OGILVY OFFICIAL LEAVES POST

Madison Avenue May Alter How It Handles Client Ties; Two Executives
Are Indicted

(See Corrections & Amplifications item below.)

The chief financial officer of the New York office of WPP Group's
Ogilvy & Mather has stepped down from his post one day after being
indicted, amid signals that an overbilling scandal could affect how
Madison Avenue does business.

In a statement, Ogilvy said Thomas Early, 48 years old, left his post
to "devote his full energies to obtaining a full vindication in this
matter." Mr. Early's lawyer said Tuesday, "We expect Tom Early to be
fully vindicated."

Shona Seifert, 43, a former Ogilvy executive also indicted, declared
her innocence in a statement issued Tuesday. Ms. Seifert serves as
president of the New York office of Omnicom Group's TBWA\Chiat\Day.
Mr. Early and Ms. Seifert entered U.S. District Court for the Southern
District of New York in handcuffs Wednesday afternoon. Each entered a
plea of "not guilty." Each was released after agreeing to sign a
$500,000 bond and pledge $25,000 in cash or collateral. They are
slated to meet in court again Feb. 13.

The indictment alleges the two participated with unnamed
co-conspirators in an extensive scheme that involved fraudulently
inflating labor costs when Ogilvy worked for the Office of National
Drug Control Policy. The federal agency is part of the executive
branch of the U.S. government. In a statement issued Wednesday, Ogilvy
said it continues to cooperate with investigators and has instituted
"the most rigorous accounting compliance program in our industry."

DuPont, an Ogilvy client, expressed confidence in the ad agency. "The
agency's current billing systems and practices meet DuPont standards.
Ogilvy remains a valued partner of DuPont," a DuPont official says.

The issues behind Mr. Early's departure likely will focus more
attention on how Madison Avenue handles its lucrative client
relationships. "The terrorism color-code alert has just changed from
yellow to orange when it comes to agency compensation," says Dick
Roth, who heads New York's Roth Associates, a consulting firm for
marketers. "Clients are already asking us about those issues."

STORIED BUT SHADOWED

A look at Ogilvy Worldwide

Business: Communications and marketing company specializing in
advertising, relationship and interactive marketing, with public
relations, sales promotion and related services.

CEO: Shelly Lazarus

Headquarters: New York

Number of offices: 474 world-wide

Key Clients: American Express, BP, Coca-Cola, GlaxoSmithKline,
Gillette, IBM, Kimberly-Clark, Kodak, Kraft, Mattel, Motorola, Nestle,
SAP, Unilever and Yum

Source: the company

Advertisers eager to save money have been scrutinizing every aspect
of the business, including the number of people working on their
account and the actual hours spent creating jingles and marketing
plans, even though creative thinkers aren't accustomed to such
reviews. Some clients have even tapped executives from corporate
purchasing departments to make certain that they get the best services
and value for their marketing dollars.

One consultant who specializes in developing efficient marketing fears
advertisers will be fixated on the idea that there are errors to
catch. "This will lead to an increase in tactical financial auditing
of accounts," says Jim Singer, a vice president at A.T. Kearney, a
global management-consulting firm. "You do a lot of these, and the
finger-pointing and erosion of trust could hurt the working
relationship," he adds.

Some agency executives are mindful of the potential for harm. "There
has been a general feeling among clients that agencies are more
interested in their own profitability than the client's sales results,
and this just adds fuel to that fire," says Alan Kalter, chairman and
chief executive of Doner, one of the nation's largest independent
agencies. Doner's clients include Ford Motor's Mazda and Progressive
Insurance.

Marketers also have noticed the issue. "I have always had a healthy
caution about agencies and their practices," says Len Short, executive
vice president of brand marketing at Time Warner's America Online.

The criminal indictment alleges that Mr. Early, Ms. Seifert and the
unidentified co-conspirators committed the acts starting in or about
May 1999, continuing through about April 2000. About two years later,
Ogilvy & Mather paid $1.8 million to settle civil charges related to
the matter. In July 2002, the U.S. agreed to let Ogilvy continue
working on the account, much to the surprise of some politicians,
including Bob Barr, a former Republican congressman from Georgia.

"I knew when we first looked into this several years ago that
something smelled rotten. It was obvious," says Mr. Barr, who served
on the House Financial Services, Judiciary and Government Reform
committees during his tenure.

Corrections & Amplifications:

Thomas Early, chief financial officer of the New York office of WPP
Group's Ogilvy & Mather, has resigned. The headline on this
advertising column incorrectly implied that the chief financial
officer of Ogilvy & Mather Worldwide had resigned.