French conglomerate buys Vickers & Benson

After 76 years of independence, Vickers & Benson has hitched its wagon to a multinational....

After 76 years of independence, Vickers & Benson has hitched its wagon to a multinational.

On Sept. 14, Vickers & Benson Companies chairman and CEO John Hayter announced that he had sold his Toronto-based agency to French conglomerate Havas Advertising. The sale price was not disclosed.

Havas, which owns the Euro RSCG group of agencies, is currently in the process of establishing a second global network called Campus, of which V&B will be part. Campus will be led by Boston-based Arnold Communications, which Havas moved to acquire earlier in September.

‘This is a very big day for our company…a new chapter in our history,’ Hayter told the news conference at which the deal was announced.

Some might say the end of an era.

Vickers & Benson, whose clients include McDonald’s Restaurants of Canada, Bank of Montreal and the Canadian Tourism Commission, has long professed pride in its strong Canadian roots, and is widely known for its ties to the federal Liberal party. Over the past several years, however, the agency has seen its profile and creative reputation decline sharply.

While V&B has been the subject of takeover rumours in the past, the agency always maintained publicly that it had no intention of selling out to a multinational. Indeed, when Vancouver-based Palmer Jarvis joined Omnicom in 1997, Hayter was quoted in Strategy as saying that there’s no need for Canadian shops to give up their independence in order to survive.

The ongoing evolution of the advertising business, however, made it necessary to rethink that position.

‘Our industry has changed more in the last five years than it has in the previous 50,’ Hayter says. ‘Consolidation, mergers and IPOs are the course of the day, and it doesn’t take very long to wake up and find that you’re soon going to be at a competitive disadvantage. There’s no glory in overseeing the slow demise of Vickers & Benson … Not under my watch was I going to see it slowly fade away.’

Selling to a multinational wasn’t the only option V&B considered, he adds; the agency also contemplated an IPO or a merger, but ruled out both possibilities.

The acquisition covers all of V&B’s operating divisions – among them Vickers & Benson Advertising, Vickers & Benson Direct + Interactive, media buying operation MaxxMedia and public relations agency Warwick & Associates – as well as the Chicago office that the agency opened in 1998. The deal isn’t expected to bring any change for them.

Hayter says he’s confident that the sale will secure Vickers & Benson’s future, and that the agency will prove a good fit with its new owner. (He and the other V&B partners, executive vice-president and COO Jim Satterthwaite and executive vice-president, chairman of creative services, Terry Bell, will be staying on in their current positions; all have signed three-year renewable contracts.)

Claude Lessard, president and CEO of Montreal-based Cossette Communication-Marketing, Canada’s largest independent agency, says the deal appears to be a sensible one that will leave Vickers & Benson ‘with a lot of liberty in terms of how they run their business.’

In order to grow and thrive, Lessard says, a Canadian agency either needs the size and clout to go public (as Cossette did in May 1999), or it must sell out to a multinational. And V&B, which has 225 employees and approximately $31 million in billings, simply ‘wasn’t big enough to go public.’

This deal may not be the last that the Campus network signs in Canada. Hayter says the organization is looking to grow, and may shop for other Canadian agencies. While no formal acquisition strategy is in place, Campus will be checking out the Vancouver market, as well as Quebec and Eastern Canada.

The addition of Arnold and V&B will put Campus in 18th place on the list of the world’s largest agency networks, with 1,800 employees and nearly $2 billion in billings. Arnold chairman and CEO Ed Eskandarian will be responsible for guiding the organization.

Direct and interactive marketing are key areas in which Campus intends to grow its business through acquisition. ‘We’re finding more and more clients want a total, integrated marketing communications program,’ Eskandarian says.