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Episode Five: La Quinta
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Sam Scali, Edward A. McCabe and Marvin Sloves began their agency in New York in 1967 doing free work for an antipollution lobby. Mr. Scali, VP-creative director for the shop, had been VP-senior art director at Papert, Koenig, Lois, New York, where Mr. Sloves, president of SMS, had been account supervisor on Xerox Corp. Mr. McCabe, the youngest person to be inducted into the Copywriter's Hall of Fame, was VP-associate copy director at Carl Ally, before becoming VP-copy director at the new agency.
The agency's first paying client was the automaker Volvo, which signed on just two months after SMS opened. Its early work for Volvo, a campaign based on the theme of the cars' durability, was ranked No. 90 on Advertising Age's list of the top 100 campaigns of the 20th century.
The Volvo account was good for business for SMS throughout the 1970s and '80s, but the relationship ended in 1990 with a scandal that cost the agency the $40 million account and a $150,000 settlement with the U.S. Federal Trade Commission. The problem arose over an ad that showed a "monster" truck driving over the top of a row of cars; a Volvo station wagon was the only one that survived without a crushed roof. An investigation by the Texas attorney general found that the Volvo's roof had been reinforced with lumber and steel, while the support pillars of the other cars had been weakened.
Other outstanding early work by SMS included a campaign for Perdue Foods in which the agency succeeded in the challenging task of creating a brand image for a commodity product-fresh chicken. The 1971 slogan, "It takes a tough man to make a tender chicken," was part of a campaign ranked No. 67 on Ad Age's top 100 list. The agency also was responsible for the slogan, "We answer to a higher authority," created for Hebrew National's kosher hot dogs. The slogan has been used by the marketer for decades.
Ad Age named the shop its Agency of the Year for 1974. During a year in which the overall economy suffered, the agency reported a 25% gain in billings. Its reputation for success was one element that made it an attractive takeover target to Ogilvy & Mather in 1976. Ogilvy agreed to pay SMS stockholders $10 million-a large sum for an agency with $60 million in billings. Three major clients of each agency represented conflicts, but because the two shops would continue to operate independently, the marketers in question did not oppose the deal.
In 1986, SMS acquired a majority interest in Minneapolis-based Fallon McElligott, which it held until 1992, later establishing McCabe & Co. Also
in 1986, Mr. McCabe left the company to take a sabbatical from advertising. That same year SMS managers bought back 20% of the agency from Ogilvy with options to buy back another 10% in two years.
In 1990, however, the agency's New York office suffered some major reverses. It had already lost the $25 million Hertz Corp. account in 1989; in 1990, it lost a $15 million account from Toys "R" Us, another $15 million account from Lotus Development and the accounts of Nikon Corp., Maxell Corporate of America and Chase Manhattan Bank.
The agency recorded a major rebound in 1992, when it won the $130 million Mercedes-Benz of North America account; the New York shop won the $90 million Mercedes national advertising account, while $40 million in dealer cooperative spending went to the Martin Agency, which SMS had acquired earlier.
Late in 1993, after an almost two-year effort, the Interpublic Group of Cos.' Lowe Group bought SMS from WPP for $55.5 million in cash and liabilities. Under the agreement, SMS was merged into Lowe & Partners to form Lowe & Partners/SMS. Included in the deal were the Martin Agency and SMS operations in New York, Mexico City, Paris, Madrid and in Canada. The latter units claimed combined billings of $550 million in 1992.
At the end of 1998, Mr. Sloves retired from Lowe & Partners/SMS to become a consultant. Mr. Scali retired in 1999, the same year Lowe & Partners merged with Ammirati Puris Lintas and SMS was dropped from the agency name.