Deals Subtly Reshape Minneapolis

Acquired by IPG, Carmichael Lynch Vows to Retain Its Autonomy
CHICAGO–Although ownership of two of Minneapolis’ largest agencies has changed hands in the past two weeks, local advertising executives expect little immediate change in the competitive landscape.
As expected, The Interpublic Group of Companies announced last week that it had acquired Minneapolis’ Carmichael Lynch. Sources valued the stock-swap deal at approximately $30 million. Carmichael Lynch, with 1997 billings of about $200 million, has been employee-owned since 1989.
Carmichael Lynch is the city’s fourth-largest agency, behind Campbell Mithun Esty (partly owned by IPG), Fallon McElligott and Martin/Williams (whose parent GGT Group was acquired two weeks ago by Omnicom Group).
“I don’t think [the Carmichael Lynch sale] will affect the city at all,” said Mark Goldstein, president of integrated marketing for Fallon McElligott, Minneapolis’ largest independent agency. “It’s just a financial transaction.”
Jack Supple, Carmichael Lynch president and chief creative officer, characterized the deal as the right move at the right time for the agency.
“We’ve always thought that if we could have true autonomy with our culture intact–and could get the right price–it would have to be something to consider,” he said.
The path to the buyout began last summer, when Carmichael Lynch representatives approached several international networks, Supple said. “We were told by several sources that this was the right time,” he said. “The accounts that we have are getting larger, and the accounts that we are talking to are getting larger.”
Supple said the agency will not forsake its traditionally midsized clients, which currently include Harley-Davidson, Harrah’s Entertainment Corp., Schwinn and Volvo Trucks. But joining the IPG network will allow the shop to give those clients access to better resources and “global connections,” Supple said.
“We are still liking our collection of midsized, great brands,” he said. “[But] agencies in our competitive set are constantly being weighed against the resources of larger agencies.”
Although neighboring CME is part of IPG, Carmichael Lynch will report financials through another IPG holding, Campbell-Ewald Advertising in Warren, Mich. But Carmichael Lynch will remain independent from that agency as well, freeing it from potential conflicts, Supple said.
Tony Hopp, CEA chairman and chief executive officer, called Carmichael Lynch “a great agency brand” that will remain “very separate and autonomous.” However, he added that he sees “future opportunities for leveraging business opportunities together.”
Hopp said CEA is in the process of putting together its own structure for servicing international clients–including its largest, General Motors’ Chevrolet division. That international capability “will be there for [Carmichael Lynch] to use if they need it,” he said.
Carmichael’s name has been floated as one of a number of possible contenders for Porche’s $10 million account, which will be up for review in April.
Like Supple, top executives at Martin/Williams expressed confidence their agency will maintain its autonomy as it enters the Omnicom network. “We’re going to remain an independent brand,” said Dave Floren, M/W chief executive officer.
Executives at other Minneapolis agencies said the flurry of acquisitions will not significantly change the local agency community.
“[The holding companies] don’t seem to want to be changing” the agencies they’ve acquired, said Jim Bergeson, chief executive officer of Colle & McVoy, the city’s fifth-largest agency and second-largest independent. “They want them to be autonomous.”
But Bergeson, whose agency is employee-owned, said an agency must be able to compete globally in the current climate.
“Having some global capacity is important today. You get asked that every time you present,” he said. “If you can’t answer [that] question … you’re not going to make the cut.”
For now, Colle & McVoy answers that question by way of membership in the International Federation of Advertising Agencies, the global affiliation of independent agencies. WPP Group approached the agency about a buyout in the past, and Bergeson said he is “confident” the agency will be approached again.
“Right now, we’re doing fine without it, but I’m not saying we’re not going to make that switch [someday],” he said.
At Fallon, there’s continuing talk about how best to service clients’ growing global needs, Goldstein said. “For now, we’re handling them from here,” he said.
“Minneapolis has been a market of primarily independent agencies for years,” said Tim Clarity, president and chief executive officer of Clarity Coverdale Fury. While he recognizes that the globalization of industry is making it more difficult to survive as a purely regional agency, Clarity said, his agency has no plans to align with a global parent in the near future.
“We get approached all the time, [but] we’re fiercely independent,” he said. “And the clients that we attract appreciate that we’re independent.”
–with Scott Hume