MORGAN ANDERSON: LOOK BEYOND MAJOR SHOPS

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Irreverent Morgan, Anderson & Co. is the search and compensation consultancy ad agencies fear most.

Partners Lee Anne Morgan and Arthur Anderson have snared some of the biggest reviews-BMW of North America; Sears, Roebuck & Co.'s apparel division and MasterCard International to name a few-but they are also known for needling agencies on profitability, expenses and other client compensation arrangements.

Gathering such information has enabled the New York-based consultancy to establish what Mr. Anderson, 54, boasted is one of the "most enviable" agency databases in the world and one that helps them better negotiate how much their clients must pay agencies.

One of Morgan Anderson's most surprising findings: "An agency stated it was losing a lot of money on an account, and the client wanted an independent verification," Mr. Anderson recalled. "It turned out the agency was making a lot of money but not calling it profit."

Big agencies in particular blast Morgan Anderson for favoring midsize and smaller shops. The partners denied those claims, but Ms. Morgan did admit being the first consultants to "persuade clients to look beyond the major agencies."

"Big agencies built structures that have nothing to do with the next millennium," Ms. Morgan said. "We were a catalyst in getting clients to look at different types of agencies."

The once-married duo, whose service fees typically range from $65,000 to $250,000, continues to expand. Ms. Morgan, 50, said the consultancy now offers evaluations of clients' internal operations.

Such assessments may save a client-agency relationship, she said, noting reviews are "hard on the industry and hard on agencies." In many cases, Ms. Morgan added, "it's easier for a client to fire an agency and move on to another than to look within its own organization and at the skills of its own people."

Also, Morgan Anderson has expanded services beyond traditional ad agencies. It's directing Sprint's search for a business-to-business agency helped Primestar Partners, a Bala-Cynwyd, Pa.-based cable consortium, appoint a public relations agency.

Said Ms. Morgan:"If we don't get a piece of business, it's because a client knows we're going to shake things up."

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