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Leo Burnett Co. next month will turn its sales promotion, direct marketing and interactive operations into a standalone unit called Leo Burnett NorthStar.

NorthStar's 150 employees represent Burnett's commitment to building a resource for clients looking for direct and database marketing as well as promotion capabilities.

"It's important in the marketplace that people recognize the specialty, and branding it gives it more recognition," said Linda Wolf, Burnett's group president-North America. "This is more evolution in terms of our overall structure."


NorthStar joins Giant Step and Vigilante, its interactive and urban marketing operations, respectively, as operating units of Burnett. Giant Step will remain a separate unit; NorthStar also will have interactive capabilities.

At some point, NorthStar could spin off into a separate division with its own profit and loss statement, such as media buying service Starcom Worldwide, although there are no immediate plans to do so, Ms. Wolf said.

Burnett is relatively late to the game of bundling these capabilities among its large-agency peers. Already firmly established as direct marketing units of general agencies are Foote, Cone & Belding's FCB Direct; Grey Advertising's Grey Direct; McCann-Erickson Worldwide's McCann Relationship Marketing; Ogilvy & Mather Worldwide's OgilvyOne; and Young & Rubicam's Wunderman Cato Johnson.

Burnett's "integrated model was widely considered to be a failure in the industry," said one executive at a competing direct marketing agency. "They needed to do something differently. There's nothing wrong with coming out of the closet."

NorthStar's capabilities have existed within Burnett as a direct marketing and promotions department since 1986, but the new structure formalizes the approach, said Tim Claffey, exec VP-managing director of the new group.

Mr. Claffey has 85 employees in Chicago, as well as 65 interactive employees in Burnett's Toronto office.


Mr. Claffey's team also plans to collaborate with the agency's Hispanic department to build databases and develop programs for the Hispanic market.

"We can use their expertise and our understanding to develop strategic marketing communications," said Mr. Claffey. "It's a relatively untapped market."

Marketing services represent major growth for agencies. Gross income from direct marketing and sales promotion among 205 U.S. agencies with the disciplines grew a collective 20.8% in 1998, to $3.92 billion, according to Advertising Age's most recent Marketing Services report. That outpaces the 14.7% advance in U.S. gross income of the top 500 agencies for 1998, according to Ad Age's most recent Agency Report.

Existing client business is the initial focus for NorthStar; current clients include Allstate Corp.; Walt Disney Co.'s Walt Disney World and Disney Cruise Line; Eli Lilly & Co.'s Prozac; and Maytag Co.

The unit will seek new business from other Burnett clients as well as from outside the agency. It is eyeing such categories as retail, transportation and

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