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MCCANN HIRES RAPP FOR DM PROWESS;GOAL IS TO BOOST REVENUES FROM $55 MIL TO $180 MIL WITHIN 5 YEARS

By Published on .

Direct marketing pioneer Stanley Rapp will join McCann-Erickson Worldwide next week as chairman-CEO of a new global direct-services unit devoted to tripling McCann's revenue in that discipline.

"We're going to grow the sector here to the point where we're in the .*.*. $170 million to $180 million revenue range," Mr. Rapp said. "We expect to get there in the next four or five years."

McCann projects total 1996 worldwide direct revenue of $55 million.

AGENCY FOUNDER

Mr. Rapp co-founded the world's largest direct marketing agency, Rapp Collins Worldwide, in 1965. He has been a consultant, author and lecturer since leaving the agency, now owned by Omnicom Group, in 1988.

The formation of a dedicated direct unit comes on the heels of other recent efforts by McCann Chairman-CEO John Dooner to fuel agency growth by forming global networks in critical "communications corridors."

McCann wants to become as powerful globally in these corridors, including healthcare, direct marketing and event marketing, as it is in traditional advertising. McCann is the world's second-largest advertising network, or "brand," behind Japan's Dentsu.

Mr. Dooner said he hopes to see McCann getting 35% of its revenue from the various corridors by the end of 1997, up from less than 10% in 1993.

`SPEND WHAT IS NECESSARY'

"We will spend what is necessary" to reach that level, including through acquisitions, said Mr. Rapp.

Based on prices paid for other direct marketing properties in the past year, adding another $100 million in direct revenue could cost McCann well over $100 million.

McCann's parent company, Interpublic Group of Cos., paid more than $100 million for the world's fourth-largest direct agency, DraftDirect Worldwide, Chicago, this summer.

VALUABLE DIRECT AGENCIES

The price startled ad industry executives, although analysts noted higher margins and fatter growth prospects have let direct marketing companies command higher prices relative to earnings than traditional ad agencies.

With $79 million in '95 revenue, DraftDirect is about half the size of the world's three big direct networks: Rapp Collins; Wunderman Cato Johnson; and Ogilvy & Mather Direct. Each had between $165 million and $175 million in total worldwide revenue last year.

But much of the growth will come from existing clients of McCann Direct and McCann-Erickson. McCann already has direct offices in 42 countries and ad agencies in 103 countries.

McCann Direct-with global clients including United Parcel Service, General Motors Corp., L'Oreal and Nestle-ranked as the ninth-largest U.S.-based direct response agency in '95, with $42.8 million in global revenue.

MCCANN DIRECT'S FUTURE

McCann Direct will operate under the umbrella of the as-yet-unnamed global unit headed by Mr. Rapp.

"We had to look to someone who could be a spiritual leader," Mr. Dooner said. "Someone with the direct capability and the capability to build something global. To my surprise, [Mr. Rapp and I] shared the dream."

The new direct group's formation comes less than three weeks after McCann's direct managers met in New York to discuss ways to service clients seeking direct marketing globally.

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