Grey Advertising was started in 1917 in an art studio by 18-year-old Lawrence Valenstein. Originally, the agency specialized in direct mail. In 1921, Mr. Valenstein hired 17-year-old Arthur Fatt, who later became chairman of the agency. Mr. Fatt helped develop Grey's reputation as an agency that used a team approach to advertising. Grey was known for working very closely with its clients and relying on research in creating campaigns.
In 1947, having won the Gruen watch account, Grey's billings hit $10 million. At a time when Madison Avenue was largely run by old-line WASP executives, Grey was widely perceived as a Jewish agency.
In 1955, after winning the Block Drug account, Grey's billings reached $30 million. Block Drug became an international advertiser and one of the top accounts at Grey. In 1956, Mr. Fatt became president and Mr. Valenstein chairman of the agency. The next year, Grey created the "Leaving now for Trenton, Philadelphia and Cucamonga!" campaign for Greyhound Bus. The campaign tagline, "Go Greyhound and leave the driving to us," became one of the best-remembered slogans of the time.
The dynamic '60s
In 1961, Grey ranked No. 18 among U.S. agencies with $58.5 million in billings; Herb Strauss was named president and Mr. Fatt became chairman. The following year, Grey opened an office in Los Angeles, creating the Grey Western Division.
At about the same time, Grey acquired a London agency, beginning its overseas expansion. Two years later, Grey became the second U.S. agency to enter Japan, opening Grey-Daiko there. Grey Public Relations was also established in 1963.
In 1964, Grey's billings reached $100 million, and the following year the agency became a public company, its stock traded on the Nasdaq exchange. Grey also began using psychographics, the analysis of consumer lifestyles, in its advertising research on consumers in that year.
In 1966, Grey broke into the ranks of the top 10 U.S. agencies, and the next year Mr. Strauss was named CEO and Ed Meyer, president. In 1969, Grey won Kraft General Foods' Post cereal account and, in 1970, Mr. Meyer was named CEO.
The 1970s were marked by several successful ad campaigns, including efforts for "Star Wars" toys from Kenner, aspirin and toothpaste from SmithKline and Stove Top Stuffing from Kraft General Foods. During the 1980s, Grey Direct and GCI Group were formed. In the early 1990s, Grey's international expansion continued with offices in China in Beijing and Guangzhou.
In 1991, Grey won the Dannon yogurt account. At the time, the yogurt market was growing rapidly and competition in the market segment was increasing. In 1992, Grey used its "Dannon Consumer Awareness, Attitude and Usage Tracking Study" to create a strategic plan for Dannon.
Based on consumer perceptions, Dannon introduced extensions, including frozen yogurt, low-fat yogurt and yogurt on a stick. "Taste why it's Dannon" was the campaign slogan. The Dannon campaign won the David Ogilvy Award, presented by the Advertising Research Foundation. (The Ogilvy Award is presented to an agency that, in conjunction with its client, utilizes effective research in a campaign's development.)
In 1994, Mr. Meyer celebrated 25 years as Grey's CEO, and the agency's billings surpassed $5 billion. In 1996, Grey won the Los Angeles/Orange County Mitsubishi Dealers Advertisers Association account, estimated at $10 million. Also in 1996, Grey took its media buying and planning worldwide with the creation of MediaCom Worldwide.
In 1997, Sprint Corp. tapped Grey to handle its corporate brand-development strategy, valued at $40 million. (Grey had previously handled about $60 million of Sprint's advertising.) Also in 1997, Grey won the $90 million Reebok media account.
In 1998, Grey became the agency for Dairy Queen. The agency developed a campaign that focused on the restaurant and its people and was awarded a Gold Effie Award by the American Marketing Association based on the sales increase Dairy Queen realized from the campaign. That year, Grey also launched a $20 million global TV and print campaign for Panasonic touting the company's digital offerings.
Legal problems and client losses
That same year, however, Grey faced legal problems related to its advertising of leasing for Mitsubishi Motors of America. The Federal Trade Commission charged the agency with misrepresentation, failure to disclose and violation of the Consumer Leasing Act and the Truth in Lending Act. A settlement was reached in which Grey did not admit to violating any laws but was nonetheless required to adhere to certain FTC rules.
In 1998, Grey lost Barilla, Dannon, Kraft Foods, Lexmark International and Mitsubishi. In 1999, Grey balanced those losses with additional business from Hasbro, Procter & Gamble Co. and Seagram valued at $152 million combined.
In 1999, Grey won a $40 million print and broadcast assignment from Glaxo Wellcome to promote a new migraine drug. Grey's MediaCom unit also made significant gains, generating more than $350 million in new business in 1999.
In 2000, in its first major restructuring in 30 years, Grey Advertising established a new holding company, Grey Global Group, and the advertising arm was renamed Grey Worldwide
Throughout 2002, Grey Worldwide cooperated with a federal investigation of the graphic services industry. One result of the probe was a prison sentence for Grey Worldwide's former graphic services executive Mitchell Mosallem for his part in a bid-rigging scheme.
In 2003, Grey Global Group had worldwide revenue of $1.3 billion, up 9% from 2002 figures, making it the seventh largest marketing organization in the world, according to Advertising Age. It had U.S. revenue of $585.7 million, up 5.5% from 2002. Grey Worldwide had worldwide revenue of $650.2 million, up 10.5% from 2002, according to Ad Age, with U.S. revenue of $270.5 million, up 14.5% from the previous year.