With its financial woes largely cleared up, a leaner N.W. Ayer & Partners is ready to concentrate on its future under the MacManus Group umbrella.
New York-based Ayer, oldest agency in the U.S. at 127, is a much smaller shop than it was a year ago. Clients AT&T Corp., DeBeers Consolidated Mines and Gillette Co. are gone, as are two managing partners. But MacManus also has managed to reduce the size of Ayer's problems, and MacManus Chairman-CEO Roy Bostock has high hopes for the newly acquired agency, with estimated billings of $400 million.
"Ayer is a very different agency [from MacManus' main holding D'Arcy Masius Benton & Bowles], and we will run it as a different agency," Mr. Bostock said. "It has a great heritage of producing emotionally driven advertising. We see great opportunities for an agency with that" expertise.
OPPORTUNITY AT AYER
"Roy sees a good opportunity in having a second agency brand with principals who are close to the business," said an executive familiar with both Mr. Bostock's acquisition of Ayer (AA, Oct. 21) and his plans for the agency.
By joining MacManus, Ayer lessened industry speculation that it would lose one or both of its biggest accounts, Procter & Gamble Co. and General Motors Corp., because of its dwindling size. DMB&B shares both clients with Ayer.
Mr. Bostock said MacManus hopes to expand Ayer with offices in Europe and Asia in the "relatively near future," but won't do it with acquisitions. "We will do it with clients."
He said he has had some "initial conversations" with Ayer clients about international expansion but no plans or commitments have been made yet.
Ayer President-CEO Mary Lou Quinlan already is stoking the new-business fires. Having lost $300 million in media billings and various creative assignments from AT&T, she wasted no time in going after a replacement telecommunications account.
Last week, she and others were scrambling to prepare the agency's final pitch for U S West's long-distance account, which could eventually exceed $30 million. Ms. Quinlan and other Ayer executives declined to be interviewed for this story, citing the workload involved in the pitch.
CHANGES IN LEASE
MacManus didn't disclose the terms of the Ayer purchase. But as part of the deal to acquire all the agency's stock from Korean investor W.Y. Choi, the holding company renegotiated Ayer's lease in a Manhattan office tower and payout deals with former executives that had been draining the agency's cash flow.
Also in recent months, Ayer closed its Los Angeles office to cut expenses and sold its autonomous media unit, Media Edge, to Young & Rubicam for about $3.5 million.
Ayer reported revenue of $94 million for 1995. Current annualized revenue is estimated at slightly more than $50 million, according to executives familiar with the agency's financials. DeBeers and AT&T had been two of the agency's top three revenue accounts.
The $40 million DeBeers account moved to J. Walter Thompson USA about a year ago. The $10 million Gillette account moved to Saatchi & Saatchi Advertising earlier this month.
One of Ayer's biggest struggles in recent years has been management turnover; Ms. Quinlan is the agency's third CEO since 1994.
When she assumed the job in spring 1995, she stepped into a quagmire of financial pressure, discontented clients and staff uncertainty. Her first big move, hiring renegade creative director Mark Fenske as co-managing partner, backfired in April when he left after six months. The third managing partner, strategic planner Martyn Straw, left at the same time.
Though many people close to Ayer think Ms. Quinlan has done as good a job as could be expected in difficult circumstances, others think the agency's administrative headaches have overwhelmed her.
Last week, MacManus said Bill Clayton will move from exec VP-human resources director at DMB&B to general manager at Ayer to let Ms. Quinlan focus on new business and existing clients.
Ms. Quinlan will report to Craig Brown, MacManus vice chairman-chief operating officer.
By far the largest current Ayer client is P&G, with about $175 million in billings. GM, with about $50 million in billings, is managed out of a small Detroit office. Other New York business consists of the $30 million Avon account, the $15 million KitchenAid account and smaller accounts from DuPont Co. and local nonprofit organizations.
A bright spot is Ayer's Chicago office, where billings have risen 500% in the past four years, to about $90 million.
Copyright October 1996, Crain Communications Inc.