Palmer Jarvis takes network option

On Nov. 27, Frank Palmer told the staff of Palmer Jarvis Communications that he had agreed in principle to sell the Vancouver-based agency to Omnicom, the world's second-largest agency holding company, and that Palmer Jarvis' operations would be merged with those...

On Nov. 27, Frank Palmer told the staff of Palmer Jarvis Communications that he had agreed in principle to sell the Vancouver-based agency to Omnicom, the world’s second-largest agency holding company, and that Palmer Jarvis’ operations would be merged with those of Omnicom’s Toronto-based subsidiary, DDB Group Canada.

With the announcement of the deal, Palmer, controlling shareholder of the agency – which also has offices in Victoria, Edmonton, Calgary, Regina and Winnipeg – has finally responded to the frequently asked question: When will Palmer Jarvis open an office in Canada’s most important marketing centre?

But if the proposed merger answers that question, it also responds to another pressing issue faced by all of Canada’s independent agencies: How do independent shops meet clients’ changing needs as the marketing function becomes more international in nature?

According to industry veterans, the options are many. They range, at one end, from launching start-up offices abroad to meet the demands of specific clients, to, at the other, selling equity to an international agency network.

In between, choices include the establishment of ad-hoc relationships with agencies in other markets or the joining of a formal international alliance of independent shops.

For Palmer, who has had plenty of time to consider this question during the 27 years since he co-founded Palmer Jarvis, the answer, ultimately, was to link up with an international network.

‘My goal,’ Palmer says, ‘is to become among the best creative agencies in the world and also the largest agency in Canada.’

In today’s marketplace, an agency would not be able to achieve those goals if it didn’t have ‘the very best access to information and resources,’ he argues, adding, ‘either you’re a world player or you’re no player.’

Palmer has instantly attained that access by merging his agency with DDB Canada, whose parent company DDB Needham Worldwide of New York has 86 offices around the world. Behind ddb’s network lies the vast Omnicom empire with its 22,700 employees and 1996 revenues of $2.64 million.

But it remains to be seen how Palmer will use the resources that become available and whether he can transfer the creative culture and growth from his Vancouver office to ddb in Toronto.

Under the terms of the agreement, Norm Rigg will remain chairman and chief executive officer of DDB Group Canada, which comprises DDB Canada, Anderson Advertising and public relations firm Heather Reid & Associates.

Palmer, as president and chief executive officer of the newly minted Palmer Jarvis DDB, will report to Rigg.

Steve Thursby, current president and creative director of DDB Canada, will become creative director of the Toronto office.

No significant staff position changes are expected in the agency’s Vancouver office. Chris Staples remains creative director, responsible for the day-to-day running of the creative department, while Ron Woodall retains his title of executive vice-president and creative director.

Woodall’s role is that of ‘a kind of creative coach and a resource’ for all of Palmer Jarvis’ creative departments, explains Palmer, adding Woodall will now play the same role for the Toronto office.

The deal also calls for the creation of a new 100% Canadian-owned agency that will primarily focus on winning and running government accounts. It will go by the name Palmer Jarvis.

Palmer Jarvis DDB will have more than 400 employees and billings of over $200 million, making it one of the five biggest agencies in the country. About $170 million of its billings will come from Palmer Jarvis, whose account roster includes McDonald’s Restaurants of Canada, Greyhound Canada, Save-On-Foods and Mohawk Oil.

ddb counts Clorox, Digital Equipment of Canada, Heinz and Lever Pond’s among its clients.

The financial terms of the purchase agreement have not been disclosed, except that it will occur through a share swap between Palmer Jarvis and Omnicom.

As for how other agency heads view the news, everyone Strategy spoke with felt Palmer picked a good time to sell, given the high profile his agency currently enjoys, but they had mixed reactions to his reason for selling.

Jack Bensimon, president of Bensimon Byrne DMB&B of Toronto, says he fully agrees with Palmer’s reasoning that Canadian agencies need access to international resources and the best way to do that is to become part of an international agency network.

‘It’s just the nature of the world these days with international clients,’ says Bensimon. ‘Most will only work with international networks.’

In May, 1997, Bensimon and partner Peter Byrne sold Bensimon Byrne, their three-year-old independent agency, to dmb&b.

The account rosters of independent agencies are made up primarily of Canadian clients, Byrne points out. ‘That’s fine as long as those clients remain Canadian, but more and more they’re being bought up by international organizations, so as time goes on there’s going to be fewer Canadian clients to win business from.’

John Hayter, controlling shareholder and president and ceo of independently owned Vickers & Benson, disagrees.

He says the foreign-market information clients need can be acquired readily through a mixture of arrangements that falls well short of selling out to a multinational agency.

For example, he says, to service Tourism Canada in Asia and Latin America, Vickers & Benson works with independent agencies in those markets. And to help Bank of Montreal build its Harris Bank division in the u.s., it has just set up an office in Chicago. The office, headed by President Bill Flynn, is expected to employ 15 people by Feb. 1 and include a creative department, says Hayter.

‘We’re going global strategically and opportunistically, in our own way,’ he says.

Ian Saville, executive vice-president and general manager of Cossette Communication-Marketing in Toronto, is another dissenter.

Saville points to Cossette’s recent win of Coca-Cola Classic brand as proof that multinational clients will still work with independent agencies – provided the independents can serve their needs.

‘At the end of the day, it’s what you have in your house that counts,’ he says.