Y&R purchased an equity interest in Guatemala's No. 3 agency, Eco in Guatemala City. The move, made in conjunction with associate relationships and future equity options with four other Central American shops, gives Y&R $30 million in Central American billings-and a strong presence in what had been its Latin American network's weak link.
"When big regional clients look at Latin America, they don't want holes," said Mr. De Deo, also chairman of Y&R Latin America.
The Eco deal gives Y&R a "large minority interest" in the shop, with options for a majority stake in the next three years, Mr. De Deo said.
The other agencies in the move are A Sesores Publicitarios, San Jose, Costa Rica; Lemusimun Publicidad, San Salvador, El Salvador; J.B. & Asociados, Managua, Nicaragua; and Cerebro JCM Publicidad, Panama City. All five shops will incorporate Young & Rubicam into their names.
The agency also created a Central American regional network to link the five agencies. Eduardo Toriello, managing partner of Eco before the purchase, will hold the same title with Eco/Y&R, as well as Central American regional director and senior VP, Y&R Latin America.
Latin America is a bustling market, accounting for $650 million in Y&R billings before the maneuver, Mr. De Deo said. But Central America was overlooked in recent expansions. In the past nine months, Y&R has formed partnerships with agencies in Mexico and Chile, doubled its staff size in Argentina, and opened shops in Bogota and Cali, Colombia.
By building relationships in Central America, Y&R bolsters heavy coverage in major markets with the "competitive edge [that] comes with addition of smaller markets," Mr. De Deo said.
Along with those efforts, the agency in April consolidated the Miami offices of Y&R, Burson-Marsteller, Wunderman Cato Johnson and its Hispanic marketing arm, the Bravo Group. Latin America has been the fastest growing part of the agency's business, with regional account value up 37% between 1992 and 1993, he said.