PUBLICIS TO CLOSE D'ARCY, MOVE CLIENTS

'Some Layoffs' Expected As Employees Are Redistributed

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NEW YORK (AdAge.com) -- D'Arcy Masius Benton and Bowles, the venerable agency that began as a small St. Louis shop in 1906 and grew into the world's 14th largest agency brand, is the latest victim of industry consolidation.

Publicis Groupe, which became D'Arcy's parent after its merger with Bcom3 Group was finalized last month, is closing the agency and folding D'Arcy clients into the holding company's other agencies, several top-level Publicis executives confirmed.

Announcement expected today
An internal announcement is expected today, the same day Publicis meets with analysts in Paris to discuss its new organizational structure.

D'Arcy employees will be absorbed by Publicis' three global agencies -- Leo Burnett Worldwide, Publicis and Saatchi & Saatchi -- as well as Fallon Worldwide, "but not without some layoffs," one of the executives said.

A D'Arcy spokeswoman referred

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calls to Publicis Chairman-CEO Maurice Levy, who could not be reached for comment at press time.

Two of D'Arcy's biggest clients, Procter & Gamble Co. and General Motors Corp., seemed to know Publicis' decision was imminent. James Stengel, global marketing officer of P&G, said it had worked with D'Arcy on a transition for "a while" and that it understood the action.

"We trust it is the right decision. They're putting us first," he said. "We just want the best people on our business."

He said that any organizational change is a distraction but that P&G and D'Arcy are working "brand by brand" on a transition.

Few conflicts for P&G and Saatchi
P&G is D'Arcy's biggest account. The agency handles more than 20 products, including four $1 billion-plus brands in Charmin, Always, Crest and Folgers. Speculation has Saatchi and Burnett in line for a good amount of P&G work, as conflicts are few. Havas' Arnold McGrath, New York, and Grey Global Group's Grey Worldwide are also on P&G's roster, and may pick up some brands.

GM is 'confident'
C.J. Fraleigh, GM's executive director-corporate advertising and marketing, said through a spokeswoman the automaker is "confident" it will continue working with whichever Publicis agency D'Arcy is folded into for its Cadillac and Pontiac accounts. "We are in discussions," he said.

Publicis' Burnett is a strong candidate to land both Cadillac and Pontiac. Burnett's Chicago office handles GM's Oldsmobile brand, which disappears next year after more than a century. Rival agencies, hungry for new business, however, are already circling D'Arcy's accounts.

While D'Arcy will no longer exist, its name may still be used on some marketing services companies for a short period of time, one executive said.

Executives' fate not known
It is not known if John Farrell, D'Arcy president-CEO, and Susan Gianinno, chairman, president and chief branding officer, will have executive positions waiting for them in the new Publicis. Neither returned calls for comment.

In May, Mr. Farrell sounded an optimistic note. "Our impression of Maurice [Levy's] expectation is that we continue on course," he said. "If anything, we should pursue it even more aggressively." But one Publicis executive said Mr. Farrell is expected to leave.

Lee Garfinkel
Speculation by industry insiders has President-Chief Creative Officer Lee Garfinkel, hired in the summer of 2001 as D'Arcy's creative savior, either landing with one of the Publicis agencies as chief creative officer or starting his own shop. Mr. Garfinkel is close to the Heineken USA account, which he handled at Lowe. Heineken moved to D'Arcy last year.

D'Arcy overall ranks as the world's 14th largest agency brand, with $763 million in worldwide gross income in 2001, according to Advertising Age data. In the U.S., it is No. 11 among agency brands, with $317 million in gross income.

Inspired loyalty
D'Arcy Advertising was founded in St. Louis just after the turn of the century, serving such clients as Anheuser-Busch Cos.' Budweiser and Coca-Cola Co. It formed long-lasting bonds with many of its clients. GM's Cadillac, for instance, was at D'Arcy and its predecessor shops since at least 1915, although Campbell-Ewald held the account for two stints in the 1920s and '30s. D'Arcy also had the Mars account since 1932 until the food marketer terminated the relationship in May of this year.

Mergers and acquisitions in the early 1970s and mid-80s yielded D'Arcy Masius Benton & Bowles, owned by parent company MacManus Group, which in 2000 merged with the Leo Group to create the Chicago-based holding company Bcom3 Group.

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Jean Halliday, Kate MacArthur and Jack Neff contributed to this report.

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