Publicly traded Omnicon Group, which acquired Ross Roy last year, engineered the move to improve its bottom line, said agency insiders and former executives.
"They can make more [money in Chrysler] merchandising than on small [non-Chrysler] clients," said a former Ross Roy staffer.
DECIDED IN JULY
Talk within Bloomfield Hills, Mich.-based Ross Roy is that Omnicom decided the matter in July, said one Ross Roy manager.
Omnicom officials in New York denied taking the initiative in the action, and said it wasn't a profitability issue.
Ross Roy was said to be losing money on several non-Chrysler accounts, including the Sports Authority. The shop resigned that account two weeks ago.
Sources were hard-pressed to name another red-ink account, however. And Janet Muhleman, the exec VP who headed the non-Chrysler accounts, said her group was profitable. She'll be among the estimated 70 to 115 of Ross Roy's 600 employees laid off.
Ms. Muhleman is trying to set up a new, non-Omnicon shop or join an existing agency to handle the discarded accounts.
Ross Roy Chairman Peter Mills described the action as a strategic and preemptive move that "we feel best positions us to help Chrysler meet the demands of marketing in today's dynamic automotive industry." He confirmed that Sports Authority was a money-loser.
DOMINO'S LOSS HURT
Mr. Mills said the refocus came in May when Ross Roy lost the $30 million regional Domino's Pizza account to J. Walter Thompson USA, Detroit. That reduced the non-Chrysler group's contribution to about 8% of total revenues.
"It caused us to really look very hard at what we were doing," he said. "When it gets down to 8%, you ask yourself, is it really critical."
Chrysler steadily has increased its business with the agency, he said. Ross Roy just bought a major software package from Trilogy Corp. that will let the agency digitize Chrysler's database, including its interactive online data for Chrysler dealers and customers.
NEW LOOK ON WEB
The agency also is reworking Chrysler's Web sites for a higher-end look for the 1997 model year.
Chrysler has long-term ties to the agency and has accounted for about 90% of its $500 million in annual billings.
The shop was founded by Ross Roy in the 1920s at the request of the Dodge brothers, whose car business became part of Chrysler.
Omnicom's BBDO Worldwide office in Southfield, Mich., handles national Dodge ads and regional dealer group marketing; sources predict that shop's 100 employees will relocate to the empty Ross Roy space created by the change.