One door opens, another shutters

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The decision by two top Fallon, New York, execs to leave the shop and start their own firm marks the latest flashpoint in an ongoing agency revolution-and the death of a storied agency's New York outpost.

In May, Anne Bologna, Fallon New York's highly regarded president, and Ari Merkin, one of the country's hottest creatives, confronted Pat Fallon with their intentions, and soon after, he made the call, announced last week, to shutter the Big Apple office-at the probable cost of some 35 jobs (the staff has been offered work at the agency's Minneapolis headquarters).

One agency executive commented that it was "probably overdue": The office has experienced a decade of management upheaval, and has suffered some classic second-office symptoms such as being hindered in its growth when it couldn't take on clients that would conflict with those serviced by the Minneapolis mother ship.

In New York, Fallon handled an estimated $100 million-plus in billings for clients including Virgin Mobile, Starbucks' Frapuccino, Time, Georgia Pacific's Brawny paper towels and SoBe. It won many awards working on their business. The agency said it had not yet heard whether these clients will shift business to the Minneapolis office.


Ms. Bologna and Mr. Merkin are leaving to join the massing ranks of streamlined, nimble agencies that are trying to win business with strong, media-neutral creative ideas and business understanding rather than a full suite of services, network of offices or armies of account executives.

These agencies-Mother, Strawberry Frog, Taxi and Anomaly have garnered the most press, but are just the vanguard of the movement-all benefit from being around at a time when decades-old rules of marketing are being changed by everything from increased consumer control to media fragmentation. Marketers want breakthrough ideas-and often want to avoid traditional agency bureaucracy and overheads.

Marketers ranging from McDonald's Corp. and Coca-Cola Co. to Miller Brewing Co. and Masterfoods have signed on with these shops. Indeed, it appears to be the greatest opportunity for new agencies to make a serious impact since the Fallons, Goodbys and Wiedens arrived on the scene decades ago.

"You can't be a breathing, living person without seeing there's a revolution," said Ms. Bologna. "It's been 20 years since the industry has had this kind of revolution," she added. "Our business has always been about ideas. That's what clients need inside and outside and that's the business we want to be in."


She said an entrepreneurial passion to participate in this changing market drove her and Mr. Merkin to leave. She declined to comment on specific plans, but said the agency they plan to start this fall will be "less traditional" than the classic agency.

The proliferation and growth of "new-era agencies"-Strawberry Frog CEO-Chief Creative Officer Scott Goodson's term-has accelerated over the past couple of years.

When USA Network conducted a review last year, it focused on smaller shops. It picked MDC Partners' Mono, Minneapolis. "We weren't necessarily looking for all the other added layers an agency has," said senior VP-marketing Chris McCumber.

Mono was started in January 2004 by two Fallon group creative directors, Michael Hart and Chris Lange, and Jim Scott, previously an account director at Interpublic Group of Cos.' Carmichael Lynch.

"There's a shift going on," said Mr. Hart. "There's a willingness by clients to seek the most innovative ideas from agencies and not getting hung up on size."

That said, this new breed still faces challenges. In the past, small agencies have blown apart in wake of internal management disputes. They need to prove they can collaborate successfully with vendors who offer services they don't.

Of the New York office closure, Mr. Fallon said he had determined that the amount of energy invested in the New York office would be better directed in Minneapolis. An entrepreneur himself, he sees clearly why new agencies are proliferating.

"Periods of change spawn new businesses, spawn restlessness," he said. "When there's change in the marketplace, what's possible is seen from a lot of different angles."

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