Deal Gives Omnicom Unit a Third McDonald's Co-op Agency
CHICAGO--Pursuing its goal of building a national network of retail advertising specialist agencies, The Integer Group in Denver is acquiring Cleveland shop Stern Advertising.
The deal expands Integer's total network to four full-service offices, 14 field offices and projected billings this year of nearly $500 million. Stern, which continues under that name, brings billings of nearly $100 million to the total. Terms of the deal were not disclosed.
Integer, acquired by Omnicom in 1997 and part of the holding company's Diversified Agency Services group, acquired Kragie/Newell in Des Moines, Iowa, two years ago; its acquisition of Denver agency Karsh & Hagan, announced last year, is expected to be closed in the first quarter.
Kragie/Newell, Karsh & Hagan and Stern all have client rosters heavily weighted toward retailers. (Stern's include Sterling Jewelers and Pennzoil's Blue Coral and Slick 50 car care products.) And, importantly, all three handle McDonald's co-op business. With the addition of Stern, the number of McDonald's units handled by Integer shops nearly doubles, to about 2,000, making it one of the largest of the chain's local marketing agencies.
"I would have pursued the deal for Stern even without the McDonald's business, but McDonald's is certainly a plus," said Ron Askew, Integer chief executive officer. "Most importantly, [Stern] is consistent with how we're building Integer: a group of independent, retail-focused agencies that understand how to build brands with strong selling messages.
"With our field offices network, we'll be able to compete for business with any of the major retail advertising agencies, like W.B. Doner [& Co. in Southfield, Mich.]," Askew said.
Integer was founded five years ago primarily to handle promotional marketing for Coors Brewing Co., which remains the Denver office's anchor client.
"With access to the resources of Integer and also of Omnicom in Internet, database, direct response and more, we gain extraordinary help in remaining competitive in a world that thinks more and more globally," said Stern chairman Bill Stern. "We've seen a lot of big clients go out of [Cleveland] to find the resources they need. We think this [deal] fortifies us so we can stop that and serve existing clients even better."
Askew said Integer plans further acquisitions of similarly retail-focused agencies on the East and West Coasts, but that no discussions are currently under way.