Acquisition Mode

It was summer-time and the purchases were easy among promotion marketers.

PROMO’s tracking of agency acquisitions took a month off in September to make room for coverage of the PRO Awards 2000 finalists, which means there are a lot of news to catch up on in this ever-consolidating industry.

Here’s a rundown of the deals that have gone down over the last few months.

More Enlistees for Draft No market consolidator was more active this summer than Chicago-based DraftWorldwide, which first added to its substantial promotion business with the acquisition of The Sloan Group, New York City, in June (August PROMO).

In July, the company struck again, buying agency Group III Promotions and absorbing the promo business of Columbian Advertising, which had been operating as part of Interpublic Group of Companies sister unit Lowe Lintas.

Chicago-based Group III ranked 27th on this year’s PROMO 100 with $6.5 million in 1999 net revenues and two-year growth of 138 percent. The shop is an agency of record for R.J. Reynolds Tobacco Co. and also worked with Bank of America, Parke-Davis, Seagram America, and Pontiac last year.

The deal adds to Draft’s capabilities with the addition of mobile and sports marketing expertise, and significantly expands the field force through Group III’s staff of 200, says Kevin Berg, president of Draft’s KBA Marketing division. It will also let the agency provide full-service promotion and event marketing “from street sampling all the way up to full campaigns,” says Draft president Jordan Rednor.

Group III sought a buyer after 18 years as an independent in order to grow, says co-founder and president Vince Parrinello. “We want to become an AOR rather than one line item. We want to get in on the ideation component, and the potential for Draft to help us do that is phenomenal,” he says.

Parrinello and co-founder/ceo Larry Diskin will remain with the agency. “I plan to stay around for a long time. I’m excited about the opportunities,” says Parrinello.

Meanwhile, Chicago-based Columbian joined the fold after Interpublic closed down the Windy City offices of Lowe Lintas in June. The direct-marketing shop brings $40 million in annual billings to Draft’s core expertise. A past member of the PROMO 100 (it ranked 12th in 1998 with $16 million in net revenues), Columbian was acquired by Lowe Lintas in 1998.

About half of Columbian’s 30-member staff, led by executive vp-director of client services Tricia Chuipek, joined Draft. Paul Steinhauser, who succeeded Columbian founder Bernard Miller, Jr. as president in September ’99, will remain only until the transition is complete.

DraftWorldwide ranked second on this year’s PROMO 100 with $239 million in net revenue – the most of any agency on the list.

Yet More Momentum McCann-Erickson WorldGroup, New York City, added more muscle to its Momentum Worldwide unit by acquiring the promotion business of St. Louis-based Waylon Co. The 90-person shop will become part of Momentum headquarters in St. Louis.

Waylon’s client list includes KFC, Nike, and the St. Louis Cardinals baseball team. It already shares such big-name accounts as Anheuser-Busch, Coca-Cola, and Gateway with its new parent. “Waylon has earned the reputation of delivering consistently smart, innovative work,” says Momentum North America ceo Mark Shapiro.

Twenty-year old Waylon Co.’s promotions division had $33 million in total billings and $16.3 million in gross profits in 1999, which ranked it 47th on this year’s PROMO 100. Owner and president James SanFilippo will remain with the company’s advertising business, which was not part of the deal, but will consult for Momentum. Waylon executive vp Bill Schmidt was promoted to president of Momentum St. Louis to manage the operation.

Momentum ranked 34th on this year’s PROMO 100 with $127.5 million in total billings and $39.9 million in gross profits in the U.S. The shop absorbed New York City-based Diamond Group, which had been part of another McCann unit, earlier this year (June PROMO). It also recently acquired Encinitas, CA, youth-marketing shop ImageWerks.

Adieu for Adair Independence Also at McCann, the agency acquired ad and marketing shop Adair Greene, Inc. and made the Atlanta company part of Torre Lazur McCann Healthcare Worldwide, its medical and pharmaceutical network.

Adair had total billings of more than $140 million in 1999. Business at its four-year-old promotion arm, Adair Greene Marketing Communications, more than doubled last year to $8.5 million in billings and $2.3 million in net revenues, placing it 63rd on the PROMO 100. Clients include Coca-Cola Bottlers Licensing, DuPont, Hank Aaron NASCAR, Ciba Vision, and Suntory Water Group.

Gage Takes the Leede Minneapolis-based Gage Marketing Group, which promised earlier this year to make more acquisitions (June PROMO), bought Leede Research of Manitowoc, WI, and will use the company to create a new firm called The Leede Group, “a Gage Marketing Group Partner.”

The new business will offer hands-on research and feature state-of-the-art focus group facilities and usability labs for Internet and Web-design testing. Leede Research ceo Dean Halverson will head up The Leede Group, which will be based in Gage headquarters. About 10 to 15 people will be employed initially by the new firm.

In the last year, Gage has acquired five businesses, including channel marketing shop Wilshire Group, Irvine, CA, and brand communications specialist Kuester Partners, Minneapolis.

Elsewhere, Minneapolis-based marketing communications firm Colle & McVoy bought itself a Mature Marketing Division with the acquisition of The Sandcastle Group, a Minneapolis agency focused on marketing to 50-plus consumers for such clients as American Express Retirement Services, Medica, and Choice Hotels International. The Sandcastle operation will relocate to Colle & McVoy’s Bloomington, MN, office.

In Los Angeles, RPMC signed a multi-year deal with New York City-based Takeoutmusic.com Holdings, a start-up company chartered to develop online and traditional marketing opportunities for music, entertainment, and lifestyle products. The start-up, which operates an on-campus rep network at 400 colleges in addition to takeoutmusic.com, had $13,000 in revenues in the first half of 2000.

The deal gives RPMC an equity stake in the company.

OCTOBER 2000 Frankel, Chicago, held onto its P-O-P and retail work with the U.S. Postal Service, which otherwise revamped its advertising and marketing assignments last month. Leo Burnett, Chicago, was handed lead duties on the $140 million ad account, while FCB Worldwide, New York City, gained responsibilities for direct marketing and interactive. Chicago-based DraftWorldwide had been handling direct marketing for USPS, Washington, DC.

Newday Communications, Norwalk, CT, was named agency of record for on-premise events for Stamford, CT-based UDV North America’s Smirnoff, Stolichnaya, Baileys, Malibu, Glen Ellen, and Beaulieu Vineyards brands. The agency was also named to handle consumer and trade promotions for Yoo-Hoo Chocolate Beverages, New York City, and trade/loyalty programs for Avis Rent-A-Car, Garden City, NY.

QLM Marketing, Princeton, NJ, was named agency of record for The Home Service Store, Atlanta, to handle branding, integrated marketing, and promotion.

The Gable Group, San Diego, was named by Affinity Internet, Inc., El Segundo, CA, to handle marketing communications. Affinity hosts Web sites and provides applications services.

Adamson, St. Louis, was named agency of record for Applied Food Biotechnology, O’Fallon, MO, makers of Optimizor dog and cat food, and Boru Irish Vodka, which is distributed in the U.S. by Shaw-Ross International Importers, Miami.