BOSTON McKinney today said it has bought itself back from Paris-based conglomerate Havas, with managers at the shop in Durham, N.C., acquiring 100 percent of the agency, which employs about 180 staffers.
The shop has suffered some key losses in recent years, notably assignments from Audi and Sony. McKinney’s estimated revenue in 2007 was $25 million, down almost 35 percent from the previous 12-month period, based mainly on those two client departures.
Staffing was about 225 a year ago, down from a high of roughly 240.
Brad Brinegar, agency chairman and CEO, said the buyback has been a long-term goal and was in the works for several years.
Independence allows local managers “to keep the fruits of our labors” and grow the shop unfettered by possible client conflicts looming within other units of Havas, Brinegar said. It also frees McKinney to team up with specialty shops on as-needed basis to pursue new business, he said.
Fernando Rodes Vila, Havas CEO, said in a statement: “We are increasing our focus on our core global brands, Euro RSCG, Havas Media and Arnold, so this is a good time to act on the interest Brad and his team have long expressed to own the agency. This sale is beneficial for both parties.”
Havas agreed to acquire the shop, then called McKinney & Silver, from ill-fated digital communications firm marchFirst in April 2001. At the time — the tail end of a consolidation spree in the ad industry — sources placed the sale price in the $20-25 million range.
Financial terms of the buyback were not disclosed.
Brinegar said all clients have been supportive and no accounts are expected to leave. McKinney operated as a autonomous agency within Havas, and did not share key assignments with other holding-company units. Notable accounts include Travelocity (for which McKinney has fashioned the well-known “Roaming gnome” campaign), Brown-Forman’s Southern Comfort, Caldwell-Banker, Nasdaq and Virgin Mobile, among others.
Roughly 35 percent of the McKinney’s revenue derives from its digital operations. Brinegar said that bodes well for the future given the increasingly interactive nature of the media landscape, but he would prefer a 50/50 split in the next few years if possible.
The shop has always been creatively focused and will continue to trade on that reputation while offering in-house media planning and buying duties across all media except broadcast TV, Brinegar said. Agencies such as Anomaly and Goodby, Silverstein & Partners — flexibly working across media channels new and old — provide inspiration, if not a blueprint, for McKinney’s future.
Industry observers generally applauded the buyback move if only because in recent years McKinney’s Havas association had not been particularly beneficial for either party.
“It has the heritage of a creative boutique and its independence may now help it to re-energize that reputation,” said Judy Neer, president of industry consultancy Pile and Co.
Chris Colbert, CEO of Boston-based Holland Mark and a longtime manger of midsize agencies, was likewise optimistic: “There is scant evidence that being publicly held or part of an agency holding company creates strategic incremental value to the agency or its clients. In fact, one could argue the opposite. It is a huge distraction and puts such a focus on satiating shareholders that ‘doing what’s right for the customer’ can get lost in the shuffle.”
He also injected a note of caution, however, because the agency’s ultimate success will also “depend on what they bought it for, the debt they took on, etc., — i.e., Is it a good investment?”
Brinegar declined to disclose financial terms of the deal or discuss related details.
Along with Brinegar, who joined in 2002, the partners and board of directors are Jeff Jones, president; Andrew Delbridge, chief strategy officer; Joni Madison, chief operating officer; Jonathan Cude, chief creative officer; Tim Jones, chief financial officer; Jeremy Holden, director of account planning; Doug Holroyd, director of connection planning; John Newall, group account director and director of strategic alliances; Janet Northern, director of agency communications; Jim Russell, director of digital strategy; and Ellen Steinberg, group creative director.