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Y&R

Report by Hamish McLennan

Global chief executive officer

Today's marketing environment is dominated by two seemingly countervailing forces. There is on the one hand, the unprecedented ability to market with a precise, data-driven, algorithmic approach to consumer and brand knowledge. On the other, there is a broader and deeper need for its expression through breakthrough content and creative. In 2007, Y&R continued to transform to capitalize on these trends. We leveraged all that is historically powerful about our brand, while at the same time recharged our offering with new leadership and new capabilities.

Leadership was a key priority going into the year and we made some critical hires and promotions. We brought Mitch Caplan on board as our chief marketing officer in North America and Tarik Sedky as our chief digital officer. We named Shelley Diamond, a 16-year veteran of the agency, the head of our flagship NY agency. We hired L.H. Whelchel as our chief talent officer.

Finally, our most high-profile appointment of the year was Tony Granger, one of our industry's top creative talents, who joins us shortly as our worldwide creative director. A top priority this year was making digital part of our day-to-day vocabulary. Key to this was the creation of a Digital Headquarters Group in New York and strategic centers of digital excellence around the world. In 2007, we ramped up in London, Paris, New York, Singapore and Brazil, adding to existing capabilities in Irvine, San Francisco, Chicago, Toronto, Cape Town, Tel Aviv, Sydney and Melbourne. With these new operations, we are more and more able to support our clients in their digital efforts anywhere around the globe. As a result, we are capturing significant online business from key clients such as Accenture, Danone, Chevron, Colgate and Sears, to name a few. In places like Australia, there is phenomenal growth of interactive business.

We broadened our offering in other high-growth areas, as well. We formalized our retail practice, based on our experience working with over 300 retail brands around the world. We created a formidable shopper marketing infrastructure, which is up and running in the US, Latin America, Europe and Asia. We launched a new specialist agency in the UK: Swarm, dedicated to through-the-line communications.

We continued our commitment to the high-growth and emerging markets. Latin America, under the leadership of Eddie Gonzalez, delivered one of its strongest years of growth and profitability and remained a creative powerhouse.

Under the leadership of Ambar Brahmachary in Asia, we relaunched our operations in China to create an offering relevant to today's marketplace.

We continued to invest in Central and Eastern Europe by taking over one of the leading agencies in the key market of the Ukraine.

In India, where our agency partner is Rediffusion DYR, the network was refreshed with new strategic and creative blood, and new business and creative awards were in abundance.

We are well positioned to capitalize on the growth in all of these markets that are increasingly important to our clients.

At the same time, our Western markets performed well in 2007. In North America, the banner news was the global win of LG business, an assignment that spans 56 markets. New York balanced its global emphasis with a revived emphasis on local new business, resulting in three wins in the fourth quarter. Our Irvine agency added to its senior management ranks with several key appointments, won Jenny Craig in a competitive shoot-out, and added a solid base of local assignments. Y&R San Francisco and Y&R Chicago continued to strengthen their base, with both new assignments and growth from existing clients. The appointment of Tom Sebok in early 2008 as president and CEO of Y&R North America will accelerate the momentum that has been building in the region.

Europe, in the third year of Massimo Costa's leadership, made some strategic acquisitions and partnerships in Spain, Portugal, the Netherlands and Ireland. Europe won pan-regional assignments for Volvic, Novotel, Fromagerie Bel, the GTV pay-TV network for Africa, and Hitachi and scores of major wins in individual markets.

The consistent strength of our network is serving us well in helping our global clients as they continue to build their brands in both mature and emerging markets around the world. It also positions us well for new business. This was evidenced by the LG win as well as by the support we gave to the cross-Group team which pitched and won the historic Dell assignment, and now as we continue to support the transition.

2007 also saw Y&R taking a more active role as a thought leader in our industry. We hosted a seminar at Cannes, inviting former US Vice President Al Gore to discuss the climate crisis. The record-breaking audiences were galvanized by his passion and presentation. This year, our seminar will feature Rupert Murdoch, who continues to have such a profound influence on the media and marketing environment.

We are looking forward to a strong year in 2008 as we celebrate our 85th anniversary.