Merger of 2 advertising agencies would create growth opportunity


One on One is a weekly feature offering excerpts of interviews 1/2 conducted by the Evening Sun with newsworthy business leaders. Roger Gray, chief executive of the advertising agency Gray Kirk & Evans, talks about the pending merger of his firm with VanSant Dugdale and what he expects the combined operation, to be called Gray Kirk/VanSant to accomplish in the future.

Q. What phase is the merger in right now?

A. We are in the final stages of getting the details worked outand it appears that the deal will be signed as of next Monday [today] and effective Aug. 1.

Q. Have you chosen a location for the combined operation[Gray Kirk & Evans is in Browns Arcade on Charles Street, while VanSant Dugdale occupies offices in the World Trade Center in the Inner Harbor]?

A. We are looking at moving down to the World Trade CenterThat's probably 98 percent guaranteed at this point. The critical thing when you have two agencies coming together is to make sure the transition as far as handling accounts is very smooth, and you need the best facility to do that. Their facility is much more open than our building and they also have a lot more space available. I think the second part of it is that we consider the World Trade Center a very prestigious headquarters for this new agency versus the location here on Charles Street.

Q. You've said that you would like to see the new organization go after more national and international clients. In terms of the nitty-gritty of the business, what makes this new organization better able to go out and get those large accounts?

A. I think there are several things. In terms of prospecting fonew business, I think the number one thing we have is talent, especially in the creative area. They have some really top creative talent down at VanSant. We have the same thing here. And when you put those two together, it really becomes a dynamite situation for us. The other thing is that it allows us to attract new talent to our agency, creative talent, because good people want to work with good people. So that's a plus. That helps you prospect for new business, because clients, even though they say they want account service and they want media, they ultimately buy an agency for the creative product because that's what we sell.

Q. I gather that the size of the agency also is a factor in getting big clients?

A. Absolutely. And I think the fact that our size is now $80 million allows us to talk to clients that have bigger advertising budgets that traditionally would not talk to us.

Q. Since the merger was announced, its been difficult to telwhether this deal was hatched because of the recession or despite the recession. Which was it?

A. I don't think it's either. The recession had no effect on this aall. I think some people that are not close to our industry don't understand that our industry, nationwide, has been in a recession for about five years now. We jumped the gun on the total economy. But Gray Kirk & Evans was not affected by what was happening with the rest of the industry.

Q. And that's because?

A. Mainly because of the success we've had with our current clients. I'll give you an example. Choice Hotels. They've been with us for nine years now, going on ten years. They were a 300-property regional chain when we started working with them in 1981. They are now a 2,500-chain, international company. Their advertising budget has grown along with that. The campaign that we have been running for them on television for the last five to six years has contributed tremendously to that success. So we've had success stories like that with our current clients and that's critical to a stable situation in this agency.

Q. And VanSant similarly has?

A. Absolutely. VanSant has been able to maintain themselvesThey have not grown in new business as much as we have, but they've got very stable situations with their clients. I mean one of the strengths they have is, they have 60 years with some of their clients: USF&G; since 1932, Martin Marietta since 1930. That's a statement of how good that agency is. That's what you really judge an agency on: how long they have their clients. Now, you know you talk about the recession. Last year in 1990 we grew 12 percent in billings over the prior year. You talk to anybody in our industry and they say, how do you do that? Because nobody was doing that. So, I'm not the kind that's patient. I like to jump ahead and I want to grow faster than 12 percent a year and I think that this merger is going to get us to the point where I want to be, and that is a major regional player in the communications business and ultimately a national player, a lot faster than we nTC could have done it at 12 percent a year.

Q. As a joint operation, are you going to be targeting certaimarkets? Is there something in particular that you're going to try to carve out as Gray Kirk & VanSant's turf as you grow?

A. Yes, we have specific industry categories that we're going to go after. It's not by market, we're not going to say, we only want to do work in this geographic location. We have learned through trial and error of new business efforts that clients are really only interested in agencies that have experience in their industry or experience that's applicable to their industry. So we have taken our new business prospect list down from about a thousand names, where we were going after everybody, down to probably anywhere between 50 and 75 names that we're going to go after real hard. I hope that answers your question.

Q. Well, I'm still looking for that umbrella that ties together those industries you consider your specialties.

A. There really is no one umbrella. Gray Kirk & Evans has a lot oexperience in travel and lodging, in the entertainment business, for example -- casinos and things like that. We understand cruise lines, we understand theme parks. We will go after those kinds of industries. VanSant Dugdale has a lot of strength in the financial side of it, the insurance side of it, health care, medical insurance providers. We will go after those kind of categories. But, there is nothing that says, "OK, we are a specialist in this category." No, that is not the case.

Q. How large is large? How large do you perceive thorganization growing and will it always be Baltimore based?

A. It will always be headquartered in Baltimore because I lovthis city and I will not leave this city. Will we have other operations beyond Baltimore? Absolutely. Because I believe you've got to go where the clients are. I just think that it is very tough for an agency to just market itself with one single operation in Baltimore. So, yes we are going to expand beyond the boundaries of Baltimore as far as having offices, because I think it will help us in our new business prospecting. In fact, we are talking to people right now.

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