$43.6B U.S. agency revenue
For most of its history, N.W. Ayer & Son was a leader and innovator in the field of advertising. In 1876, Ayer pioneered the "open contract," a revolutionary change in the method of billing for advertising that became the industry standard. It also pioneered the use of fine art in advertising and established the industry's first art department. It was the first agency to use a full-time copywriter and the first to institute a copy department. In later years, however, the inherent conservatism of Ayer left the agency vulnerable to the "creative revolution" of the 1960s and 1970s, the industry restructuring of the 1980s and the economic recession of the early 1990s.
Francis Wayland Ayer was an ambitious young schoolteacher with an entrepreneurial streak. Having worked for a year soliciting advertisements on a commission basis for the publisher of the National Baptist weekly, he saw the potential to turn a profit as an advertising agent. In 1869, Mr. Ayer persuaded his father, Nathan Wheeler Ayer, to join him in business, and with an initial investment of $250, N.W. Ayer & Son was born. Notwithstanding a smallpox epidemic in Philadelphia in 1871 and the general economic depression of the early 1870s, the agency flourished. The senior Ayer died in 1873, leaving his interest in the agency to his wife, but Francis Ayer bought her out, consolidating his interest in the company's management. In 1877, the agency took over Coe, Wetherill & Co., a shop on the verge of bankruptcy.
Ayer's fortunes initially were tied to newspapers, and the agency began to make a name for itself as the compiler and publisher of the widely used American Newspaper Annual. Ayer's singular goal was "to get business, place it [in newspapers] and get money for it." After several years as an independent space broker, however, Francis Ayer resolved "not to be an order-taker any longer." This decision led the agency to change its mode of conducting business, a move that would revolutionize the advertising industry.
In 1876 Ayer pioneered the open contract with Diggee & Conard, a Philadelphia rose grower and agricultural supplier. Prior to that time, Ayer and most agencies had operated as independent wholesalers of advertising space; under this system, opportunities for graft and corruption were legion. The open contract, in contrast, allowed an advertiser to pay a fixed commission based on the volume of advertising placed, aligned the advertising agent firmly on the side of the advertiser and gave advertisers access to the actual rates charged by newspapers and journals.
By 1884, nearly three-quarters of Ayer's ad billings were on an open-contract basis. By 1890, Ayer was the largest agency in America, which meant its switch to direct payment by advertisers had a significant impact on the industry, as other agencies found themselves forced to respond to Ayer's standard.
Just as important, the open contract helped to establish Ayer's longstanding reputation for "clean ethics and fair dealing." Its use of open contracts also helped establish Ayer as a full-service advertising agency, and Ayer routinely offered advice and services beyond the placement of advertisements.
Ayer set another milestone in 1888 when it hired Jarvis Wood as the industry's first full-time copywriter. He was joined by a second full-time copywriter four years later, and the agency formally established the copy department in 1900. Ayer hired its first commercial artist to assist with copy preparation in 1898, and 12 years later it became the first agency to offer the services of a full-time art director, whose sole responsibility was the design and illustration of ads.
By 1918, the agency's billings had reached $6 million, and Francis Ayer predicted that it would soon hit $1 million a month-a forecast that came to pass in 1924.
In 1913, Ayer won the Camel cigarette account from R.J. Reynolds Tobacco Co. Camel was a blend of tobaccos concocted by R.J. Reynolds himself, who boasted that "if you pay money for the best tobaccos, isn't that the best advertising you can get?" Ayer built Camel into one of the "Big Three" cigarette brands by the 1920s with such simple slogans as, "No better cigarette can be made" and "The Camels are coming." Camel sales fell sharply in the late 1920s, and Ayer launched a $300,000 newspaper campaign deriding "false and misleading statements in recent cigarette advertising." The effort did not stop Camel's decline, however, and in 1930 Ayer lost the account to Erwin, Wasey & Co.
Ayer's leadership in the use of fine art in advertising achieved its highest expression under the legendary art director Charles Coiner, who joined the agency in 1924 after graduating from the Chicago Academy of Fine Arts. Mr. Coiner marshaled the talents of notable painters, illustrators and photographers, including N.C. Wyeth and Rockwell Kent (Steinway), Georgia O'Keefe (Dole), Leo Lionni (Du Pont), Edward Steichen (Steinway, Cannon Mills), Charles Sheeler (Ford) and Irving Penn (DeBeers). Mr. Coiner's efforts won both awards and attention for a campaign in the 1950s for the Container Corp. of America. Titled "Great Ideas of Western Man," the campaign featured abstract and modern paintings and sculpture by leading U.S. and European artists. The artworks were linked with Western philosophical writings in an early example of corporate image advertising. (In 1994, Mr. Coiner was posthumously named to the American Advertising Federation's Hall of Fame, the first full-time art director ever chosen for the honor.)
Mr. Coiner and fellow art director Paul Darrow also created the legendary "A Diamond Is Forever" campaign for De Beers Consolidated Mines, with ads featuring works by Pablo Picasso, Salvador Dali and other modernist painters. The "A diamond is forever" tagline was written in 1949 by Frances Gerety, a copywriter at Ayer from 1943 to 1970. In 1999, Advertising Age cited the slogan as the most memorable of the 20th century.
As a founding member of the Advertising Council in 1945, Ayer associated itself with public service advertising. In the mid-1980s, Ayer became a leading force in the "War on Drugs" campaign of the administration of President Ronald Reagan. Lou Hagopian, Ayer's sixth CEO, brokered the establishment of the Partnership for a Drug-Free America, a media coalition that generated as much as a million dollars a day in donated time and advertising space aimed at preventing the use and abuse of illegal drugs.
By 1944, Ayer was the No. 3 U.S. ad agency, after J. Walter Thompson Co. and Young & Rubicam, with billings estimated at $33 million. Among its major accounts were Chrysler Corp.'s Plymouth division, whose growth after the war offset the losses of Boeing Aircraft, American Home Products' Birdseye division and some Kellogg Co. business. U.S. Army billings also expanded after the war, but the account went to Gardner Advertising. Nevertheless, the agency celebrated its 80th birthday in 1949 with billings of about $65 million and a No. 4 ranking among agencies. After a healthy but static period in the early 1950s, growth took off again and carried Ayer over the $100 million mark in 1957.
Famous names appeared among Ayer's clientele from its very earliest days, including retailer John Wanamaker and Montgomery Ward & Co.'s mail-order business. Over the years the agency represented at least 20 automobile manufacturers, including Cadillac, Chrysler, Ford, General Motors, Plymouth, DeSoto, and Rolls-Royce. Other major clients included Canada Dry, Cannon Mills, Hills Bros. Coffee Co. and Philip Morris Cos. By the agency's 100th anniversary in 1969, some of these companies had been Ayer clients for decades, and the longevity of these relationships was a source of Ayer's strength.
Facing new challenges
But the advertising industry began to change in the late 1960s and '70s, due in part to what was called the "creative revolution." Small agencies won attention with provocative copywriting and art direction that more closely resembled art than the advertising of earlier times. Advances in market research allowed advertisers to tailor their ad messages to specific groups of consumers, which led to a rise in targeted marketing that could more readily be assigned to specialized "boutique" agencies than to larger, traditionally structured agencies. Thus advertisers began to bypass the old, established agencies such as Ayer, which into the 1960s maintained a tradition of originating all creative work in Philadelphia. Older, more conservative shops were hard pressed to compete, and by 1960 Ayer had dropped to No. 10 among major agencies.
In 1969, in an effort to meet these challenges and to establish a foothold on the West Coast, Ayer bought out two smaller agencies-Hixson & Jorgenson, Los Angeles, and Frederick E. Baker, Seattle. It also relocated to New York in 1974, both to consolidate operations (Ayer had operated a New York office since the 1920s) and to be closer to the historic center of the advertising industry. Riding the wave of mergers that characterized the advertising industry from the 1970s on, Ayer continued to grow through the acquisition of Rink Wells & Associates, Chicago, in March 1972, and Cunningham & Walsh, New York, in 1986.
During this period, Ayer received acclaim for its work for U.S. Army recruiting, which returned to the agency's roster in 1967. "Be all that you can be," launched later in the decade, was widely credited with helping the army reach recruitment goals despite the unpopular Vietnam War and plummeting enlistments after the elimination of the draft in 1973. The agency lost the account in 1986 amid government charges that an Ayer employee assigned to the account had accepted kickbacks from a New York film production company. In spite of Ayer's position as the No. 18 U.S. agency (with billings of $880 million in 1985) and its selection by Advertising Age as agency of the year in 1978, the loss of its second-largest account hit hard.
Ayer made up for the loss of the $100 million U.S. Army account and made headlines for being on the winning end of what at the time was the largest account switch in advertising history when fast-food giant Burger King Corp. moved its $200 million account from archrival JWT in 1987. Ayer made headlines again, however, when it lost the account just 18 months later in another record-breaking switch.
Another blow to the agency was the loss of its lead position on the AT&T Corp. account, which it had worked on since 1908. Despite valiant efforts to keep the account for which it had written such memorable corporate slogans as "The voice with a smile" and "Reach out and touch someone," Ayer lost the business in 1996.
After a wave of mergers and acquisitions in the late 1980s, the economic recession triggered in 1987 hit Madison Avenue hard, and Ayer, not known for cutting-edge creative work, proved particularly vulnerable. Moreover, although the agency had offices overseas, Ayer had never built a strong multinational presence, a serious void in the then-new climate of global marketplace consolidation. By 1990, although Ayer was still among the top 20 U.S. agencies in billings, earnings were declining and the agency found itself faced with client defections, a high rate of management turnover, expensive real estate commitments and deferred executive compensation deals that were coming due, all fallout from the high-flying 1980s.
This was the atmosphere in 1993 when W.Y. Choi, a Korean investor who had already assembled a media and marketing empire in his homeland, began looking for an American partner to form an international advertising network. Jerry Siano, the former creative director who had earlier been named Ayer's seventh CEO, found Mr. Choi's offer of $35 million to buy the now-floundering agency irresistible. But the infusion of cash proved no magic bullet, as Mr. Choi took a wait-and-see approach and allowed his partner, Richard Humphreys, to make key decisions about Ayer's future, including the purging of senior executives and the installation of two new CEOs in as many years.
The agency's decline continued with the loss of another longtime client, the DeBeers diamond cartel, in 1995. Several top executives defected abruptly, and the agency failed to attract major new accounts. Ayer was facing the loss of revenue and personnel as well as much of the respect it had once commanded. In 1995 Mary Lou Quinlan became the first woman to serve as the agency's CEO. A year later, Ayer and another struggling agency, D'Arcy Masius Benton & Bowles, merged to form MacManus Group. In 1998 MacManus Group had worldwide billings of more than $6.5 billion.
Under MacManus, the renamed N.W. Ayer & Partners was able to expand its international operations and begin to build a stronger global presence. Several important new clients were won in 1997 and 1998, most notably, the worldwide account for Continental Airlines. In 1999 the MacManus Group joined with the Chicago-based Leo Group (parent of Leo Burnett Co. and other agencies) and Tokyo-based Dentsu to form Bcom3. In 2002, Bcom3 dissolved Ayer into its smaller Kaplan Thaler Group.