2004 Not Bad For Regional Shops, And That’s Just Fine

CHICAGO With ad spending up and a Canadian holding company instilling renewed confidence in small and midsize agencies, 2004 was a good year for regional shops. And after the way things have gone earlier in the decade, good isn’t bad.

“Media expenditures are good; it seems more stable than it has been—it’s not as crazy,” said Jim Schmidt, chief creative at Omnicom Group’s Downtown Partners, here, which opened in June.

Ad spending was up more than 10 percent to about $102 billion through September, according to TNS Media Intelligence/CMR. Consolidation continued, with MDC Partners this year rounding up several small and midsize regional shops (which have been threatened with marginalization in the era of globalization) in an effort to form a new kind of ad network.

“It’s a far more optimistic time,” said Patty Alvey, director of the Temerlin Advertising Institute at Southern Methodist University in Dallas. “There isn’t that scared look in people’s eyes anymore.”

While it’s difficult to highlight all of the significant regional events, here’s a look at some of the developments that made headlines—for better or for worse:

CUTTING DEALS
• Under CEO Miles Nadal, MDC reduced the ranks of the remaining independents by acquiring stakes in two New York shops, Kirshenbaum Bond + Partners (60 percent) in January and Cliff Freeman and Partners (20 percent) in March. And the Toronto-based company in April took minority ownership in Minneapolis’ mono—launched late last year by ex-Fallon and Carmichael Lynch staffers.

• Niche players saw benefits in consolidation. In February, Publicis Groupe created the second-largest Hispanic agency in the U.S. by merging Miami-based Publicis Sanchez & Levitan with San Antonio-based Bromley Communications under the Bromley name. The merger led to the closing of PS&L’s Dallas office. Independent Boston i-shop Digitas in July agreed to purchase Norwalk, Conn.-based rival Modem Media; the stock-for-stock deal was completed in October and ultimately valued at $160 million. And Machado/Garcia Serra, an independent Hispanic agency in Miami, bought rival IAC Group, also in Miami, in October. The acquisition created the nation’s 20th-largest Hispanic shop.

• In an effort to extend its new-business reach to the East Coast, Chicago independent Cramer-Krasselt got its long-coveted New York beachhead by signing Larry Hampel and Dean Stefanides in September to form Cramer-Krasselt/Hampel Stefanides in New York. The new shop brings over several staffers and two clients, Comcast Spotlight and Steve Madden, from the creative pair’s former home, now called The Tucker Partnership.

BACK IN THE FOLD
• The year marked a return to the ad business for some. Larry Weber, former below-the-line marketing exec at Interpublic Group (he founded Weber Shandwick), came back to the scene in September after a year away and formed W2 Group, a regional holding company in Waltham, Mass., that focuses on technology and b-to-b clients. W2 launched with two units: PR shop Racepoint Group and research company Digital Influence Group; it later acquired i-shop One to One and ThirdScreen Media.

• And Fred Smith, former chairman of Leap in Chicago (which was sold in 2001), resurfaced with a new venture in the city called the Tungsten Group. The fledgling agency absorbed Grant Jacoby in Chicago and began efforts to roll up small shops in an attempt to create a national network.

EXECUTIVE DECISIONS
• His contract up, John Yost resigned as president of Havas’ Black Rocket Euro RSCG. Yost founded the San Francisco agency with partner Steve Stone, who continues as CEO.

• IPG’s CL in Minneapolis lured Peter McHugh from 180 in Amsterdam to take over as CCO from chairman Jack Supple. (McHugh was also being pursued by Publicis’ Fallon—where he had served as group cd before joining 180—to replace David Lubars.)

• There were other changes in the Twin Cities as well. At Omnicom’s BBDO, the loss of Buffets Inc. ($20 million) in December 2003 led to the exit of president Bob Thacker in January; he was replaced by CCO Denny Haley. And at MDC’s Colle + McVoy, CEO Chuck Kushell exited in March; he was replaced by CCO John Jarvis as the shop put greater focus on creative.

• Some efforts had a cosmetic component. Under CEO Ed Winter, Omnicom’s TracyLocke, which has been through numerous name changes over the years—including, most recently, TLP—returned to a closer variation of its original moniker (Tracey Locke Advertising). The shop also named COOs for its offices in Dallas and Wilton, Conn.

• Other moves heralded the end of one era and the beginning of another. Fletcher Martin Ewing, an MDC shop in Atlanta, saw the departure of partner and CCO Michael Ewing in September. He was replaced by Tim Stapleton, cd for the past two years. And the 2003 merger of Dailey & Associates and Suissa Miller didn’t take for David Suissa, who left as co-vice chairman of the West Hollywood, Calif., IPG shop in October.

BEGINNINGS AND ENDINGS:
• Barely making it into the year was the Wolf Group, which collapsed in January despite chairman Larry Wolf’s last-minute attempts to sell the Toronto-based network, done in by debt that included a failed dot-com venture. Execs at offices in Cleveland and Rochester, N.Y., bought the shops back, while Wolf New York ecd Mike Rogers resigned before he could be put out of a job, taking 25 staffers and N.Y.’s largest client, Scotts ($80 million), to start ML Rogers.

• Separately, independent Clarke Goward in November closed its doors after 27 years in Boston, stung by a string of client losses. Its remnants were absorbed by RDW Group in Providence, R.I.

For 2004, it’s farewell, which beats the heck out of good riddance. – WITH STAFF REPORTS