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Dot-Com Fever Sinks MARC N.Y.

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Sucked in by overreaching dot-coms, too slow to cut costs and unable to diversify its offerings, MARC USA New York was shuttered last week by its Pittsburgh-based parent.

MARC bought $75 mil lion Ryan Drossman in 1999 during an acquisition spree that laid the groundwork for CEO Tony Bucci's vision of a Pittsburgh-based national network. Led by industry veterans Neil Drossman, Matt Ryan and Bob Needleman, the shop was expected to add creative spark to the fledgling network, which then claimed $400 million in billings. (MARC last year reported billings of $586 million across six U.S. offices, down 14 percent from 2000.)

The shop fell victim to almost all of the maladies that have plagued the industry in the past few years, problems that hit small shops operating on thin margins especially hard. When the dot-coms beckoned, MARC New York rushed in. Bucci said the first year the office was expected to help triple its holding com pany's revenues, largely from clients like getajob.com and Posh & Sticks, an online furniture retailer that suggested billings of around $30 million. "We took it all," Needleman acknow ledged. "We were BBDO for a while."

Financial services were hard hit in the ensuing recession, costing MARC New York clients such as Bear Stearns, which scaled back marketing, and Cantor Fitzgerald, which split with the New York agency last July in search of a shop with an international footing, Needle man said.

Efforts to shore up the New York office via acquisitions were a bust because "everyone was in such a mess," Bucci said, adding that he has no plans to re-establish a Big Apple foothold. But he will be loosely affiliated with a shop Drossman and Needleman hope to open in June.

Bucci said no market was as hard hit by the recession as New York, with other MARC offices posting flat to modest gains for 2001. He admitted that a New York presence is essential for some clients, but said he is going forward with plans to build a strong second-tier group of integrated shops.

Drossman and Needleman, both creatives, said that in hindsight they would have relied more on freelancers during the boom, and would have done more to bolster their below-the-line offerings.

"When you're in the middle of a downturn, nobody expects it to continue," Drossman said. "Agencies at the start of it didn't make the adjustments that needed to be made because it'd be over tomorrow."