Why Carmichael Lynch Resigned Harley After 31 Years

New Business Wins, New Client Categories and a Troubled Brand Behind Split

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NEW YORK (AdAge.com) -- When it comes to client-agency relationships, agencies aren't typically the ones doing the dumping. But that's just what Carmichael Lynch, Minneapolis, appears to have done to iconic motorcycle company Harley-Davidson after a 31-year-long ride.

The Interpublic Group of Cos. agency, which first began working with Harley Davidson in 1979 as it sought to shed its reputation for poor quality, last Friday informed Harley it would initiate a 90-day termination period ending in late November. The shop conveyed that decision to its staff of nearly 250 in a meeting today, just before Harley-Davidson and Carmichael Lynch disclosed their split in separate announcements.

"We've had a good run with Carmichael Lynch over the past 31 years but as our brand has grown globally and with new, broader audiences and cultural opportunities, we've been working for some time with a more diverse group of agency partners," Mark-Hans Richer, Harley's chief marketing officer since 2007 and a onetime General Motors exec, said in a statement. "Our strategies have been moving away from a singular consumer target and a one-size-fits-all agency solution. Rather than accept this new reality, CL chose a different path and we respect that."

Despite the talk of broadening its agency relationships beyond Carmichael Lynch, a spokesman for Harley insisted to Ad Age that it did not initiate the parting with its agency of record, nor does it plan to conduct a search to find a new one. Instead, it will continue working with a cadre of roster shops such as VSA Partners in Chicago and McCann Erickson in the U.K.

Asked whether the split stemmed from any creative differences, Harley referred calls to Carmichael Lynch, whose president, Doug Spong, had this to say: "You can't be in a relationship for 31 years and not have some differences. We're very grateful for such a long and glorious time together, but we just feel like we've taken that brand as far as we can go."

Mr. Spong said there were multiple motivations for the agency's decision to part with Harley. Among them was the company's performance amidst the economic downturn. "It didn't come down to any one thing, but if you look at the challenge right now of growing Harley's sales -- they've weathered a tough few years in terms of the recession. We've supported them through good times and bad."

In the early part of this decade, Harley-Davidson sales were on the upswing, and the brand was getting hot again, but through the first six months of 2010, worldwide retail sales of Harley-Davidson motorcycles fell 10.7% compared to the prior-year period. U.S. retail sales of Harley-Davidson motorcycles decreased 15.3% for the first half of the year. Ironically, Carmichael Lynch in the throes of the downturn created a campaign called "Screw It; Let's Ride," which was meant to evoke the feeling of Harley fanatics who would rather be out riding bikes than worrying about the economy.

Mr. Spong continued: "The question is why now, and we've got a number of new-business wins we've picked up this summer, most of which we've not announced because they're so fresh we've just got signed agreements." He declined to disclose the names of Carmichael Lynch's new clients, but said the shop is "getting into categories that Carmichael Lynch hasn't historically been in ... some things in home, in baby and in parenting ... all category-leading brands and brands that are very big."

Harley-Davidson spent $11 million in measured media in 2009, and less than $5 million for the first six months of this year, according to Kantar Media.

Mr. Spong noted that the agency plans no layoffs as a result of the news, and that it has "more than replaced the revenue lost on Harley Davidson with the new business this summer." Remaining clients include Jack Link's Beef Jerky, Hasbro and key auto client Subaru, of which Mr. Spong said the "relationship couldn't be better."

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