D'Arcy Masius Benton & Bowles, Inc. Business Information, Profile, and History

1675 Broadway
New York, New York 10019-5809
U.S.A.

Company Perspectives:

At D'Arcy Masius Benton & Bowles we have a passion for creating brand leaders. It's what drives us and makes us unique. It's the richest part of our heritage and the touchstone for our future.

History of D'Arcy Masius Benton & Bowles, Inc.

D'Arcy Masius Benton & Bowles (DMB & B), Inc., known informally as D'Arcy, was ranked the world's 15th largest advertising agency in 1998 with $5.8 billion in worldwide billings. The agency had 131 offices in 75 countries. It was formed in 1986 by the merger of two pioneering firms in the advertising industry: D'Arcy MacManus Masius, an agency based in the St. Louis area, and Benton & Bowles, a pillar of the New York advertising business. In November 1999 D'Arcy's parent holding company, The MacManus Group, announced it would merge with The Leo Group, parent of Leo Burnett Co., to form the world's fourth largest advertising holding company.

Prospering with Coca-Cola and Anheuser-Busch: 1906-20

The agency that would become DMB & B got its start on August 23, 1906, when William C. D'Arcy opened a six-person advertising firm in St. Louis. After graduating from a St. Louis public high school, D'Arcy took a job selling paint. Ten years later, he moved to the Western Advertising Company, a pioneering St. Louis firm, where he stayed for five years to learn the advertising business. D'Arcy struck out on his own when he saw an opportunity to prosper by promoting a fizzy brown beverage with a two-part name, Coca-Cola.

Coke's ad budget in D'Arcy's first year was only $3,000. D'Arcy had a small stable of other clients that year, including Plover Hams and Bacon, Cascade Whiskey, and Nature's Remedy, an elixir that claimed healing properties. The company earned $1,500 by the end of 1906.

The survival of D'Arcy's fledgling enterprise was guaranteed when Coke upped its ad budget to $25,000 in the firm's second year. Instantly, D'Arcy became an advertising agency with a national presence, placing ads for Coke in publications across the country. This track record helped D'Arcy win its next major account, St. Louis brewer Anheuser-Busch, Inc., in 1914. Anheuser-Busch put the agency to work promoting its products Bevo, a nonalcoholic soft drink, and Malt Nutrine, a premium bottled tonic.

The following year, D'Arcy landed Anheuser-Busch's Budweiser account. Technological innovations led to the use of refrigerated railroad cars and the development of a stabilized brewing formula--two factors that enabled Anheuser-Busch to sell Budweiser across the United States. The brewer therefore needed an advertising agency that could promote its products throughout the country. D'Arcy notched another major account in 1916, when the General Tire Company signed on. The following year, D'Arcy began its marketing research efforts, conducting its first interviews with consumers to determine their attitudes toward various products.

The advent of World War I slowed the U.S. economy, and clients reduced their advertising budgets. D'Arcy, however, survived the war without losing any accounts, despite the fact that wartime prohibition cut into the company's Anheuser-Busch business. By 1919 the ad agency had grown to 30 employees.

Prohibition and Radio: 1920s

In 1920, however, D'Arcy's key Anheuser-Busch account received another crushing blow when the 18th Amendment to the Constitution inaugurated Prohibition, a nationwide peacetime ban on the manufacture, transportation, and sale of alcoholic beverages. The brewer stepped up marketing of its nonalcoholic beverage, Bevo, and turned to sales of other related products, like yeast, to stay in business.

That same year, D'Arcy set up its research center, which began with the clipping and saving of advertisements from both current major publications and more than 30 years of backfiles. This resource allowed D'Arcy staff to trace the history of various advertising campaigns created for a given product over the course of decades, thereby aiding them in creating their own new advertising.

In 1923 D'Arcy opened its first office outside St. Louis. The Atlanta location served as a liaison with the flourishing Coca-Cola Company. Throughout the 1920s D'Arcy introduced several innovations in the production of print ads and began advertising on a new medium: radio. The first ads to be aired were for Anheuser-Busch on KMOX in St. Louis.

By 1929 D'Arcy's account with General Tire had grown large enough to merit the opening of a special office, and the company's operations expanded to Cleveland for this purpose. During this time, the company also conducted its first major effort at market research, surveying 733 airports to determine demand for Shell aviation fuel.

New Offices, and the End of Prohibition: 1930s

Two years later, D'Arcy began a decade of landmark work for Coca-Cola with a Christmas campaign that included an enduring depiction of Santa Claus. The artwork from this ad, showing Santa with twinkling eyes and a red fur-lined suit, would go on to shape the popular perception of this mythical figure. In addition to the Santa campaign, which ran every winter in an effort to get people to drink Coke even when it was cold out, D'Arcy introduced the Coke slogan, 'The Pause That Refreshes,' in the 1930s.

As Americans took to the highways, D'Arcy helped Coke develop filling station vending machines and also plastered the land with billboards. The agency would soon become the largest buyer of outdoor advertising space in the United States, pioneering the use of rotating cutouts to further attract attention to its ads.

With the repeal of Prohibition in 1933, D'Arcy's other major account came back to life, heralded by a print ad in every newspaper in the country that proclaimed, 'Something More Than Beer Is Back,' touting the economic and social advantages of legalized liquor.

Building on its successes with national accounts, D'Arcy undertook a geographical expansion in the 1930s. The company opened a New York office in 1934, a Toronto outpost in 1938, and a Los Angeles branch in 1939. Despite the general economic malaise of the Great Depression, William D'Arcy's enterprise prospered throughout the decade.

World War II, Television, and the Retirement of the Founder: 1940s-50s

The company underwent a much more severe test with the U.S. entry into World War II at the end of 1941. D'Arcy's staff was reduced as its employees joined the military, and almost all of its clients cut back on their advertising budgets as the economy shifted to war materiel production, which severely restricted the manufacture of consumer goods. With the resulting shortages of many products, ads urging people to buy became inappropriate. Instead, D'Arcy and its clients devoted themselves to the promotion of the war effort with ads urging Americans to buy war bonds.

Despite the privations of the war years, D'Arcy expanded further in 1942, opening a wholly owned subsidiary in Mexico City, Publicidad D'Arcy. At the conclusion of the conflict in 1945, the agency underwent another transition when its founder, William D'Arcy, announced his retirement. At the time he stepped down, billings at the company D'Arcy had built topped $21 million.

D'Arcy was replaced at the helm by his deputy and longtime employee, J.F. Oberwinder. During his tenure, D'Arcy began to employ the new medium of television to promote its clients' products. Anheuser-Busch became the sponsor of the 'Ken Murray Show,' aired over the CBS network on Saturday nights, and in 1955, Donald Woods became the on-air salesman for Budweiser, 'The King of Beers.'

Coca-Cola got on the television bandwagon when it signed up to sponsor 'Kit Carson,' a Saturday afternoon cowboy show for children. Four years after the agency's 1951 transfer of Coca-Cola dealings to its New York office, D'Arcy suffered the loss of this flagship account: Coca-Cola switched its business to McCann-Erickson, New York, a competing advertising firm with an international presence.

In the wake of this loss, D'Arcy won several other big clients, including Standard Oil of Indiana, Royal Crown Cola, and car manufacturer Studebaker-Packard. In the mid-1950s the company also opened an office in Chicago. Along with its branches in Detroit, Houston, Dallas, and Havana, Cuba, this gave D'Arcy 12 offices across North America.

An Innovative Ad Agency: 1960s

D'Arcy's use of outdoor billboard advertising expanded greatly during the 1960s, and the company introduced a number of technological innovations to the field. Among D'Arcy's most successful campaigns during this time was the launch of the red and blue Budweiser label as an advertising icon. The company first ran the label as a Life magazine ad in 1965. Soon, the demand for products bearing the label had taken off, and it was imprinted everywhere from beach towels to hot air balloons.

By 1966 D'Arcy was taking in $120 million a year, and the company acquired Johnson & Lewis, a San Francisco advertising agency. Revenues remained at that level for the following year but dropped to $110 million in 1968 and fell even further the next year to $102 million. One factor contributing to this slow-down was the account losses suffered by D'Arcy's New York office, which lost its $10 million Royal Crown Cola account in 1969, as well as several other clients whose business totaled $6 million.

Cutbacks, Mergers, New Clients: 1970s

Difficulties continued in 1970, as the Chicago office lost its $7 million McDonald's Corporation fast food account, and the company shuffled members of its top management in an effort to stem the tide of client defections and set profits on the rise. D'Arcy had scaled back its full service offices to eight, and its billing was sliding toward the $100 million level.

In late 1970 D'Arcy merged with MacManus, John & Adams, Inc., an advertising agency headquartered in Detroit. Among the clients of this firm were General Motors and 3M. The plans to merge were disrupted initially by a suit brought by a disgruntled former D'Arcy executive, who charged that he had been fired improperly because he opposed the merger. After the suit was settled out of court, the two agencies combined their operations, consolidating offices in New York, Chicago, and Los Angeles and changing the agency name to D'Arcy-MacManus.

The agency went through a series of additional modifications during the 1970s, beginning with a name change in April 1972 to D'Arcy-MacManus International. Six months later, D'Arcy-MacManus underwent another transformation, merging with a British advertising agency, Masius, Wynne-Williams. This company had been founded in London by an American in the aftermath of World War II, and it had extensive operations in Europe, South Africa, Australia, and New Zealand. The firm then adopted the name D'Arcy-MacManus & Masius, or DM & M. In the following year, DM & M spun off its research arm as a subsidiary, called Media Information Research.

In the early 1970s DM & M began to systematize its marketing methods, developing theories to explain how consumers decided what products to buy. These methods would eventually become 'Belief Dynamics,' which would lead to the use of target audiences to increase the effectiveness of advertising campaigns.

During the mid-1970s D'Arcy worked for a variety of clients in diverse businesses, including the automobile and restaurant industries and the U.S. Armed Forces. The agency created successful campaigns to encourage enrollment in the U.S. Air Force and also handled advertising for the General Mills Restaurant Group's Red Lobster chain of seafood restaurants. In 1975 the company agreed to refrain from making deceptive claims of fuel economy in its ads for Cadillac's Eldorado model, after it was charged with doing so by the Federal Trade Commission a year earlier. Around the same time, DM & M began producing advertising to promote a new kind of beer, 'light' beer, for calorie-conscious consumers.

International Expansion, Merger, and Reorganization: 1980s

DM & M began a push to expand global operations in the late 1970s. The company added offices in Australia, Hong Kong, Kenya, South Africa, Germany, Spain, and Zimbabwe and by 1984 had 46 offices around the world. At that time, it again altered its name slightly, to D'Arcy MacManus Masius, and instituted a new, more centralized corporate structure after it lost Colgate-Palmolive, a $35 million client. The company planned to compete more effectively for international accounts in its new incarnation and aimed to reach revenues of $2.1 billion by 1988.

D'Arcy MacManus Masius took a large step toward that goal in 1986, when it merged with Benton & Bowles, a venerable New York advertising agency. Benton & Bowles had been founded in July 1929 by Chester Bowles and William Benton, who started out with a staff of five. With a stable of General Foods products, including Hellman's mayonnaise, and Certo, a pectin extract for making jellies, the fledgling enterprise rode out the stock market crash of 1929 and the subsequent Depression to become a leading New York ad agency, retaining its affiliation with General Foods for more than five decades and adding such consumer giants as Procter & Gamble.

With the merger of the two privately held firms, then the largest in the advertising industry's history, D'Arcy Masius Benton & Bowles became the world's sixth largest advertising agency. Benton & Bowles brought to the union a portfolio of communications concerns that it had purchased over 15 years, including Medicus Intercon International, a medical communications company; Ted Colangelo & Associates, a corporate communications specialist; Manning, Selvage & Lee, a large public relations firm; and several others.

The merger was followed by staff cutbacks in October 1986, as DMB & B attempted to streamline its operations in response to a sluggish economy. The firm laid off 63 employees in New York and San Francisco, closed its Atlanta office, and began to shed its smaller regional bureaus, including those in Houston and Miami.

As DMB & B's overseas revenues grew, the company's U.S. operations remained static. The agency became known on Madison Avenue as the 'bridesmaid agency' for its failure to succeed in competitions for a number of big new clients. Responding to an industry perception that DMB & B lacked creative sparkle, the company undertook a reorganization, putting creative directors in closer contact with account supervisors.

The reconfigured agency's push for new business finally bore fruit after three years, when in 1989 DMB & B snagged two big new clients: a $50 million Maxwell House coffee account from Kraft General Foods Group, and half of the $215 million Burger King fast food franchise job. It followed up these gains by augmenting its creative staff and paying record salaries to attract top executives in an effort to banish once and for all the idea that DMB & B was an unimaginative workplace. In November 1990, however, DMB & B lost the Maxwell House account and was forced to fire 70 employees at its New York office as a result of the drop in expected revenue.

More Expansion and Growth: 1990s

In that same year, the company purchased a 49 percent interest in Sosa, Bromley, Aguilar & Associates, an advertising agency specializing in appeals to the Hispanic population, and further expanded its communications holdings when it bought the Donald E. Whiting Yellow Pages business. In addition, DMB & B undertook significant international advances, buying part of an advertising agency in Malaysia and forming joint ventures in India and Pakistan to augment its network of Southeast Asian operations. Agreements with agencies in Brazil, Argentina, and Colombia added to the company's holdings in Latin America. It also acquired a British firm, Yellowhammer.

In a major move that signified a dramatically changing marketplace, DMB & B opened an office in 1991 in Guangzhou, China, to advertise products for Procter & Gamble, Sharp, and Philips. DMB & B's Asia-Pacific network included agencies in China, Japan, Hong Kong, Korea, Taiwan, the Philippines, Singapore, Australia (Sydney and Melbourne), and New Zealand.

Also in 1991 DMB & B opened agencies in Hungary and Czechoslovakia, building on the move it had made into the Eastern bloc in 1989, when it started DMB & B/Moscow, a joint venture with Promstroy Bank--the second largest bank in what was then the Soviet Union. In 1992, a Warsaw office was opened.

In addition, DMB & B augmented its holdings in the Hispanic and ethnic marketing field, purchasing 49 percent interest in two California firms: Noble & Asociados, a major packaged goods advertising agency, and Moya, Villanueva & Associates, a leading Hispanic public relations company. These new companies, coupled with Sosa, Bromley, Aguilar & Associates, gave DMB & B the strongest Hispanic-related communications capability in North America. The company also bought into a Puerto Rican advertising agency located in San Juan.

CEO Roy Bostock planned to bring the agency's far-flung advertising, public relations, and promotions operations closer together. Ranked 11th in worldwide billings, the agency was still perceived in the industry as 'big and boring.' Annual billings for 1992 were $4.7 billion, and the agency had 125 offices in 46 countries. Major clients included Budweiser, Cadillac, Burger King, Procter & Gamble's Scope and Pampers, and Kraft General Foods' Cool Whip. Recent new accounts included the GM gold card, Citizen watches in the United States, Hyatt International in the Pacific Rim, and Canon cameras in Germany.

In 1994 DMB & B lost the $100 million Budweiser account after 79 years, when Anheuser-Busch chairman August Busch III decided that the brewer's relationship with the agency had eroded over the years. The account went to DDB Needham Chicago. DDB Needham was already handling Bud Light advertising. In 1994 DMB & B added Blockbuster Entertainment as a client. By 1995 worldwide billings exceeded $6 billion.

From 1994 to 1996 DMB & B lost eight major accounts, including Magnavox, Anheuser-Busch, Kraft General Foods, Whirlpool, Denny's, and Amoco. In 1996 it lost the Blockbuster account. Following the loss of Denny's and Amoco, the agency closed its offices in Chicago and Greenville, South Carolina. The Los Angeles office was reorganized after a merger with Pacific Marketing Group and spun off as Highway One in 1995, but it re-opened in late 1996 with the DMB & B name following confusion on the part of clients over the new name.

Following a series of lost accounts, DMB & B began to set up a new tier of management to oversee the agency's North American operations. Leading the reorganization was the agency's North American CEO, Richard Hopple. U.S. and Canadian operations would be managed as a single unit. Previously the agency's regional offices had operated independently, with inconsistent standards.

Despite its problems in North America, the agency's global strategy continued to pay dividends. It was able to turn a relatively small assignment from Tyco Toys into a $75 million global account. The firm had also invested heavily in emerging markets such as Russia, China, and Latin America.

In 1996 DMB & B acquired N.W. Ayer and Partners, the oldest advertising agency in the United States. DMB & B subsequently changed the name of its holding company from D'Arcy Masius Benton & Bowles Communications Group to The MacManus Group in order to differentiate between the Ayer and DMB & B operations. Roy Bostock, DMB & B's CEO and chairman since 1990, held the titles of chairman and CEO at both The MacManus Group and DMB & B. The MacManus Group became the parent holding company over both Ayer and DMB & B. Ayer's principal offices were in New York, Chicago, and Los Angeles.

In 1997 Arthur Selkowitz, formerly president of DMB & B/North America, succeeded Roy Bostock and chairman and CEO of DMB & B on May 1, 1997. Bostock remained as chairman and CEO of DMB & B's parent holding company, The MacManus Group. John Farrell, formerly group chairman of DMB & B/United Kingdom, succeeded Selkowitz as president of DMB & B/North America.

DMB & B lost several accounts in 1997 due to organizational changes at its advertisers. These included the $70 million Tyco Toys account, after Tyco was acquired by Mattel Inc., the $25 million Baskin-Robbins business, and the $70 million Aleve account, following the brand's sale to Roche.

At the beginning of 1998 DMB & B picked up the advertising account for Ryder TRS, the number two consumer truck rental company, following a five-month agency review. The account was valued at $20 million in billings. Ryder advertising would be handled by DMB & B's Troy, Michigan, office, which also handled advertising for General Motors' Cadillac and Pontiac brands.

In 1998 DMB & B lost its account for SBC Communications, which it had handled through its St. Louis office for 30 years. SBC accounted for about $7.5 million of DMB & B's annual billings. However, the St. Louis office was subsequently awarded SBC's $70 million Pacific Bell business.

In 1998 the agency also lost the account for computer manufacturer Gateway 2000. The loss was attributed to Gateway's newly installed president and chief operating officer. DMB & B expected to handle $50-$70 million worth of business from Gateway. Following its dismissal, DMB & B initiated a rare lawsuit against Gateway to recover $9 million in costs associated with the former client.

Following extended negotiations, advertising giants Leo Burnett Co. and The MacManus Group called off a planned merger of their media operations at the end of 1998. The two holding companies shared some clients, including General Motors and Procter & Gamble, the two largest U.S. advertisers. It was rumored at the time that a full-fledged merger was also discussed.

In 1999 D'Arcy was selected by Molson Breweries of Canada for its $12-$15 million account for its flagship brand, Molson Canadian. The agency's St. Louis and Toronto offices would handle the account. It was D'Arcy's first beer advertising account since the departure of Anheuser-Busch in 1994.

The agency also picked up additional advertising from The Pillsbury Co., including its Progresso Soup, Totino's Pizza, and breakfast brands, accounting for some $60 million in billings. DMB & B's parent, The MacManus Group, also announced plans to shift all of its Procter & Gamble accounts--including Folgers coffee, Puffs tissue, and Hawaiian Punch beverages--from N.W. Ayer to D'Arcy in order to free Ayer to become a more creative agency. The change was part of an ongoing strategy to raise Ayer's creative profile.

With D'Arcy and MediaVest, The MacManus Group's media buying and planning subsidiary, handling Procter & Gamble's Sunny Delight, Coca-Cola decided to take its $50 million Minute Maid account away from D'Arcy and MediaVest and give it to Starcom Worldwide, Chicago.

D'Arcy picked up $65 million worth of billing when Avon Products decided to consolidate its advertising account and move it from Ayer to D'Arcy. An important factor in the move was D'Arcy's ability to support Avon's global vision with its 131 offices in 75 countries. Ayer, by contrast, only had four offices, two in the United States and two abroad. Ayer's entire Avon team moved with the account from Ayer's New York office to D'Arcy's New York office.

In mid-1999 DMB & B announced it would unofficially change its name from DMB & B to D'Arcy, preferring to be called D'Arcy rather than by its initials. At the time D'Arcy was the world's 15th largest advertising agency, with $5.8 billion in worldwide billings. As part of its reorganization, the agency added another layer of management for its newly created Transatlantic Region, which included North America, Europe, the Middle East, and Africa. In charge of the new regional group were current North American President John Farrell and Chief Branding Officer Susan Gianinno, who would share the title co-president. The new structure was intended to flatten the agency's hierarchy and encourage independent offices to work together.

New Parent Holding Company: 1999 and Beyond

During 1999 The MacManus Group explored a possible merger with the Interpublic Group of Companies. When nothing resulted, The MacManus Group and The Leo Group, parent of Leo Burnett Co., announced in November 1999 that they would merge to create the world's fourth largest advertising company. MacManus and Leo were the two largest privately held ad agency holding companies. The new company was tentatively titled BDM (for Burnett D'Arcy MacManus). Observers expected the new company would likely go public in 2000 with an estimated market value ranging from $3.6 billion to $5.4 billion. Also taking part in the deal was Tokyo-based Dentsu, which provided cash and took a 20 percent stake in the merged organization. BDM would have an estimated gross income of $1.8 billion based on 1998 figures. In the new organization, which would be headquartered in Chicago, Roy Bostock would become chairman, while Roger Haupt, CEO of The Leo Group, would become CEO.

With the change in ownership, D'Arcy, N.W. Ayer, Leo Burnett Co., and other agency brands were expected to continue. Some of the agencies falling under the DMB umbrella would have client conflicts, which could result in lost business. For example, Burnett handled advertising for Delta Air Lines, while Ayer had the Continental Airlines account and D'Arcy handled Trans World Airlines. It was up to the individual agencies within the DMB family of agencies to keep those accounts separate but equal.

Principal Competitors: Interpublic Group of Companies; True North Communications Inc.; BBDO Worldwide Inc.; Grey Advertising Inc.

Chronology

• Key Dates:

• 1906: William C. D'Arcy opens an advertising firm in St. Louis.
• 1914: D'Arcy wins the Anheuser-Busch advertising account.
• 1923: D'Arcy opens its first office outside St. Louis, in Atlanta, where client Coca-Cola is located.
• 1934: D'Arcy opens a New York office.
• 1970: D'Arcy merges with MacManus, John & Adams, Inc., a Detroit-based agency, and becomes D'Arcy-MacManus.
• 1972: Company merges with British agency Masius, Wynee-Williams and becomes D'Arcy-MacManus & Masius (DM & M).
• 1986: DM & M merges with New York ad agency Benton & Bowles and becomes D'Arcy Masius Benton & Bowles (DMB & B).
• 1996: DMB & B acquires N.W. Ayer and Partners and renames its holding company The MacManus Group.
• 1999: The MacManus Group announces a merger with The Leo Group, parent holding company of Leo Burnett Co.