Carl Ally Inc.

Published on .

Founded by Carl Ally, 1962; renamed Ally & Gargano, 1977; went public, 1983; purchased by Marketing Corp. of America, 1986; control sold to Wesray Capital Corp., 1988; closed, 1995.

Carl Ally launched Carl Ally Inc. in 1962, after he left Papert, Koenig, Lois to handle the $1 million Volvo account with two former colleagues, art director Amil Gargano and copywriter Jim Durfee.

With that first account, the agency showed off its "grab 'em by the throat" advertising philosophy, which shook up old-line agencies. Neither Mr. Ally nor Mr. Gargano fit the buttoned-down image of the advertising community's old guard, and Mr. Ally in particular saw the old school of advertising as dull and insipid.

At the time Carl Ally Inc. was formed, rules barred an advertiser from mentioning its rivals by name in TV spots. Ally got around that rule in one Volvo spot by using an aerial view that showed a Volvo, with the company's name visible on the roof, easily outpacing five unnamed but recognizable competitors.

Not long after, the agency began naming names. Indeed, Ally is credited with helping lift the ban on comparative advertising, which the last of the major TV networks discarded in 1972, following a suggestion from the Federal Trade Commission that the rules might be interpreted to represent restraint of trade.

For one client, Ally took the competition head-on. Hertz had been losing market share to Avis, which had obliquely compared itself to Hertz by touting its "No. 2" status. Hertz saw its market share slide from 55% to 45% under the Avis assault. Ally's approach was more direct:

For years, Avis has been telling you Hertz is No. 1. Now we're going to tell you why. If you were in the car rental business and you were No. 2 and you had only half as many cars to offer and about half as many locations at which to offer them and fewer people to handle everything, what would you say in your advertising? Right. Your ashtrays are cleaner.

Six months after the campaign was launched, Hertz rebounded to a 50% share.

FedEx and other successes

In October 1974, the year-old FedEx named Ally as its first consumer agency. With a budget of only $150,000, the agency began by running test campaigns in New York and Los Angeles, where business increased 87% and 59%, respectively.

The advertising strategy was accomplished in phases. The first goal was to build awareness through the tagline, "America, you've got a new airline." The agency created many memorable ads with slogans the company used for years, among them 1979's "When it absolutely, positively has to be there overnight."

The 1982, FedEx "Fast Talker" spot, featuring "the world's fastest-talking man," garnered nationwide acclaim. It featured actor John Moschitta in a fast-paced telephone conversation on the importance of overnight delivery. In 1999, Advertising Age ranked "Fast Talker" No.11 among the 100 best ad campaigns of the century. By the time their relationship ended in 1987, FedEx was spending $25 million via Ally.

In 1976, the agency changed its name to Ally & Gargano, and in 1979, Mr. Ally sold his voting stock to Mr. Gargano. He also turned over day-to-day responsibilities to his longtime colleague, although he retained the title of chairman until his retirement several years later.

Edward M. Gallagher joined Ally in 1979 as exec VP-chief operating officer. Mr. Gallagher had a strong background in packaged goods, and also had gone to college with the chairman of a small, upstart telephone company, MCI Communications, that became an Ally client.

By 1982, Ally's fortunes had turned, at least briefly, and Advertising Age named the company its Agency of the Year. But the success was not to last: Messrs. Ally, Gargano and Gallagher clashed over future direction. Nonetheless, the agency went public in 1983, a decision that Mr. Gargano, at least, claimed to regret.

Ally's finances took a nosedive, and several major clients, including FedEx and MCI, cut back on their advertising budgets. Several others, including Commodore computers and Franklin Computer, went bankrupt. At the same time, the agency was rapidly increasing its staff size. In 1981, Ally had 75 employees; by 1984, it had almost 300.

Takeover by MCA

Six months after the company went public, Mr. Gallagher was fired by agency's board, and the company again reorganized. That reorganization created a greater daily role for Mr. Ally and an operating committee led by Senior VP-Media Director Larry Dexheimer.

By the time Mr. Ally retired in 1985, the agency had attracted several new, large clients, such as Ciba-Geigy Corp.'s pharmaceutical division and Polaroid Corp. But other key clients also followed Mr. Ally out the door, including Travelers Insurance Co., Polaroid and MCI. After Mr. Ally's retirement, Mr. Gargano added the title of chairman.

In June 1986, Marketing Corp. of America acquired Ally for $26.6 million. MCA merged Ally with MCA Advertising, its own agency, but the effort proved less than seamless. MCA Advertising focused on packaged goods, with clients including H.J. Heinz Co. The more conservative culture that went with servicing such clients was not an easy fit with Ally employees, who were used to a different dynamic.

Following the merger with MCA, the agency began to lose key creative people. Several Ally employees who left after the merger formed Messner, Vetere, Berger, which went on to rival Ally in a review of its Saab account in 1988.

Messrs. Gargano and Ally barely remained on speaking terms following Mr. Ally's departure. The relationship between the two was stressed even more when Saab, which had employed Mr. Ally as a consultant, moved its account from Ally to Lord, Einstein, O'Neill & Partners in 1988. (Mr. Ally maintained that he had had no role in Saab's final decision to move its account.)

For Ally, the loss of the Saab account was particularly bitter as the account had been with the agency for nine years and represented about $30 million a year in billings for the ailing shop. The same year that Saab moved its business, Ally also lost the Ciba-Geigy and SmithKline Beecham accounts.

In December 1988, MCA sold control and 50% of the agency for $30 million to Wesray Capital Corp., and Bill Luceno, who became chairman-CEO, in a leveraged buyout. The debt from that reorganization, while not immediately crippling, meant that Ally could afford no further losses.

Following its reorganization, Ally added several major accounts, including Shearson Lehman Hutton and Tambrands, but in 1991, Mr. Gargano left the agency. He opened Amil Gargano & Partners, taking with him three of the agency's top creative people and sparking a series of departures that were an enormous drain on Ally's talent.

Turning point

In 1992, Ally unsuccessfully competed for the Mercedes-Benz of North America account. That failure marked a turning point in the agency's fortunes. Ally failed to make the finals for the $80 million BMW of North America account in 1993, although the shop was familiar with the product through its work for the New York City metropolitan BMW dealers association. While the agency won General Nutrition Centers' $30 million media account in September 1993, it lost the $6 million Celestial Seasonings account and two brands marketed by Pfizer: Ben-Gay ointment and Plax mouth rinse.

In February 1994, after Ally President Warren Dechter left to return to MCA, Mr. Luceno took on a much larger role in client service, which left him stretched thin. As the end of 1994 approached, Ally was struggling but had managed to hold on to about $250 million in billings (when accounts at its three main subsidiaries were included).

Nevertheless, longtime client Lorillard announced in December that it was pulling its $25 million account from Ally. That left Ally with two clients, Bank of New York and Dunkin' Donuts, and both were considering switching shops.

In January 1995, Ally was named a finalist in the $175 million Kmart Corp. review, an effort Mr. Luceno had termed the agency's "last chance," but in March that account went to Campbell Mithun Esty. Soon after, a parade of accounts left Ally, including H.J. Heinz Co.'s $4 million Weight Watchers account and Bank of New York's $20 million account and, finally, Dunkin' Donuts' $40 million account. Late in 1995, the agency was shuttered.

Most Popular
In this article: