Back in the Saddle
Mergers and acquisitions among promotion agencies started rolling again near the end of 2001 — a year that had largely been marked by their absence.
“We’ve turned the heat on under the acquisition burner,” says Thomas Harrison, chairman of New York City-based Omnicom Group’s Diversified Agency Services, home to 100-plus promotion, direct, and p.r shops assembled in a loose network that is encouraged — but not required — to work together.
Harrison made the remark after Omnicom announced that it had purchased The Promotion Network, a Dallas-based independent shop with an impressive client list boasting Sharp, Gatorade, Nabisco, and 7-Eleven.
Founded by former McDonald’s executive Roger Winter in 1983, TPN has about 110 employees, offices in New York City and Chicago, and revenues in the $15 million range. Chief executive Winter and the agency’s other two principals, president Sharon Love in New York and executive vp Rich Feitler in Chicago, will remain at the helm under “long-term” contracts, Winter says.
Omnicom pursued the shop despite Winter’s initial rebuff because “it’s not just a sales promotion agency. It’s a very strategic and unique promotion company,” says Harrison. “When someone says, ‘We’re not for sale,’ that usually means they’re onto something good.”
“If it had been anyone but Omnicom, we wouldn’t have done it,” says Winter, who in the past has professed a decided preference for independence. “But we liked Tom and what he had to say.”
Harrison’s pleasing words specifically centered on the “laissez faire” strategy at DAS, where agencies are primarily left to operate on their own. Cooperation among network agencies is encouraged (forums are held regularly to facilitate collaboration) but not required. “We don’t dictate anything, and I think that’s what attracts a lot of people to this organization,” says Harrison. “We buy very strong companies with good leaders, and we let them keep leading.”
Winter says the network benefits began paying off a few days after the deal was signed, when a client called with a problem. “We could have done the creative, but we couldn’t have handled the execution,” he says. “Within hours, we found other resources within Omnicom to help us.”
The Omnicom DAS division also includes such leading promotion agencies as GMR Marketing, TLP, Inc., U.S. Marketing & Promotions, Alcone Marketing, and the Integer Group.
Eastern Intrigue
In a move that gives the agency a much-needed presence on the East Coast as well as in-house field marketing capabilities, Chicago-based Frankel acquired Creative Alliance Marketing & Communications, Southport, CT.
Those service and geographic qualifications meant that 11-year-old Creative Alliance met “both criteria” in Frankel’s expansion plan, ceo Jim Mack says. “They also have good clients, and they’re really good people,” Mack adds.
Founded and run by former Pepsi-Cola executives, Creative Alliance ranked 41 on this year’s PROMO 100 with $5.5 million in net revenues. The shop, which works with several Pepsi brands along with such other clients as Labatt’s, Dewar’s, Sodexho Marriott, and OurHouse.com, has 30 full-time employees but also a network of about 1,000 freelance field staffers.
“This gives us the perfect vehicle to expand our offerings nationwide,” says Jim Kern, who runs Creative in a triumvirate that also includes principals Dominic Lemma and Tony D’Amico. “We could only grow our business so much organically.”
The two agencies didn’t wait for the contract to be signed before they began working together: The folks at Creative helped Frankel on last fall’s successful account pitch to the Centers for Disease Control (November 2001 PROMO).
New BMOC
Elsewhere, Gen Y media and marketing company Alloy, Inc., which operates the Alloy.com destination site, made two November acquisitions in its drive to become the leading marketer to college students.
In separate deals, New York City-based Alloy acquired the 360 Youth marketing services division of MarketSource Corp. and Target Marketing & Promotions.
Alloy will pay an estimated $34.7 million in stock (by issuing 1.8 million shares) and an additional $13.4 million in cash for 360 Youth, whose assets include such co-op services as the Campus Trial-Pak sampling program and the Campus Fest event tour. The operation generates roughly $15 million in annual sales.
Combined with the July 2001 acquisition of newspaper and campus display company Cass Communications, Chicago, the deal gives Alloy “a dominant position in the college market,” says ceo Matt Diamond. “We’re now the largest media player in the space.”
The acquisition of 22-employee Target adds more firepower on the execution end of the company, says Diamond. The Boston-based shop specializes in event work for brands targeting young adults and has worked with Hasbro, UDV North America, Dr Pepper/Seven-Up, and Frito-Lay, among others.
Target, which ranked No. 59 on the 2001 PROMO 100 with net revenues of $2.3 million and two-year growth of 45 percent, will be aligned with Beantown neighbor Triple Dot Communications, a marketing shop acquired by Alloy in December 2000.
In other M&A activity:
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The Zipatoni Co., St. Louis, completed its sale to the Interpublic Group of Companies, New York City, which first purchased a 49-percent stake in spring 1999. The move “will help assure our future growth,” and give the shop “access to IPG’s resources around the world,” says ceo Jim Holbrook.
PROMO’s Agency of the Year in 2000, Zipatoni ranked 23rd on the 2001 PROMO 100 with net revenues of $27.2 million and two-year growth of 49 percent.
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Westcott Marketing, Bellevue, WA, entered into a strategic alliance with niche shops in Seattle and Tacoma to form Westcott Promotion Group.
The new agency combined Westcott’s partnership marketing and consumer promotion expertise with the event marketing capabilities of Kavacom Sports & Entertainment and the production talents of Cascade Printing, Inc. The combined entity has 30 employees.
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Former b. little & co. principals Jordan Bochanis and Lee Rogan reunited to launch Bochanis Rogan Zoom with the help of their former production house.
The backbone of the creative concepting and execution shop is the former Zoom Design, Baton Rouge, LA, a seven-year-old production house that worked with Bochanis and Rogan in the b. little years.
Bochanis most recently was executive concept director at TLP, Inc. Rogan was president of The Geppetto Group, a kids marketing agency owned by WPP Group. The two will open an office in Wilton, CT.
Priceless Review
Purchase, NY-based MasterCard International in November sent out a request for proposals to a number of agencies including incumbent Ryan Partnership.
VP-global promotions Robin Blunt says the company “regularly reviews each of its agencies to ensure that our partners are engaging in the highest levels of service and quality programming.” He declined to discuss what other agencies were participating or the account’s billings.
Six or seven shops including Westport, CT-based Ryan will be selected to make pitches, according to a MasterCard spokesperson. A decision is expected this month.