Three years after the collapse of Lehman Brothers produced worldwide financial disruption, advertising agencies continue to face significant challenges. But Madison Avenue is, by and large, in better shape than many of the industries for which it creates ads.
To be sure, numerous agencies have succumbed to business woes. But no holding company that owns agencies has gone bankrupt. No agency with offices around the world has been forced to close, nor has any big agency in a large market like New York. And agencies are still making deals, actively pursuing mergers and acquisitions.
This summer, for instance, holding companies like Havas, the Publicis Groupe and WPP have announced deals for agencies like Big Fuel, DPZ, Host and Lunchbox.
And last week, Publicis said that it would buy Schwartz Communications, a public relations agency with offices in Boston, London, San Francisco and Stockholm. It was the sixth acquisition of a public relations agency by Publicis in 18 months.
Another example of the trend will come shortly, when MDC Partners, which owns agencies like Crispin Porter & Bogusky and Kirshenbaum Bond Senecal & Partners, is to announce the acquisition of majority stakes in two specialty agencies.
One agency, Concentric Pharma Advertising, creates campaigns for pharmaceutical marketers like Bayer, Novartis, Pfizer and Roche. Concentric has 75 employees who work at a headquarters in New York and an office in London.
The other agency, Laird & Partners, is based in New York and also has about 75 employees. It specializes in ads for beauty, fashion and luxury-goods marketers like DKNY, Gap, Tommy Hilfiger and Calvin Klein.
MDC is estimated to be paying $20 million for the majority ownership stakes in both agencies, with additional considerations based on future performance.
The acquisitions are the second and third this year for MDC, which is based in Toronto and owns all or part of about 50 agencies. The previous deal in 2011 involved a New York agency named Anomaly. MDC made 13 acquisitions last year and two in 2009.
“When others are fearful, we are ambitious, and when others are ambitious, we are fearful,” said Miles S Nadal, chairman and chief executive at MDC. “We see this time of uncertainty as a great opportunity.”
Although “the European debt crisis is a big issue because it’s affecting the confidence of CEO’s everywhere,” Nadal acknowledged, “business for us has been terrific,” with a 24 per cent increase in the first half in organic growth — revenue minus acquisitions and currency exchange — compared with the same period last year.
©2011 The New York
Times News Service
