Last week, the Bethesda, Md.-based ad agency lost its $15 million Virginia Lottery account to Arnold Finnegan Martin, Richmond. Earlier this summer, EPB's joint venture in Orlando-Yesawich, Pepperdine & Brown-lost the $26 million Florida Lottery.
YEAR OF LOSSES
Those losses and others have made 1996 a trying year for the agency, one of the largest independents left in the U.S. USAir, one of EPB's biggest clients with $25 million in billings, also departed earlier this summer.
With the loss of the Virginia Lottery-awarded to Arnold after eight years at EPB-the agency will close its Richmond office.
"The only reason we had an office in Richmond was to serve the lottery," said EPB CEO Jeb Brown. "It doesn't make sense to keep the office open."
Mr. Brown said EPB dropped out of the Virginia Lottery com-petition days before a decision was made because he was uncom-fortable with the review process.
But Theodora Cogvill, purchasing manager for the lottery, said that when EPB President/Managing Partner Mike Gaffney called two weeks ago to say the shop was considering dropping out, she told him to rethink the decision and get back to her.
NO WORD FROM EPB
When she didn't hear back, she "assumed they were in it until the bitter end."
Actually, this should have been a glorious anniversary year for the agency and its CEO. Twenty years ago, a 29-year-old Mr. Brown took over his father's $3 million agency, with enormous plans. By 1992, he had expanded the agency into a dozen cities with billings of more than $400 million.
But since then, while the ad industry has come out of the recession, EPB has stumbled. Billings have fallen and half EPB's offices have been closed.
MERGER, SALE TO BLAME
Mr. Brown concedes revenue and billings may be lower in 1996 than 1995, but said the main reason is that one office was merged and another sold.
He acknowledged the agency has lost 13 clients with a combined $48 million in billings this year, but claims it has gained 43 new clients, in advertising and public relations, worth $64 million in billings.
The Philadelphia office, now the agency's largest with $125 million in billings, has won nine new clients worth about $27 million in billings this year, including Amoco Corp. and Bristol-Myers/Squibb Co. In New York, 23 clients worth about a combined $20 million in billings have come aboard, including Colonial Penn Group, Paxar Corp. and Sega Channel.
The office also has a project to reposition Salem cigarettes for R.J. Reynolds Tobacco Co. And Be-thesda, which won the estimated $10 million LDDS WorldCom account this past spring, is a finalist in the $10 million Popeye's Chicken & Biscuits review.
"We'll enter '97 ahead of where we entered '96" in both revenue and billings, Mr. Brown said. "We're doing well from a business, revenue and profit standpoint."
Mr. Brown said the agency had 1995 revenue of $50 million on billings of $366 million. Current billings are around $300 million, he said, excluding Yesawich.
He shared these numbers after a handful of current and former EPB senior managers estimated revenue of about $20 million, billings of about $250 million.
Despite the USAir and lottery losses, Mr. Brown disputes the notion EPB is struggling.
"We'd like to continue to be the largest [agency] in Philadelphia, the largest in the Washington area and a bigger organization in New York City," Mr. Brown said.
That's still a change from his early '90s vision of becoming a major national agency.
Acquisitions, including the pur-chase of Norfolk, Va.-based Lawler Ballard, put EPB in 12 cities. The agency won national accounts, including USAir and Roy Rogers Restaurants, due to an improved creative reputation and a cadre of up-and-coming top managers.
Chief among those were Mark Goldstein, president, and Bill Westbrook, creative director, both in Bethesda.
"They were a terrific match," said one former EPB executive. "For a while, everything they touched turned to gold."
But then, EPB lost several big pitches, including Hardee's Food Systems and the corporate USAir account (it then handled the retail business).
CLASHES OVER DIRECTION
In particular, Messrs. Brown and Westbrook began to clash over the direction of the agency. By the end of '92, Mr. Westbrook was gone. Mr. Goldstein left the next year; the two ended up at Fallon McElligott, Minneapolis.
Since then, a steady stream of senior managers has left EPB, with some senior positions turning over two or three times. Richmond has been through several generations of management since 1995, and New York is on its third president since 1995.
"Some of the best people in the business have gone through there and left frustrated," said Terry Taylor, former Richmond creative director and currently a freelancer. "They all said the same thing: they couldn't make a difference."
Complaints of those who have left vary, but most agree on one point. They say Mr. Brown has put the agency through an endless series of re-engineerings.
"He is tinkering constantly," said one former executive.
"That's an invalid criticism," Mr. Brown said, adding, "We invested in training" as the agency moved toward an integrated communications system, organized in multidisciplinary client teams.
"It's true that some senior people have left," Mr. Brown said. "But they either weren't right for our structure or weren't performing. I'm putting younger people in key roles. I'm trying to build a new generation of managers."