Reference no: EM132214268

Case question “The Aggressive Ad Agency,” describe the type of business information that the agency is offering to Microsoft, and why it could be unethical for Mr. LeBow to accept the offer. What do you believe Mr. LeBow should do? Describe the options for action available to him, how each would affect Microsoft, and which you would choose. Note any common interests between Microsoft and Lotus that Mr. LeBow should protect.

Rob Lebow was used to aggressive advertising agencies. As director of corporate communications for Microsoft Corporation, the giant computer software producer located in Redmond, Washington, Lebow helped to administer the company’s $10 million advertising budget. So when it was announced in the fall of 1987 that Microsoft was conducting an agency review, putting its business up for grabs, he was prepared for a flood of calls and letters. One particular piece of mail that caught his eye was a specially prepared flier from a small agency in Boston named Rossin Greenberg Seronick & Hill (RGS&H). Under the leadership of its president, Neal Hill, this five-year-old advertising agency had accounts totaling $26 million and a growth rate of 65 percent for the past year. Although its business was concentrated in New England, RGS&H was attempting to become a national force by going after high-tech industries. As part of this strategy, the agency recruited two talented people who had worked on an account for the Lotus Corporation at another firm. Jamie Mambro and Jay Williams, who were creative supervisors at Leonard Monahan Saabye in Providence, Rhode Island, joined RGS&H on November 2. A few days later, Neal Hill read a news story in a trade publication about the agency review by the Lotus rival. Because Microsoft’s new spreadsheet program, Excel, was competing directly against Lotus 1-2-3, the industry leader, this seemed to be an ideal opportunity for RGS&H. The flier was sent by Neal Hill on November 20, after two previous letters and several telephone calls elicited no response from Microsoft. Included in the flier was a roundtrip airline ticket from Seattle to Boston and an invitation that read in part: You probably haven’t thought about talking to an agency in Boston.... But, since we know your competition’s plans, isn’t it worth taking a flier?... You see, the reason we know so much about Lotus is that some of our newest employees just spent the past year and a half working on the Lotus business at another agency. So they are intimately acquainted with Lotus’ thoughts about Microsoft—and their plans to deal with the introduction of Excel. In order to do an effective job for a client, advertising agencies must be provided with a certain amount of confidential information that would be of value to competitors. Many companies include a confidentiality clause in their contracts with advertising agencies, and Lotus had such an agreement with its agency, Leonard Monahan Saabye. Even in the absence of a confidentiality clause, however, advertising agencies generally recognize an obligation to preserve the confidentiality of sensitive information. On the other hand, offering the experience of employees who have handled similar accounts is an accepted practice in the advertising industry. As the president of one firm observed, “There’s a thin line between experience and firsthand recent knowledge.” But, he continued, “I can’t imagine a new-business presentation in which the agency didn’t introduce people who worked on the prospect’s kind of business.”40 Rob Lebow was left to wonder: Was Neal Hill at RGS&H offering Microsoft the experience of two employees who had worked on the Lotus account, or was he offering to sell confidential information? In either event, what should Lebow do? If the new employees at RGS&H had information about Lotus’s advertising strategy for countering the introduction of Excel, this could be of considerable value to Microsoft. Anticipating the moves of rivals is often critical to the success of a campaign. However, moving even a part of Microsoft’s business to another agency—especially to a small, untested agency like RGS&H—would surely attract the attention of Lotus. In the rumor-filled world of advertising, the presence of two employees who had formerly worked on a Lotus account would not go unnoticed. Therefore, any information that RGS&H had might be “too hot to touch.” Rob Lebow recognized that he could decline the offer in different ways. He could merely ignore the flier, or he could return it with the reply “Thanks but no thanks.” Another possibility was to forward the flier to Lotus. Even the rumor that Microsoft had communicated with RGS&H could be damaging to the company, and so being open with Lotus would provide some protection. However, Lotus has a reputation within the industry of being quick to sue, and considerable harm could be done to RGS&H—and to the two new employees, Jamie Mambro and Jay Williams, who might be unaware of the offer made in the flier. Thus, any decision that Rob Lebow made was bound to have significant ethical, legal, and practical implications.