GOING, GOING, GARGANO?; WITH $100M, HALF OF STAFF GONE, ALLY STILL INSISTS IT WILL SURVIVE

By Published on .

"It was one of the great agencies of all time. Taking a job at Ally & Gargano was the right move. I just happened to do it in the wrong decade."

So lamented a fax last week from a former staffer at the New York agency.

But "wrong decade," heck-just the past year has seen Ally go into a breathless descent that has many observers wondering if it's about to close.

Ally entered 1995 with $284 million in billings, Advertising Age estimates, but a string of account losses has lopped off nearly $100 million. The latest client to bail out is General Nutrition Centers, which last week officially moved its $30 million media-only account to Western International Media, Los Angeles. This year, Ally has also lost Dunkin' Donuts ($40 million), Bank of New York ($15 million), Lorillard ($10 million) and H.J. Heinz Co.'s Weight Watchers division ($3 million).

A source close to cigarette maker Lorillard said worries about Ally's financial condition were major factors in its decision.

Ally CEO Bill Luceno said financial woes had nothing to do with any of Ally's client losses.

"No [client] has ever said anything to me," he said, contending that in most of the cases, clients weren't happy with creative.

A public-records search turned up two liens filed against Ally in June 1993 by New York City for unpaid taxes totaling almost $480,000. While the city shows the liens as still active, Mr. Luceno insisted they have been settled. He showed Advertising Age a letter written by an accounting firm and dated July 13, 1995, demanding that the liens be removed.

"The irresponsible presence of this lien against Ally & Gargano, when in fact no such amounts are owed, has caused significant and continuing damage to Ally & Gargano's business and financial reputation," the letter stated.

Mr. Luceno insisted Ally won't close and said he has reduced the number of employees by 50% to 80. Plans are to reorganize on a smaller scale, and he said "bankruptcy" is "not in my vocabulary right now." He said reincorporation is a possibility and a name change and an office relocation are probabilities.

Ally still has $10 million to $20 million in billings, while Ally's Dugan/Farley Communications has $65 million, and AdDirect and Media Partners combined have about $25 million, Mr. Luceno said. However, management plans to sell those three units.

Western International Media took over Media Partners' accounts as of May 29, said Dennis Holt, chairman-CEO, of the Los Angeles-based media buying company owned by Interpublic Group of Cos. He wouldn't say how Western assumed the business, or say whether there are earlier media bills owed.

Marketing Corp. of America, Westport, Conn., has an option to own a stake in Ally, Mr. Luceno said. Current owners, including Mr. Luceno and John Howard (an outside investor with a majority stake in Ally who wouldn't comment for this story), bought the company from MCA in 1988, at which time MCA became a creditor.

In the '70s and '80s, Ally helped build huge businesses at once-unknowns MCI and FedEx.

"Some of the greatest creative talent in the business went through there, people like Ed McCabe, Helayne Spivak, Martin Puris, Ralph Ammirati and Amil Gargano," said an executive at one midsize New York agency.

Co-founder Amil Gargano formed an independent agency several years ago, but shares some of Ally's support staff and phones.

He wouldn't elaborate on what he called "the agency's demise," saying, "Anything I say about how this happened would just be venting anger at this point."

In this article:
Most Popular