Federated Ad Account Goes to New Firm

After years of testing its luck with a number of small Los Angeles area ad agencies--and even trying to create and place its own ads--the Federated home electronics chain on Friday took its $25-million advertising business to Sacramento.

The change, however, caught few ad executives by surprise. The Federated Group was purchased last year by Atari Corp., and the agency it hired--the recently created retail division of DDB Needham Worldwide--creates and places ads for Atari.

Federated has mostly created and placed its own newspaper and magazine ads. It is perhaps best-known for zany TV ads that featured Shadoe Stevens in the guise of Fred Rated. In a cost-saving move, Federated cut off virtually all such TV advertising over the past year.

But Federated recently had bolstered its radio advertising. And Purcell Media & Marketing of Los Angeles, which placed Federated’s radio ads for the past six months, has now lost the account. “It was our major piece of business,” said Marsha Purcell, who founded the media buying firm three years ago. “Sure, it’s a big loss, but that’s all a part of the business we’re in.”

The move is viewed by ad industry executives as one that will consolidate Federated’s advertising. In a statement, Jack Tramiel, chairman of Atari, said the company selected DDB Needham because of its “cost-effective” ads for Atari’s home video games division.

Meanwhile, the Los Angeles media-buying company that lost the account will continue to hunt for new business.