Arnold crafts new NY image

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You couldn't blame the former Jordan McGrath Case & Partners for bidding an energetic farewell to this year. Its signature-and second-largest-client defected, billings fell to half their peak, layoffs hit and its iconic chairman is exiting. But the turmoil may have been necessary as the agency hopes to shake off its reputation as a quiet New York package-goods shop and adopt the creative cachet of Arnold Worldwide.

Boston-based Arnold had wanted to expand to Gotham long before 2001, but that didn't become a reality until parent Havas shifted Jordan McGrath from its Euro RSCG network to its Arnold network. The arrangement gave Jordan McGrath an association with a creative hot shop and Arnold an entree into the Big Apple.

"New York is the biggest, toughest, best market on the planet, and we are bringing our brand of creativity to New York," said Arnold Worldwide President-Chief Operating Officer Fran Kelly.

The transition has been tough. In 2000, the agency was among the country's 50 largest, with billings at a peak of $675 million. Client losses cut that to $420 million earlier this year, and staff shrunk by a quarter to 200. Then, in November, 17-year client Procter & Gamble Co. shifted $70 million in billings in a consolidation, reducing the New York office total to $350 million.

a good loss?

Though the amount parked at Arnold was little more than a rounding error to the country's second-largest advertiser, it deprived the agency of a marquee client that seemed to define it. Some claim that was good.

"They certainly were known as an agency for package goods. That dominated their perception out there, which doesn't necessarily translate to the most creative work," said Judy Neer, exec VP-managing partner at consultant Pile & Co. She said she's more inclined to go to Arnold, New York, for clients want-ing edgy work, and credits Chief Creative Officer Rochelle Klein, who arrived in October 2000.

Ms. Klein has been relentless in producing un-package-goods-like creative for package-goods clients-shotguns to sell Reily Foods Co.'s Luzianne iced tea; for Nicorette, a cigarette vending machine stalking a former smoker. For Trivial Pursuit's 20th Anniversary Edition from Hasbro, Arnold did quick takes of Donald Trump and Kato Kaelin, thanking them for providing game fodder.

fresher creative

Jeff Brown, VP at Arnold's largest client, GlaxoSmithKline, said creative is fresher. "Rochelle comes at it from a different viewpoint. ... Different is an option to be good as opposed to the same and it's just blending right in."

"They're churning out work people aren't aware of," said Ron Lawner, chairman-chief creative officer of Arnold Worldwide.

A new chapter opens as President Mary Baglivo assumes the duties of Chairman-CEO Pat McGrath after the well-admired ad executive retires this week."I loved what I did for last 40 years," said 68-year-old Mr. McGrath. "When your usefulness comes to a point where it isn't what it used to be, it's time to move on. This is not an old person's job."

But Mark Ketchum, president-global paper at P&G, credited Mr. McGrath with taking Bounty-the marketer's fastest-growing U.S. brand-from $500 million in sales and a 21% share of the U.S. market in 1989 to a $1.6 billion brand with a 42% share now. "All advertisers say they have this passion, but Pat really did," he said.

Despite a handful of layoffs still to come from the P&G fallout, Arnold wants to bring on more integrated and creative staff as well as another new-business executive. In its sights are clients in the fashion, beauty, travel and package-goods categories as well as cable TV stations. "It's like building a house. You have to have a solid foundation," said Kristen Volk, chief marketing officer, New York.

So far this year, the shop has brought in $35 million in new accounts, though that's been more than overshadowed by the P&G loss. In June, the U.S. Tennis Association handed Arnold its $4 million account, and the $15 million Bermuda Department of Tourism business moved to the shop in February. Some additional business also came from Hasbro and GlaxoSmithKline.

lots of lag time

"This team is really coming together and realizing they can compete and do great things," said Ms. Baglivo, who wants to double the size of the New York agency over the next three years.

That's a tall order in a city where, as Mr. Kelly said, agencies "all know each other. They hardly even know we're alive."

It's a slow process. "The lag time between when you actually do great new creative work and the perception change is significant", said Ms. Neer. "It takes a while for ... perceptions to catch up."

contributing: jack neff

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