole lot different a year from now, a lot of you won't be in this room,” he said. Then he flipped off the projector, wished the group a Merry Christmas, and walked out.

The Third had a talent for judiciously doling out special treatment as reward for the stress, though his carrots were often calibrated to just barely make up for the harshness of the stick. The company lavished expensive but puzzlingly useless items on valued employees and ad agency staffers. As a Christmas gift, one executive received a full set of silverware emblazoned with the Anheuser-Busch crest. Another was gifted with a giant statue of an eagle, meticulously carved out of white alabaster, at his retirement party.