Draft Surges ahead with new division

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As Interpublic Group of Cos. readies its agency realignment, the holding company's Draft-Worldwide today launches a new promotion marketing division aimed at widening its positioning beyond direct marketing.

The new entity, called Surge at DraftWorldwide, is the consolidation and rebranding of Draft Chicago's promotion business-born out of the 1997 acquisition of promo shop Lee Hill Inc.-and two of Draft's independent operating units, KBA Marketing and Group 3. Draft purchased KBA, which pioneered "trend influence marketing"-or using early adopters to promote brands-in 1998 and bought event-marketing specialist Group 3 in 2000.

The launch of Surge at DraftWorldwide, which Draft Chairman-CEO Howard Draft said was in the works before the Interpublic reorganization plan, unites the agency's existing promo capabilities under one umbrella alongside DraftDigital and Draft's direct offerings. The rebranding highlights Draft's services outside direct marketing, the discipline for which it is best known.


"The name Draft and the alliteration of `Draft direct' is very powerful," said Lee Hill, president of DraftWorldwide, Chicago, and now also president of Surge at DraftWorldwide. The launch of Surge aims to give promotion "a separate calling, a separate identity," Mr. Hill said.

Draft was introduced to the Surge name in March 2000 when it acquired a majority stake in AG Worldwide, New York, and its digital arm Surge Interactive. Draft sold AG back to its founder Peter Arnell (Mr. Arnell is now selling AG to Omnicom Group) this spring. Draft then acquired the remaining stake in Surge, which will fold into Draft's digital unit while donating its name to the new promotional group. Draft also received clearance from client Coca-Cola Co., which markets a soft drink named Surge, before using the moniker.

Although promotion is gaining a distinct name and identity at Draft, it remains part of a larger whole. "Our game plan isn't really to break out [promotion by revenue]," said Mr. Draft, adding that Draft's Chicago business is split about evenly between promo and direct. However, promotion revenue accounted for less than 25% of Draft's 2000 total of $285 million, according to Advertising Age figures (AA, May 21).

"My brand has been known as a direct brand," Mr. Draft said, but "much of our new business now comes from these other disciplines."

Promotion marketing is especially hot in an economic landscape where it's faring better than direct marketing. "This year, promotions are shaking out very well, just because promotional budgets tend to be a bit more stable or even increase" during slowdowns, said Alexia Quadrani, managing director at Bear, Stearns & Co. "It's no surprise that [Draft] would try to increase their emphasis on that area in this market."


Draft said it was motivated to create Surge because clients were asking for it. "There were so many disciplines under the [promotions] umbrella, that most of our clients' confusion was driven under that area," said Kevin Berg, previously CEO of KBA Marketing, who will serve as vice chairman of Surge. Mr. Hill added: "Some of our clients said they would like a single point of contact into these resources. We have been promotional companies working together separately. It was simply the time to come together."

That coming together was prefaced by Draft's win of Burger King Corp.'s global promotion business in January, estimated at more than $150 million by industry-watchers (Adage.com Jan. 31). Other promotional clients include Kellogg Co., RJ Reynolds Tobacco Co. and Sprint.

"Our existing clients are asking for [promotional integration], and new clients we talk to about the concept of one-stop promotional marketing are just so excited about it," said Yvonne Furth, president-chief operating officer of U.S. operations at Draft. "It's traditionally something that clients have been buying piecemeal," she said. "The client was screaming for it."

Draft, however, stresses the focus on direct will not diminish. "We're just trying to be like that guy who pulls the 747s into the airport," Mr. Draft said. "One's direct; one's promotions; we're just trying to get the big planes in."

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