Mergers and acquisitions always have been a staple of the advertising agency business. Size matters for agency holding conglomerates such as the Interpublic Group of Companies Inc., Omnicom Group Inc., WPP Group PLC and Publicis Groupe. The more offerings under one roof, the better the chances of winning multimillion dollar accounts across a global footprint. And, of course, with M&A activity may come culture clash, diffused focus and the opportunity to cut duplicated costs depending on how the deal is handled and its purpose.
The most recent mega-merger was the direct marketing-focused Draft’s marriage with Foote Cone & Belding, a storied general ad agency. That union, between the two Interpublic shops, will take a while to result in a unified culture. But conversations with senior Draftfcb executives confirm that the agency is doing its best to retain key talent through this period. For agencies talent is the name of the game. As the saying goes, your assets walk out the door each day.
While traditional agencies grapple with the flight of budgets to direct and interactive marketing, their counterparts on the other side are thrilled. DM agencies have long sold their services based on performance, be it orders, enquiries, calls or visits. Branding paved the way for building trust, but it is direct marketing that does the heavy lifting.
A barometer of growth in any industry is the level of hiring. While not a representative sample for the DM agency business, the two examples below suggest business is booming.
Take Merkle Inc. It is one of the nation’s largest database marketing agencies, with more than 800 employees. The agency serves such clients as Procter & Gamble Co., DirecTV and Dell Inc. along with nonprofits, including the Arthritis Foundation, National Multiple Sclerosis Society and CARE. Revenue this year is projected to be $190 million. The agency is set to hire 50 new employees in its new consolidated Denver office over the next couple of years.
In February, Merkle announced a new five-story, 120,000-square-foot corporate headquarters in Columbia, MD. Nearly 550 employees will will work in this building, which will also include a 10,000-square-foot data center. Next door, the agency has a four-acre campus with room to accommodate another 350 employees in a 70,000-square-foot building. And yes, Merkle intends to do more hiring when it moves from its current Lanham, MD, base. All told, Merkle is investing nearly $65 million in its new corporate campus.
Another agency in the same region that is looking to grow is WPP’s RTC Relationship Marketing. This Washington shop, which has swapped top executives with sibling DM agency Wunderman, wants to hire 60 advertising and marketing executives. The positions span the spectrum: database manager, broadcast producer, Web developer, interactive producer, copywriters, art directors, marketing analyst, teleservices manager and so on. The agency says it’s growing.
Of course, agencies lay off people just as easily when they lose accounts. But this is a good time for direct and interactive agencies as clients seek more accountability from their shops and response from their marketing in this consumer-controlled era. These agencies know that good talent is hard to find and easy to lose.