2 Major Ad Agencies Plan Merger : Benton & Bowles, D’Arcy Will Be 5th Largest in Industry
Advertising agencies Benton & Bowles Inc. and D’Arcy MacManus Masius Worldwide said Monday that they are joining to create the nation’s fifth-largest advertising agency in what will be the industry’s largest merger.
Following a pattern of industry consolidation, the companies will form an agency that will be known as D’Arcy Masius Benton & Bowles Inc. and will have 6,000 employees and $2.47 billion in annual billings. It will rank sixth internationally, with offices in 50 cities worldwide.
D’Arcy may be best known for its Budweiser ad campaign, “This Bud’s for You,” while Benton & Bowles’ credits include the “Don’t Squeeze the Charmin” campaign created for Procter & Gamble’s brand of toilet paper.
The companies are privately held and declined to discuss the value of the deal or other financial aspects. Last year, D’Arcy ranked 12th among U.S. agencies with billings of $1.34 billion, while Benton & Bowles was 14th with billings of $1.13 billion.
Two weeks ago, Lorimar Inc., the Culver City entertainment and communications firm, said it had tentatively agreed to buy New York-based Bozell & Jacobs. Lorimar said it planned to merge Bozell with Kenyon & Eckhardt, an advertising agency that it acquired in 1983, and would call the new concern Bozell, Jacobs, Kenyon & Eckhardt. Its estimated billings would exceed $1 billion, placing it 15th worldwide.
In a statement, John S. Bowen, chairman and chief executive of Benton & Bowles, and Hal Bay, chairman and chief executive of D’Arcy MacManus, said each brings “complementary geographical, creative and philosophical strengths to this enterprise.”
Senior officials were said to be unavailable for elaboration.
But analysts suggested that the union was not motivated entirely by considerations of strength. Charles Turner, an analyst with Oppenheimer & Co. in New York, said D’Arcy has recently lost several major accounts, including those for Anheuser-Busch’s Michelob and Michelob Light beer brands and consumer products maker Alberto-Culver.
“There’s been talk in the industry that they’ve been limping along a little bit,” said Turner, who added that at least three other agencies had been attracted by D’Arcy’s “blood in the water” and had approached the agency to discuss such a deal.
Analysts said a trend to combinations has been under way in the industry for several years, in part driven by the increasing tendency of multinational advertisers to choose only those agencies that have a broad worldwide network of offices.
The largest previous industry merger was Interpublic Group of Cos.’ acquisition of SSC&B;:Lintas Worldwide, which took place when SSC&B;'s billings stood at $1.2 billion.
D’Arcy, based in Bloomfield Hills, Mich., is strongest in the Midwest and last year derived more than 15% of its revenue from the Anheuser-Busch account, Turner estimated. Benton & Bowles’ strongest presence is near its New York base.
D’Arcy’s West Coast presence consists of one office in San Francisco, with a staff of about 50 employees, said a spokesman, Lonny Unger. Benton & Bowles’ single West Coast office is in Los Angeles and also has a staff of about 50, Unger said.
Benton & Bowles’ public relations unit, Manning, Selvage & Lee, has offices in San Jose and Los Angeles, with a combined staff of 35, he said.
The merged firm will represent, among other clients, General Foods, General Motors, Pillsbury, Procter & Gamble, Brown-Forman Distillers and Whirlpool.
The firm will include units offering other marketing and advertising services, including Direct Inc., direct marketing; Intergroup Marketing & Promotions, sales promotion and marketing; Manning, Selvage & Lee; Medicus Intercon International, health-care marketing and advertising, and Telecom Entertainment, television program development and production.
Bowen will be worldwide chairman and chief executive of the new company, and Bay will be worldwide president and chief operating officer.
TOP U.S. AD AGENCIES IN 1984 WORLDWIDE BILLINGS
1. Young and Rubicam $3.20 billion 2. Ogilvy & Mather International $2.89 billion 3. Ted Bates Worldwide $2.84 billion 4. J. Walter Thompson Co. $2.71 billion 5. Saatchi & Saatchi Worldwide $2.30 billion 6. BBDO International $2.27 billion 7. McCann--Erickson Worldwide $2.17 billion 8. Foote, Cone & Belding Communications $1.80 billion 9. Leo Burnett Co. $1.73 billion 10. Doyle Dane Bernbach International $1.51 billion 11. Grey Advertising $1.50 billion 12. D’Arcy MacManus Masius Worldwide $1.34 billion 13. SSC&B;:Lintas Worldwide $1.23 billion 14. Benton & Bowles $1.13 billion 15. Marschalk Campbell--Ewald Worldwide $0.94 billion
Combined D’Arcy Masius Benton & Bowles Inc. would rank fifth. Source: Advertising Age