The consolidation of worldwide business at J. Walter Thompson Co., New York, cost Ayer $35 million to $40 million in billings, representing 10% of Ayer's revenue, said CEO Mary Lou Quinlan (some say the figure is closer to 17%).
But Ayer this week will fire a big volley back at its critics by naming a West Coast creative leader as its new creative director, the first hired from the outside in the agency's 127-year history. The new hire, who will also be a managing partner, will work with Ms. Quinlan and Managing Director Martyn Straw to see that the rest of the jewel box-AT&T Corp., Procter & Gamble Co. and General Motors Corp.-stays put. Those accounts represent more than half of Ayer's revenue.
W.Y. Choi, the South Korean investor who holds 99% of Ayer owner AdCom, and investor Richard Humphreys planned to be in New York this week to meet with Ms. Quinlan, Mr. Straw and the new creative director.
Historically, Mr. Choi has taken a hands-off approach to business and has not met with Ayer clients.
The loss of DeBeers after 57 years comes amid a year of management upheaval at Ayer and concerns about the agency's international capabilities. The agency has failed to build a presence outside the U.S., splitting with Ayer Europe (now Interalia) more than a year ago. Mr. Humphreys has told agency employees buying a stake in an international network is a priority for 1996.
Still, Ms. Quinlan downplayed the loss, emphasizing the agency's growth via increased spending by existing clients.
"It's disappointing, but it's not the end of the world," she said of DeBeers. "We considered the possibility when we did our '96 financial planning."
Some 20 employees do only DeBeers work, with many more spending some time on the account. Ms. Quinlan said she hopes to find Ayer jobs for at least some of those people. The Ayer staffers primarily worked with the jewelry trade, rather than doing traditional creative, she said.
The good news is 1995 will be a terrific year for Ayer, Ms. Quinlan said. Revenue is tracking 15% above last year, and DeBeers will be on the books through Dec. 31. That will make two good years in a row, since revenue rose 18% to $98.8 million and billings 10% to $861.2 million in 1994.
AT&T and P&G both increased spending with Ayer this year, she said, and the New York office picked up the $15 million Avon Products business. Ayer Chicago has won $60 million in new client spending in the past 18 months.
With no significant debt on its books, Ayer also is in a better position than most agencies to sustain a major revenue loss.
But while the agency doesn't appear in imminent danger of another big client defection, troubling rumors persist, especially about its status with AT&T.
"We have no plans to put Ayer's work in review," said Dick Martin, AT&T's VP-corporate advertising. "We're happy with what Ayer is doing for us. In fact, the work they've done with 1-800-CALL-ATT has really increased our calls." Ayer also handles AT&T's award-winning "You Will" campaign and buys network TV.
But Ayer is vulnerable, sources close to AT&T said, because the telecommunications giant isn't sure how the agency fits into its long-range plans. Like many multinational advertisers, AT&T knows there are only about a dozen truly global agencies. Companies that want three or four of them on their roster don't have many to choose from, once competitive conflicts are factored in. Sources said that's one of the reasons AT&T recently put BBDO on its roster with a creative assignment for the 1996 Olympics: If it hadn't, another competitor might have.
P&G currently has four global agencies and five of what it calls "local" shops, including Ayer. Sources have said P&G wants to gradually trim its roster to five global agencies and possibly one or two others, but Robert Wehling, senior VP-advertising, market research and public affairs for P&G, said the company has made "absolutely no such decision."
GM has expressed no dissatisfaction with Ayer and is not believed to be considering an agency consolidation. Ayer does corporate image work for GM.
International capabilities weren't directly a factor in DeBeers' decision to move its U.S. account to JWT. But DeBeers executives cited the "significant advantages" of having one global agency in explaining its decision to part with Ayer after 57 years. JWT already handles the rest of the world for DeBeers, and Ayer's recent TV advertising was adapted from a JWT campaign in Europe. DeBeers had started consolidating its advertising with JWT four years ago, when it moved its Asian account there from Bates Worldwide.
Jeremy Pudney, London-based director for DeBeers, said the pending move to New York of Chris Jones, president of JWT Worldwide and longtime lead manager on the DeBeers account, is "a pleasant coincidence" but was not a factor in the decision.
However, sources close to the situation said management turnover at Ayer was a factor. Ms. Quinlan has been with the agency a little more than a year, and she just took over as CEO in May-when Steve Dworin left after only a year on the job. Vice Chairman-Chief Creative Office Pat Cunningham departed last month; he is now working on a novel.
Laurel Wentz and Kim Cleland contributed to this story.