Frankel eyes growth via direct, online buys

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Frankel is looking to purchase direct and interactive companies as the promotions giant seeks to expand its marketing communications offerings under new President Dan Rose.

Mr. Rose said Frankel, fresh off a cash infusion from its January sale to Paris-based Publicis, isn't close on any acquisition yet and has no particular targets. He said, however, that such an arrangement would allow Frankel to expand its geographic coverage beyond San Francisco, Los Angeles and its Chicago headquarters, as well as beef up its expertise and acquire new clients -- such as desired automotive, pharmaceutical and computer accounts.

Mr. Rose, 44, said that in addition to acquisitions, other options include forming alliances with digital or direct shops, or hiring experts directly to work with Frankel's 5-year-old digital unit as well as its direct services component, which began in 1982.

"We want to think on bigger, broader and different planes than agencies have previously," Mr. Rose said. "Agencies so far have been unable to keep up with the pace of their clients."


Other agencies also are seeking to enhance their direct capabilities. BCom3 Group Vice Chairman Rick Fizdale, for example, has said he wants to build or buy a U.S. direct company (AA, Jan. 31).

Since January 1999, 17 independently owned U.S. direct marketing agencies and another 16 marketing services companies with direct capabilities have been sold. Independent shops, whether a giant like Aspen Marketing Group, with $225 million in 1999 revenues, or a $6.3 million shop like Roska Direct, are used to fielding phone calls from general agencies interested in gaining direct and database capabilities.

Direct marketing revenue in the U.S. jumped 15.6% last year to $2.49 billion. The marketing services industry as a whole had $5 billion in revenue, a 17.2% increase.

Diving into direct is part of Mr. Rose's plan for the country's 54th-largest branded shop -- to better integrate its marketing offerings. The plan also includes centralizing the internal reporting structure to make Frankel more client-focused, with each office having a director of client service.

"We've got to get innovative right now, impact clients' business," said Mr. Rose, a 14-year Frankel veteran who last month rose to president from chief operating officer. He succeeded Jim Mack, who remains CEO.

While Frankel won't shift its focus to traditional image advertising, it will increase promotional advertising, such as the multibrand spot it created for Frito-Lay snack foods that aired June 8 on ABC's "Who Wants to Be a Millionaire."

Mr. Rose said he plans for Frankel, a $95 million agency, to grow to $200 million in revenue by the end of 2003, as well as create at least three new products or services. Current products include Brand Guard, which allows franchisees to build their own promotional and direct programs, and Siren, which provides digital delivery of point-of-purchase materials.


Mr. Rose also wants to turn Frankel -- with clients including McDonald's Corp., Nestle, United Airlines and Visa International -- into more of a performance-based organization, where it and clients will set goals, and the agency and its employees will be responsible for helping meet those goals.

He said Frankel also may open more offices to supplement its West Coast and Chicago presence if client needs necessitate. Already, it has opened a small Minneapolis office to handle its Target Stores work.

Contributing: Amanda Beeler.

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