Four Steps Forward After One Step Back
The $81 million that Gage Marketing Group gained last year by selling its fulfillment operations came in handy this spring, when the Minneapolis agency acquired two businesses and made investments in two others to expand its marketing services portfolio.
The moves include the acquisition of Kuester Partners, Inc. and The Wilshire Group, an equity stake in Marketing Bridge, and an intent to purchase 50 percent of Bitstream Underground.
“Since we divested our fulfillment business to [Atlanta-based AHL Services, Inc.] in 1998, we have been focusing our efforts on becoming the preeminent integrated marketing agency in the United States,” says ceo Skip Gage.
“It took us about 15 months to get our heads together and develop a strategic plan” for acquisitions, says executive vp Tom Belle. What the company identified were needs in the e-business arena and several vertical markets, he says.
Kuester Partners is an 18-year-old Minneapolis agency with 25 staffers and $35 million in annual billings. The shop specializes in brand communications and lists Potlatch Corp., General Mills, United Health Group, US Bancorp/Piper Jaffray, and Steinway and Sons as clients. Founder and ceo Kevin Keuster will serve as a consultant.
The shop is “very strong creatively, and will be a big boost to our overall brand strategy,” says Belle.
Wilshire Group, Irvine, CA, develops channel marketing for technology companies. “It’s all we do,” proclaims its Web site. The 24-year-old, nine-employee shop reported total billings of $2 million and net revenues of $1.2 million in 1999, placing it 73rd on this year’s promo 100. Clients have included Microsoft, Intel, and Hewlett-Packard. Wilshire ceo Bob Rubin will become a senior executive in Gage’s Irvine office. Technology was one of the vertical channels in which Gage wanted to expand its capabilities, notes Belle.
One-year-old Web development company Marketing Bridge, a transactional engineering provider, has worked with such blue-chip clients as SuperValu, Kraft, General Motors, and GE, working in conjunction with Gage in some cases. President and ceo Frantz Corneille will remain at the helm of the Edina, MN-based company.
Seven-year-old Bitstream Underground, Minneapolis, designs and hosts Web sites, and is “very strong creatively” in community development and content management, says Belle. Bitstream ceo Gary Clark will now lead all of Gage’s Internet activity, including future acquisitions.
Gage first hit the acquisition trail last year with the purchase of Mayer-Douglas, a local shop that had ConAgra brands as clients. It then merged its interactive operations with local Web developer Imaginet after acquiring a 40-percent stake in the company.
Still on the to-do list is the establishment of an in-house division for Internet-based direct marketing. “We’d also like to acquire a good direct shop – if we can find one,” and increase assets in the financial services and building products markets, Belle says.
Gage’s net revenues slipped five percent to $46.5 million in 1999, although billings rose two percent to $80.6 million. The revenue decline was the result of “residual effects” from the fulfillment divestiture, Belle says. The agency ranks 50th on this year’s promo 100.
