Needham Managers Buy L.A. Office, Open Agency

Hoping to profit from last weekend’s advertising mega-merger, executives of the Los Angeles office of Needham Harper Worldwide agreed to buy their office and keep client American Honda Motors Co., which posed a potential business conflict for the merged agency.

No sales price was disclosed for the all-cash transaction, which is expected to be completed by July.

The sale of Needham’s office to Los Angeles President Gerry Rubin and Creative Director Larry D. Postaer resolves a key business conflict issue that arose with Sunday’s announcement of the merger of BBDO International, Doyle Dane Bernbach Group and Needham. The merger would create the world’s largest advertising firm.

All three agencies handled advertising for an auto maker, and analysts had said they expected Needham Harper to drop Honda because merging partner BBDO handles Volkswagen of America.

Competing Accounts

“There would have been a conflict between Volkswagen and Honda,” said Rubin, who, as a Needham director, sat in on board discussions about the merger. He decided to buy the office, which will be renamed Rubin, Postaer & Associates, because “we did not want to lose our relationship with American Honda.”

Rubin said no layoffs are contemplated in the 149-person office. Despite losing its ties to Needham, the Los Angeles office will still rank among the largest agencies in California. According to Adweek, a trade magazine, only about a dozen independent agencies and branch offices of major firms had more billings last year than Needham’s Los Angeles office. Its clients include the California Lottery; La Petite Boulangerie, a chain of bake shops owned by Pepsico; a retail chain called Bayless Markets, and McDonald’s operators in San Diego.

An agency typically is paid 15% of billings, which are the cost of advertising placed through the agency.

‘Fewer Distractions’

Honda said it is pleased with Rubin’s move.

“It’s great for us,” said Eric Conn, director of automotive advertising for Honda. “We will be the primary account. There will be fewer distractions for them (the new agency). We get to go to the head of the class.”

Before Rubin offered to buy the Los Angeles office, Needham’s board debated the business conflict questions arising from its representation of Honda and also Home Federal Savings, Rubin said. The latter company apparently would pose a conflict with Nationwide Financial Corp., which is represented by Doyle Dane.

Rubin said representing two companies in the same industry is more of a “perceptual problem than a real problem” of conflict of interest.

But Honda’s Conn said: “We are concerned about possible business conflicts . . . for security reasons and market tactical reasons.”