Cramer-Krasselt thinks small

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Cramer-Krasselt plans to piece together a midsize international agency network -- one small account at a time.

While $10 million and $20 million account wins are considered paltry for global behemoths, Cramer-Krasselt views them as components to build a global footprint. The Chicago-based network's focus on smaller clients has helped raise billings 12% to $470 million for the first eight months of 2000, putting the agency on track to reach a 20% increase in billings for the full year. Measured by revenue, it is the country's 38th-largest agency and fifth-largest independent.

But President-CEO Peter Krivkovich hopes to climb the ranks. He said that by late 2001, Cramer-Krasselt -- with offices in Milwaukee, Orlando and Phoenix as well as the Windy City -- will have expanded into either New York or California, or perhaps both places. New offices also are planned in Europe or Asia within five years. "Our future is the world. It's not just the heartland," he said.

PRECEDENTS

Abe Jones, managing director of AdMedia Partners, New York, an investment banking and mergers and acquisitions adviser, said there are ample precedents for midsize agencies to so expand -- citing Doner, Southfield, Mich., and Fallon McElligott, Minneapolis, which opened offices in London, and Wieden & Kennedy, Portland, Ore., which added an Amsterdam office.

Building an international network, however, may be a tall order, since many Cramer-Krasselt clients are based in the Midwest and serviced out of Chicago, which accounts for about half the agency's billings.

Tough, but not impossible. Mr. Jones said agencies the size of Cramer-Krasselt can open foreign field offices to service multinational clients and expand from there. "Typically, you want to have clients before you open new offices," he said.

Cramer-Krasselt would like to buy its way into new markets but could open new shops if it doesn't find the right options. "There are huge opportunities to create a midsize international network," Mr. Krivkovich said. "There are only a handful of $100 million-plus accounts, but hundreds of brands in the $10 million to $50 million range."

Mr. Krivko-vich said his agency is pitching an East Coast consumer products company with operations in Europe. He wouldn't identify the client but said the account could bring in $30 million in new billings.

RECENT WINS

Since May, Cramer-Krasselt has won Zenith Electronics' $15 million to $20 million account, Kemper Insurance Cos.' $10 million to $12 million business and, from Canada, Bombardier's $10 million Ski-Doo snowmobile account. In August, it picked up Manpower's multimillion-dollar business, catalog direct retailer Spiegel's $8 million account and the $20 million account for an undisclosed California services company.

"What's a $20 million account to a huge agency?" Mr. Krivkovich said. "Smaller clients know they'll get a lot of attention from us. We practically have every single resource the majors have -- other than the number of people -- so we can bring a significant level of sophistication to our clients that only the very large agencies are capable of."

Kemper VP-Corporate Marketing Joel Borgardt said he wanted a small or midsize Midwestern agency to service his suburban Chicago company "so we wouldn't get lost in the shuffle."

"We got a lot of attention from the senior people," he said. "A lot of agencies tell you all clients get top-notch focus. I'm not sure [if] that is real or perception."

In November, Cramer-Krasselt's Chicago office was handed Barton Brands' $18 million Corona beer line after Barton agency Fogarty Klein 312, Chicago, closed. Barton is one of the Cramer-Krasselt's biggest accounts, along with Air Tran Airlines, Hyatt Corp., Kemper and Zenith.

"In terms of staff, they might not be as deep as some of the large agencies, but they do provide a full range of services from creative to account management to media planning and buying to PR, and as far as capabilities are measured, I'd stack them up against anybody," said Timm Amundson, VP-marketing for Modelo products, which include Corona, at Barton.

Working with small budgets puts pressure on Cramer-Krasselt to maximize its creative ideas. It worked with Air Tran in 1997 after predecessor ValuJet's fortunes crashed with Flight 592 into the Florida Everglades in May 1996. Cramer-Krasselt repositioned the airline's focus from a vacation carrier to one for thrifty business travelers.

MASTERLOCK CREATIVE

Cramer-Krasselt also got major play with its bullet-flying-through-the-Masterlock in the 1970s and a one-second version that broke in 1998. "It showed the product name and benefit all in 1 second," Mr. Krivkovich said. "It takes a small budget and makes it appear bigger."

The shop, however, is best known for integration, solid strategy and branding rather than jaw-dropping creative. Its strategic focus along with its technological expertise helped it win Manpower, said Kris Kagelman Holtz, director of advertising and sales promotion at the temporary staffing company. "They've done good things for a lot of their current customers," she said. "They don't just come in and shoot the budget in one year."

While its size and Midwestern locale may keep it off the lists of many consultants, those familiar with the agency say it offers a strong media-neutral philosophy that could be a good fit for midsize clients.

"They've been a very strong proponent of solution-neutral approaches to marketing communications needs -- it's whatever discipline does the job," said one consultant who asked not to be named. "Many agencies are moving that way, but C-K has been that way for seven or eight years."

Even so, its gross income has failed to keep pace with some of its independent peers. Deutsch, New York, saw its gross income rise 52.3% to $133.1 million in 1999, while Richards Group, Dallas, showed a 27.5% jump in gross income. Last year, Cramer-Krasselt's gross income was up only 10.3% to $64 million.

SOME ACCOUNTS EXIT

The agency has suffered only a few balance-sheet hits the past few years. It resigned Cracker Barrel Old Country Store after four years in September 1999, when the $11 million account shriveled and went outdoor. The agency and copier company Oce-USA parted ways in June after a similar decline in spending. Southwest Airlines consolidated its account at GSD&M, Austin, Texas, in March 1997, costing Cramer-Krasselt $10 million in billings.

Competitors suggest that lack of national or global presence last year may have caused Cramer-Krasselt to lose the pitch for Midas' $25 million domestic account, which went to Euro RSCG Tatham, Chicago, and FTD/Florists' Transworld Delivery's $40 million business, which went to DDB Worldwide.

The 102-year-old agency would like to snag an automotive account as well as a car rental company, which Mr. Krivkovich said would complement clients including Air Tran, Hyatt and travel Web site Iexplore.com. A tech company and computer brand are high on his list, too.

Mr. Krivkovich -- who speaks Russian, Polish and German -- believes Cramer-Krasselt's approach will sit well in Europe and Asia. The agency already has scoped out shops in London, with Germany, France or Hong Kong targeted after the U.K.

While many midsize agencies have been absorbed into other agencies or holding companies over the past decade, Mr. Krivkovich said he sees no benefit in selling out, even though he's been contacted by most holding companies.

"You name them, we've been approached," he said.

Contributing: Mercedes M. Cardona.

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