Read this new article series on the history of advertising agencies from Marsha Appel, SVP Research Services, email@example.com. Don’t miss other Defining Moments in Agency History. Let us know what you think!
When did the “business of advertising” become the “advertising business”—subject to shareholder value, stock market fluctuations, and the pressure of quarterly earnings reports?
You might think it corresponded to the rise of the agency holding companies, but while there was a spate of agencies that went public shortly after the formation of Interpublic in the early 1960s, the first IPO actually occurred much earlier.
In 1929, Rudolph Guenther-Russell Law (later known as Albert Frank-Guenther Law, and currently incarnated as The Gate Worldwide) sold a small number of shares to the public just ten days before the stock market crash. Atoning for its mistake in timing, the agency eventually repurchased its own stock.
It took another 33 years before other U.S. agencies dared to venture into public ownership, beginning with Papert, Koenig, Lois in 1962 (it went out of business in 1981, presumably for reasons unrelated to going public). The offering price was $6, about 25 times the earnings per share. Next was an agency that’s still around, FCB, which took the plunge in 1963 with 500,000 shares priced at $15.50. DDB joined them in 1964 at $27/share.
These baby steps were followed by Grant Advertising (now defunct) and Grey Advertising in 1965, Ogilvy & Mather in 1966, and the late lamented Wells, Rich Greene in 1968. Then, in June 1969, J. Walter Thompson, which was the biggest agency in the world at the time, raised more than $30 million with its IPO.
Some smaller agencies jumped on the bandwagon as well, including Doremus, which was founded in 1903, and is still alive and kicking under its original name, although it is no longer independent. All told, there were 15 publicly owned agencies by 1970. Incidentally, Interpublic was a comparative latecomer when it went public in 1971.
And not surprisingly, then, as now, the discussion about going public centered around balancing clients’ and shareholders’ interests.