Shades of Grey

WPP Group’s promotion agencies are more likely to collaborate than merge as WPP completes its $1.52 billion purchase of Grey Global Group.

The acquisition, expected to close by yearend, adds J. Brown Agency to WPP’s stable of promo shops, which currently includes 141 Worldwide, Einson Freeman and Wunderman.

That lineup — along with WPP-owned retail research firm Management Ventures, Inc. — positions WPP to challenge Publicis Groupe on “shopper marketing,” a hybrid discipline poised to grow quickly following Procter & Gamble’s $4 billion communications-planning assignment this summer.

Agencies are jockeying to build account-specific expertise, fueled by P&G’s much-watched review, which uses shopper marketing to plan media buys. (Publicis’ Starcom MediaVest Group and Aegis Group’s Carat won.)

A separate, simultaneous review for retail and direct-to-consumer promotions for P&G’s health and beauty care division also emphasized shopper marketing. Grey Synchronized Partners (including J. Brown) pitched but didn’t win, despite P&G’s long relationship with Grey. (Integer Group, Frankel and Saatchi & Saatchi X won the HBC work. Publicis, which owns Frankel and Saatchi, bought account-specific shop ThompsonMurray in June to strengthen Saatchi’s bid.)

Grey’s loss “doesn’t close the door for future assignments” from P&G, says Joe Celia, president of Grey Synchronized Partners. “I hope we can be in the right place as P&G continues to focus attention on retail marketing.”

J. Brown CEO Tim Dorgan won’t say how much of the agency’s revenues come from P&G. But sources say J. Brown lost the bulk of that business in 2001, when P&G decentralized field marketing, and it has handled few P&G assignments since then.

WPP says it will keep Grey intact. Stamford, CT-based J. Brown will continue to operate as part of Grey, Dorgan says.

There had been speculation that WPP might fold J. Brown into 141 Worldwide, which WPP got as part of its August 2003 purchase of 141 parent Cordiant Communications. “Every indication that we’ve gotten is that Grey and its units will stay intact,” Dorgan says. “I assume there will be more resources for us once this all comes to fruition. Until then, it’s business as usual.”

But J. Brown has been in flux since the abrupt Aug. 25 departure of longtime leader Jon Kramer and the September layoffs of about 20 staffers.

Dorgan, who replaced Kramer as CEO, says the layoffs were unrelated to Kramer’s departure or Grey’s pending sale. The layoffs, most of which improve back-office efficiencies with Grey, were part of a “reorganization to fine-tune our infrastructure,” says Dorgan. J. Brown is hiring in its Chicago, Cincinnati and Stamford offices “to add to our promotional concepting and planning horsepower,” per Dorgan. The agency also is immersing creative staffers in retail channels, from food, drug and mass-merchandise to home-improvement and consumer electronics stores.

Dorgan, who had been president of J. Brown’s Chicago office for 18 months, will remain in Chicago. Executive VP Vince Weiner was named president of J. Brown’s Stamford headquarters to replace Kramer’s leadership there.

J. Brown strengthened its account-specific marketing resources when it merged with food broker Crossmark in January 2004 (March PROMO). That gave J. Brown access to store-level shopper data from 30,000 stores to better plan and evaluate campaigns. The merger is “starting to gain traction” with wins from Breathe Right maker CNS, Alltrista Corp. (best known for Ball canning jars) and two undisclosed clients, Dorgan says. Interest from non-packaged goods brands “has broadened my new-business scope” to include electronics and do-it-yourself retail, he adds. “The Crossmark deal was a game-changer. It gives us a unique advantage.”

One source close to Crossmark says Grey hasn’t capitalized enough on that advantage. Dorgan disagrees: “Shopper marketing is very important to Grey, as it is to agencies across the board.”

J. Brown is still integrating Crossmark’s capabilities, Celia says. “Retail is definitely the next big battleground in marketing communications. We continue to be all over it, across the globe.”

WPP-owned shops are eager to tap J. Brown’s account-specific expertise.

“I hope we can find some kind of alliance. It would be a nice fit for us,” says 141 Worldwide President-Regional Director Jay Farrell. “What’s nice about being part of WPP is that, despite being friendly competitors, [the agencies] are comfortable and encouraged to work together.” J. Brown and 141 both do work for Kraft Foods.

“Partnering is the strength of our network. We just have a better phone book now,” says Steve Zammarchi, president of Wunderman’s New York office. Wunderman has worked with Einson Freeman on Sears, and collaborates with Young & Rubicam on Sears, Chevron and others. Adding J. Brown “broadens our reach and scope.”

Einson Freeman, which isn’t affiliated with an ad agency like 141 and Wunderman are, works with all WPP’s ad shops, says Einson President Jean Mojo. “It’s in WPP’s culture to collaborate. J. Brown will simply be another resource for us.”

Aspen Branches Out

NEW FINANCING FUNDS ACQUISITIONS

Aspen Marketing Services is shopping for acquisitions with a new checkbook.

Aspen got an infusion of cash in September, when investment firm KRG Capital Partners recapitalized financing for the West Chicago, IL-based agency. Aspen is looking to buy agencies with a strong client base, especially in financial services and pharmaceuticals. Also on the shopping list: a small Hispanic agency and a database and analytics firm.

“The last few years have been very strong, so we went into the marketplace to see what kind of investment support we could get,” says CEO Patrick O’Rahilly. “KRG could give us the biggest checkbook.”

“KRG also shares our values,” adds CMO Cathy Lang, and will move quickly on due diligence for purchases that Aspen wants to make.

KRG takes a minority share; Aspen management and other investment firms also hold minority shares. The agency has 500 staffers in nine offices handling direct marketing, events, promos, interactive, strategic planning and ad specialties.

Aspen’s revenues should hit $200 million in 2005, thanks in part to a five-year contract with General Motors for retail marketing. The business, won in July, should bill $35 million to $50 million a year, O’Rahilly says.

Aspen ranked No. 52 in the 2004 PROMO 100 with $39 million in 2003 net revenues, up 10% from 2001. Gross revenues are tracking at $175 million for 2004, up from $125 million in 2003, O’Rahilly says.

Denver-based KRG looked at a handful of direct-marketing service shops before choosing Aspen for the strength of its management team. “Under the leadership of O’Rahilly and Lang, they’ve done a superb job building their automotive business through GM and their telecom business through SBC and Qwest,” says KRG Managing Director Bruce Rogers. “A lot of direct-marketing companies have smaller accounts; Aspen’s position as agency of record for [bigger clients] means it handles execution and fulfillment as well as strategy.”

This is KRG’s first foray into marketing; the eight-year-old firm has a track record of building businesses via acquisition and organic growth. “We can work with Aspen management to identify acquisition targets and facilitate integration,” Rogers says.

Aspen grew rapidly from 1997-2000, with 13 acquisitions in three years. But it was a rocky path: The purchases weren’t integrated well, and in 2001 Aspen uncovered mismanagement in its Schmidt Cannon division, where two executives had inflated revenues. No legal action was taken, and Aspen sold Schmidt Cannon back to its founders.

O’Rahilly took the CEO post (replacing Neal Vitale) in February 2002 and pulled the divisions into a single profit & loss structure from 13 separate P&Ls. Even the business cards got a makeover so they’d all look the same. “Now we win as a team, or lose as a team,” says O’Rahilly, who sold his agency Creative Marketing International (CMI) to Aspen in 1998. Four other execs who sold their businesses to Aspen remain: Group Presidents John Gaston (Corporate Trademarks) and Yvon Russell (M3), VP Jim Hanig (Hanig & Co.) and VP Mike Weiner (Norris & Co.).
— Betsy Spethmann

Equity, Now EMAK, is Shopping

Equity Marketing changed its corporate name in September to reflect its global growth and disparate marketing services.

Now called EMAK Worldwide, the Los Angeles-based agency touts marketing services beyond its flagship premiums business.

EMAK continues to shop for acquisitions in direct marketing, interactive, events and multicultural marketing. “We want to add vertical capabilities,” said Bret Hadley, EMAK president of client services and operations.

Premiums-related work still accounts for 60% of EMAK’s revenues, but a spate of acquisitions has broadened its capabilities. EMAK expanded its non-premiums business by acquiring Ontario-based SCI Promotion Group in September 2003; the shop handles promotional marketing for nine of the top ten retail department stores in the U.S., including May Co., Sears, Kohl’s, Nordstrom’s and Macy’s. Then there’s Chicago shop Upshot (acquired in July 2002) and U.K. shop Logistix (acquired in July 2001), which bring account-specific retail and kids’ marketing expertise, respectively.

EMAK also beefed up its premiums work when it bought Minneapolis shop Johnson Grossfield in February. That brought in Johnson Grossfield client Subway Sandwiches & Salads to extend EMAK’s business in kids’ meal premiums beyond its core client, Burger King. Other key clients include Kellogg Co. (in North America and the U.K.), Procter & Gamble and Disney (both via Upshot) and Diageo.

“Premiums are a tactic, the end result of strategic work,” says Bret Hadley, EMAK president of client services and operations. “We want to be in a position to execute other tactics when it’s appropriate to clients’ strategy.”

EMAK’s entertainment marketing division in Los Angeles retains the Equity Marketing name.

EMAK also renamed its Equity Toys branded consumer products division as Pop Rocket. The unit, which accounted for 16% of EMAK’s fiscal 2003 revenues, launched Baby Einstein toys (based on the successful video line) in January via Target and Babies R Us stores, with distribution set to expand to all major retailers in 2005.

Equity ranked No. 17 in the 2004 PROMO 100, reporting 2003 net revenues of $40 million, up 12% over 2001.
— Betsy Spethmann