Society’s fascination with the advertising and public relations industry is far-reaching and well documented.
Bob Vornbrook, left, and Donna Gordy, are both executive VPs of client services, and Brian Sullivan is principal of Sullivan Branding, the new company formed by the merger of cs2 and Thompson & Co.
(Photo: Lance Murphey)
Television programs have long been interested in ad agencies as a setting, as evidenced by “Bewitched,” “Thirtysomething” and “Mad Men,” to name a few.
But in recent times, the phrase, “ad agency” is being used less and less, and is instead being replaced with the term, “marketing communications,” said Michael Thompson, who founded in 1977 what has come to be one of Memphis’ oldest and well-respected advertising agencies, Thompson & Co.
“There was a glamorous aura in the ’60s,” Thompson said. “Agencies almost told the client what to do and had the gumption to close the account if the client wouldn’t listen. Nowadays, the consumer is in charge. Companies spend as much time protecting their brand as they do promoting.”
So after 34 years, Thompson has decided to sell his firm to Brian Sullivan, principal of cs2 advertising. The two companies will combine to form Sullivan Branding, one of the largest full-service firms in the Mid-South.
With the announcement of the merger comes Thompson’s plan to retire. He’ll remain in an advisory capacity for three months.
“I’m 62. I don’t want to wait until I’m 65 or 67 to retire,” Thompson said. “I’m ready to move onto the next phase of my life. The first 15 years was pushing a rock uphill. I’ve worked hard for years.”
Thompson’s plans for the future include completing “David: The Illustrated Novel, Volume 2” for release in 2012, and go on a book signing tour. Then a 10-day trip to Israel with Independent Presbyterian Church, followed by a three-week Harley Davidson ride out west with his brother.
The plan for Thompson and his life-long friend and business partner, Bob Vornbrock, was for Thompson’s son, Michael Thompson Jr., to take over the company. But after heading the BottleRocket ¦Sponsorship Consulting division for years – with corporate sports clients like First Tennessee and Cellular South Inc. – Michael Thompson Jr. left to take an offer at Ole Miss in August 2010.
But as it turns out, selling Thompson & Co. outside of the family was the best business decision, Thompson Sr. said.
“It actually is better to sell than to pass onto family members,” he said. “It’s too tough to make any money in this business. You’ve got to be lean and mean, tough with expenses, you can’t roll over clients because they all want more for less now these days.”
Due to the duplication of duties, three Thompson employees will not be hired at Sullivan Branding. But it’s not the consolidation of overhead that is the catalyst of this merger, said Russ Williams, CEO of archer>malmo, a firm that exists today because of strategic acquisitions.
“There are modest scale economies in the business, but I think these kinds of things are more driven by complementary lines of business, talent and management strengths,” Williams said. “In reality, if you look at the size of firms today, both locally and nationally, the average size of firms in our business has gone down. When I first got in this business about 10 years ago in Memphis, there were probably 10 firms with 35 or more people. And today, there’s probably four.”
To Thompson, the advertising and public relations industry has been a natural but unfortunate progression. It started in the late ’60s with advertisers taking over the role of consumer research, he said.
“Used to be, consumer insight research was the domain of agencies,” Thompson said. “Advertisers look to their agencies for these insights, which were incorporated into campaigns and presented to clients as, ‘Here’s what and how your consumer thinks, and this campaign will tap into that and create more sales.’ But then, advertisers began hiring qualitative research people in-house, and agencies lost their first seat at the advertisers’ C-level meetings.”
For Vornbrock, whose new title will become executive vice president of client services at Sullivan Branding, the job duties at an ad agency are the same – to come up with strategy and help clients have successful marketing and PR programs.
What has changed, however, is the immediacy at which advertising professionals are asked to complete those jobs.
“Unfortunately, with the speed that the expectation of how quickly we need to deliver things these days, the computers have sped up, but our human minds have not,” Vornbrock said. “Because the speed of everything is compressed, the time schedules; we’re asked to do things now in a week that was very commonplace a number of years ago to do in a month or six weeks. It’s just a change that coincides with change in the rest of our world. It mirrors society.”
Companies coming together in a strategic sense can make a lot of sense in the current financial environment, Vornbrock said, because it broadens the base and strengthens the core of both companies.
But he doesn’t see mergers of this magnitude becoming a trend going forward, at least not in the local market. What he does see is the emergence of specialty firms – small, two- to five-person operations that focus on one particular strategy.
Doug carpenter & associates LLC is one of those boutique firms. Doug Carpenter, former principal with cs2 advertising who has since left to start his own firm, said mergers or acquisitions are born out of the desire to increase financial performance.
“When companies want to grow they must analyze the value of organic growth against the cost of acquisition,” Carpenter said. “So in that sense, I would expect that acquisitions will continue to be a growth option for some Memphis firms.”
A variety of factors, both on a local and national level, have led to the diminishment of relevancy for ad agencies over the years, Thompson said. Clients can now ask about an agency’s financials to determine its return on investment, which is nearly impossible to calculate.
“Although we call it a profession, clients call it a well-trained service,” Thompson said.
And that’s an area he knows quite well. Thompson once calculated the turnover rate at his firm over five years – 20 percent.
“For so many years, we were the training ground,” he said, adding that he at one time was Sullivan’s boss for a three-year span. “Employees would spend maybe a year, year and a half, two years, leave and go somewhere else. And that’s OK. That’s life.”
There are so many former employees of the firm that an actual Thompson & Co. alumni group meets about once a quarter around town. The next one is Monday, Sept. 26, at Café Ole. And you better believe Thompson will be in attendance.
“Ill have my Harley,” he said, “so I’m going over there.”