Engine USA Inks Another Deal: Buys New York Shop Noise

Ad Legend Martin Puris Talks Acquisition Strategy, the Problem With Earn-outs and His 'Digital Fetish'

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NEW YORK (AdAge.com) -- On the heels of its acquisition of digital agency Deep Focus, Engine USA has purchased its second New York-based shop: Noise.

Martin Puris
Martin Puris
The 35-person agency, which also has a San Francisco office, was launched in 2003 to specialize in marketing to 18- to 34-year-olds. Under CEO-Chief Creative Officer Noah Kerner, it has launched Facebook's API and the site's first third-party app for Amazon.

Terms of the deal were not disclosed, though it does not include an earn-out. The no-earn-out model, where founders of purchased agencies become stakeholders in the larger collective, is a cornerstone of Engine USA's strategy as it continues to hunt for New York-based agencies specializing in disciplines such as PR, direct response and entertainment.

Noise joins Deep Focus, the digital agency Engine acquired in October. They are forming the basis of the "just one of everything" agency collective Engine is plotting here in the U.S., mirroring a growth strategy it has used in London.

After five years, 14 shops sit under Engine's U.K. operations, which boasts a total of 600 employees and $95 million in revenue.

Engine USA has set out to build an agency company under one roof that will house up to 12 shops, which each specialize in an area of expertise that's not duplicated elsewhere in the company.

Heading up Engine's U.S. acquisition strategy are two old-school admen. Martin Puris as CEO of Engine USA is the co-founder and former chairman-CEO of Ammirati & Puris. In his 30-plus year tenure in advertising, Mr. Puris has penned such gems as BMW's "The Ultimate Driving Machine." John Bernbach is Engine USA chief operating officer. He was chairman-CEO of Bernbach Group and also served for several year's at the agency his father co-founded, Doyle Dane Bernbach, now DDB. He later helped create Omnicom Group.

Ad Age checked in with Mr. Puris on his path from "The Ultimate Driving Machine" to his current venture.

Ad Age: How did you get from Ammirati to where you are today? How has your perspective changed?

Mr. Puris: We started a digital group at the agency in 1995. After I left the agency, I was among the founders of two mobile companies. After my time in the digital business, John [Bernbach] and I were doing consulting with clients on how to get from mass marketing to micro-marketing and started to think--this is before the crash--that it was a good time to put together a new agency model. If you're carrying around a lot of backage, it's very tough to change because you have to sell what you have and, unfortunately, what [agencies now] have isn't what clients are asking for.

Then three years ago, Peter Scott [chairman of Engine Group and Engine USA]--we used to work together in the late '70s when we both had BMW; [his agency WCRS, which was the first agency to form Engine in the U.K.] had it in London and we had it here--contacted us and said his new agency had been doing what we wanted to build for the past four years. He needed to be someplace other than London. And obviously New York was that place.

Ad Age: Tell me why Peter's offer was more attractive than calling, say, old buddies at holding companies?

Mr. Puris: Because Peter started a new model--when they bought WCRS back out of Havas [in 2004], they started with a new concept. It was getting the agency back in order to build something different. That something different was exactly what we were thinking about here. They had a chance to start fresh, even though they were starting with an old, fabled creative ad agency. The holding companies for me are just a failed concept. Holding companies were invented to solve agency problems not client problems. They were invented to solve [client] conflict. I was privy to those conversations. Then it got out of hand. Under the guise of integrated marketing services, which nobody much cared about then on the client side, they were able to buy thousand of agencies and it became a business in itself. That business wasn't really about solving client issues, it was about solving their own problems and making opportunities. The holding companies now have bought themselves into a corner. It's not that they don't have good companies; it's that they can't make it a collaborative business, which is what's called for now. What they have is something that can't move; it's can't adapt because of the earn-outs, because of the cultures and the caste systems that have been around for years. They have too much baggage to carry with them. You really have to start lean because it's difficult to build a new machine with old parts.

Ad Age: What exactly are you trying to build here in the U.S.?

Mr. Puris: First of all, it's a concept: All of us are smarter than any one of us. Collaboration among the essential elements of marketing in the new world creates something better than any one of them can do on their own. The second piece is to have discreet brands with vertical depth and knowledge of their own category. Then there has to be a duality. There has to be a center that makes collaboration happen and creates a culture of collaboration. I use the symphony orchestra analogy: We want a genius in every chair, but we need Lenny Bernstein to make sure everyone plays the same tune. We don't want to bring in partners who play brilliant violin but who think oboe players are second-class citizens. Then we remove the barriers that the holding companies set up. The primary barrier is the earn-out. Once you have the earn-out and you have 1,000 companies competing with each other. That's why all of the efforts holding companies have tried have failed because they're bucking a culture, caste system, and financial realities.

The future belongs to people that come in with no baggage that can see what clients want and deliver it. Clients want the best in each category, they want agility, and they want a structure that can help them sort through what's an extremely complex media world. 25 years ago, clients had three people sitting at the table -- the guy who did commercials, the guy that did direct marketing maybe and the guy that did public relations. Now client has 25 guys sitting at the table all with very valid propositions.

Ad Age: What was the reasoning behind acquiring a digital agency first?

Mr. Puris:I have a fetish for digital that goes back to 1995. I think digital has to be at the heart and the head of the group. I say that not really talking about technology, although technology is the enabling factor. I say it because digital is the metaphor for working with and being in love with your consumers. The day of throwing messages at people is over.

Ad Age:That from the guy who came up with "Ultimate Driving Machine"?

Mr. Puris: It was a lot simpler then. You start everyday with a headache now.

Ad Age: Tell me what hasn't changed.

Mr. Puris: I think one of the things missing is the important idea. Agencies talk about the important idea and they're more often talking about executions as opposed to "The Ultimate Driving Machine," which is an idea about a company that can be spread everywhere. It articulates clearly what the company stands for and their passion for building their product. That can be talked about in any forum; it can be a TV commercial, it can be in social media, it can be anywhere because it's a consumer idea. Important ideas have kind of gone missing in the last few years. If I watch any hour of TV, whether it's a football game or a commercial, I am very hard pressed to find an idea. It's always been the case that what makes great advertising is a great idea with a great execution. Not one or the other. What we've got now is all execution; the Super Bowl is the arch-enemy of the idea. There are things to be learned from the old world.

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