The Richards Group, Inc. Business Information, Profile, and History

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History of The Richards Group, Inc.

The Richards Group, Inc., is a Dallas-based advertising agency devoted to brand building. Richards has an enviable track record for producing some of the most innovative advertising campaigns in the entire industry. The agency's work for Motel 6, Chick-fil-A, and Corona beer are notable successes. Richards, with over 550 employees and annual billings in the $600 million range, is one of the few privately held agencies. Founder Stan Richards has taken steps to ensure that it remains independent, establishing a succession plan that would turn over ownership of the business to a charitable organization upon his death. Free from the short-term pressures that come with public ownership, Richards takes a long-term approach to the way it conducts its business. The agency concentrates on brand building, employing a process which is itself branded: Spherical. In brief, Spherical involves a thorough examination of the current state of a client's brand and a determination of the brand's ultimate destination. Richards then develops a campaign--as opposed to a slate of ads--that might last for several years. The company's most celebrated success story is its 17-year relationship with Motel 6 and the "We'll leave the light on for you" advertising campaign that transformed a struggling motel chain into the leader in economy lodging.

Stan Richards Relocates to Dallas in 1950s

Founder Stanford Harvey Richards was very much a child of the Depression. He was born in Philadelphia in 1932, the son of a man who worked two jobs in order to buy a bar in New Jersey and later opened and establishment in Atlantic City. Encouraged by his mother, Richards developed a passion for fine arts at an early age, and then in high school decided to pursue a career in commercial art. In 1950 he traveled north to Brooklyn to attend Pratt Institute, one of America's leading design schools. Pratt, at the time, offered a three-year program that awarded a certificate instead of a bachelor's degree, so that other than freshman English and a class in art history, Richards' studies were geared towards preparing him for a commercial career. He was taught by professionals who believed in a master-apprentice approach, stressing discipline and a commitment to craft. His teachers also urged him to broaden his knowledge of the other arts, maintaining that it would positively influence his work.

Richards graduated near the top of his class in 1953 and decided to relocate to Los Angeles, harboring a vague plan of landing a job with legendary designer/filmmaker Saul Bass. As a way to prepare for an interview with Bass, which he had not yet attempted to arrange, the self-confident 20-year-old decided to fly to Dallas first, in order to show his design portfolio around town.

Essentially all Richards knew about Dallas was that the Nieman Marcus Department Store was located there and that its in-house creative department was doing some of the best commercial work in the country. He was able to show his student work to the creative director, who encouraged him to keep showing his portfolio to area advertising agencies. Elsewhere, however, Richards did not find his reception to be as welcoming. He practiced a Euro/minimalist style, at a time when Dallas creative departments were packing every square inch of print ads with information. Richards was told by one creative director that his work was "junk" and not suitable for Dallas or anywhere else for that matter.

His next stop, however, was with Marvin Krieger, the creative director of Dallas' largest advertising agency, Rogers & Smith. Recognizing Richard's talent, he appreciated what the young man was attempting to do. Although he could not offer a job and admitted that Dallas was not yet ready for Richards' approach, Krieger encouraged Richards to stay in Dallas, open up his own graphic design practice, and grow with the city. According to Richards, Krieger saved his most convincing argument for last: "I believe you can do what Saul Bass has done--right here in Dallas."

Having decided to launch his career in Dallas, Richards soon found a garage apartment and a one-room downtown office and set up shop as a freelance designer. His unconventional work began to catch on with area ad agencies, so that after two years he had won a number of local awards for his work and had established a solid reputation. It was at this point, in 1954, that the Bloom Agency offered to make him creative director at a salary of $12,000 a year, an amount that Richards could not resist. He would only last one frustrating year (precisely 365 days) at Bloom, forever at odds with account management, but the experience provided invaluable lessons on how an advertising agency functions--and can become dysfunctional.

Stan Richards & Associates Formed in 1955

Richards returned to freelancing but found the going tougher than before. He slowly built up a stable of clients and was eventually able to hire his first employee, a designer named Martin Donald. Thus, in 1955, Stan Richards & Associates was born. Over the next 20 years the company added employees, becoming a boutique creative-department-for-hire, pursuing advertising work, logo designs, annual reports, corporate identity work, and some package design. A notable and unusual achievement of the 1960s came when the writer of Butch Cassidy and the Sundance Kid, impressed with Richards' ad work for the film, asked if Stan Richards & Associates could help devise an opening title sequence. The result was a vintage-looking newsreel film within a film sequence that adorned what would garner four Academy Awards in 1970--the only such film work the company would ever perform.

Stan Richards & Associates was a company of some two dozen designers and writers in 1975 when Richards decided to change the name of the company in order to better acknowledge the contributions of his team. He settled on "The Richards Group," choosing "group" because he did not like the organizational implications of "agency" and preferred to see his company as "just a friendly aggregation of people who have come together around a common pursuit." Fostering openness and communication between staff members was key to the Richards approach to running an enterprise. Decades before open-bay work environments, Stan Richards removed all office doors, and as the staff grew, necessitating that the company occupy an additional floor, he insisted on constructing a stairwell (which would ultimately connect four floors), urging people to avoid taking the elevator--yet another way to encourage employee interaction.

In 1976 Richards, whose business was thriving, made the risky decision to turn The Richards Group into a full-service advertising agency, in effect going into business against its clients. The move was initiated by an invitation from the chairman of Mercantile Bank, one of Dallas' largest advertisers, to pitch its business. Although The Richards Group had the creative credentials to land the account, it lacked all the necessary support to make it a full-service advertising agency. Despite the fact that he was burning his bridges with his agency clients, Richards decided to pitch the business. Mercantile, in the end, found a compromise solution, hiring The Richards Group for creative work and an established advertising agency for media and coordination. The resulting campaign, which The Richards Group soon handled solo, was a major success, running for 11 years and proving to be instrumental in the rise of both Mercantile (which grew from an institution with $800 million in assets and a single location to $23 billion in assets and 125 branches) and The Richards Group.

With Mercantile as an anchor, The Richards Group added more accounts and more staff members to handle the business. Richards tried hiring experienced art directors but found that he was better off hiring recent college graduates, who had yet to learn bad work habits and acquire an obsession with office politics. The company's breakout year came in 1984, when it landed several new accounts. The group was so busy, in fact, that it actually turned down an offer to bid on the broadcast account of TG&Y stores. In 1985 The Richards Group was named the Southwest Agency of the year by Adweek.

The Richards Group's best-known campaign was the one devised for Motel 6, a relationship established in 1985. The client was in bad shape, as was quickly revealed through focus group sessions with past Motel 6 customers, which according to Stan Richards' book, The Peaceable Kingdom, "turned into gripe-fests. Rooms were tatty and often dirty. The rooms had no phone; you had to walk to a pay phone in the office. If you wanted to watch television, you actually had to plug quarters into the TV set." Taking a long-term brand-building approach, The Richards Group recommended that Motel 6 improve its product before it even thought to advertise. Although the agency did not take in much money as it waited for Motel 6 to fix its operational problems, when the client was finally ready to launch an advertising campaign it would be a memorable one and highly profitable for both Motel 6 and the Richards Group.

The cornerstone of the campaign was its spokesperson, Tom Bodett, an Alaskan carpenter who had been doing commentaries on All Things Considered for public radio. A copywriter suggested that Bodett's everyman persona would be a good fit for Motel 6. The resulting radio--and ultimately television--spots featured Bodett comparing high-priced lodging with the practicalities of Motel 6: "They've got beds, we've got beds. They've got sinks and showers, by golly, we've got 'em too. There are difference, though. You can't get a hot facial mudpack at Motel 6 like at those fancy joints. And you won't find French-milled soap or avocado Body balm. You will, however, find a clean, comfortable non-fancy room for about 20 bucks in most places." The ads closed with one of the most enduring taglines in advertising history: "We'll leave the light on for you."

In 1988, while other area ad agencies were struggling to retain clients, The Richards Group added some $35 million in new business. It was again named agency of the year, and early in 1989 topped the benchmark $100 million level in annual billings. It would also be named agency of the year in 1990 and continued to thrive throughout a decade in which the advertising industry underwent a period of consolidation, as scores of privately-held independent shops were rolled up by giant public companies. Major Richards' clients included Corona, The Home Depot, Nokia, Chick-fil-A, and Fruit of the Loom.

As it entered a new century, The Richards Group was an organization with more than 500 employees and annual billings in excess of $500 million. In 2001 the company launched a separate branding enterprise, a unit called Spherical (named after its trademarked Spherical branding approach, refined after many years of application), which was intended to pursue clients that might not be seeking its advertising services. Moreover, it was an attempt to counter consulting firms that were now offering branding services, to bring greater attention to the Spherical method. It provided a thorough examination of a company's business, taking into account such details as the hold music used on a company's telephone system, all geared towards helping a client's brand to reach its "highest calling."

Succession Plan Announced in 2001

For years Stan Richards personally approved each piece of work produced by The Richards Group, but as business increased that desire became unrealistic, and a greater amount of creative authority was delegated. He had no intention of retiring, but as he approached his 70th birthday, Richards felt the need in 2001 to formulate a succession plan in the event of his death. His main objective was to keep the agency independent indefinitely. To achieve this end he decided to transfer his 100 percent ownership equity to an unnamed Dallas charity, which would be required to pledge to never sell the stock and in return would receive an annual income from the business. The Richards Group was estimated to have a market value of $125 million and was believed to be the largest advertising agency owned by an individual. Some observers, however, questioned the practicality of the succession plan, arguing that most charities are wary of open-ended transactions and prefer to sell off assets when they are ripe. Moreover, an immediate infusion of cash was often in the best interests of the charity. Those concerns notwithstanding, Richards finalized his plan, which also called for three senior creative executives--Glenn Dady, Gary Gibson, and Mike Malon--to form a leadership council. One of the three would ultimately emerge as the head of the agency, in all likelihood after Richards' death. Richards told the press, "There's always been an understanding within the agency that my successor would be a creative, not an account service or media, person. I think agencies should be run by creative people. These three guys ... have been with me forever [and] are as responsible for the success of this place as I am." Starting immediately, the three men would begin to alleviate Richards of some of his work load. While his desire to maintain the agency's autonomy was generally lauded, there were also some concerns that because the company had no provision for equity participation, allowing top performers to become partners in the business, The Richards Group might be limited in it future recruitment of talent. Nevertheless, current staffers appeared to value stable ownership and independence over extra money. According to Malone, "Remaining fiercely independent is a great idea. The trauma that ownership issues cause has affected the entire industry. Looking from our perch, we think we're doing it the right way."

Following Richards announcement, business at the agency he founded carried on as usual. As the economy slipped into recession, the advertising industry was forced to retrench. The Richards Group cut some staff members in January 2002, but the move was coupled with the hiring of new people in select areas. In fact, while rivals struggled to secure new business, The Richards Group landed 11 new clients in 2002, including Hyundai Motor America (worth $160 million in billings) and the Hyundai dealers' associations (worth another $200 million). In addition, the agency opened four new regional offices. In the first few months of 2003 The Richards Group added another six clients, including Red Roof Inns and TV Guide. Stan Richards, his career spanning more than 50 years, continued to be very much engaged in the business he launched on a trip to Los Angeles he never completed.

Principal Operating Units: Spherical.

Principal Competitors: Deutsch, Inc.; Fallon Worldwide; GSD&M Advertising; Landor Associates.

Chronology

• Key Dates:
• 1953: Stan Richards begins doing freelance design work in Dallas.
• 1955: Stan Richards & Associates is formed as boutique design shop.
• 1975: The Richards Group is incorporated.
• 1976: Company becomes a full-service advertising agency.
• 1985: Motel 6 is signed as a client.
• 2001: Richards announces a succession plan.