NW Ayer & Partners (US)

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Already a shadow of its former self, advertising agency NW Ayer & Partners finally faded away in Spring 2002, merged into Kaplan Thaler Group. Until that point Ayer was America's oldest agency, and it was at one time the world's biggest advertising company. But the business had been under intense pressure since the mid-1980s, suffering a seemingly endless series of client losses and management upheavals. Two of the agency's last remaining major accounts defected in 1999 and 2000, when Procter & Gamble and General Motors both moved their business elsewhere.

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NW Ayer had a long and venerable history. It is generally considered to have been America's first advertising agency, formed in Philadelphia in 1869 by a 21 year-old whizzkid named Francis Wayland Ayer, who had spent the previous few years selling ad space on behalf of religious magazines and farming journals, which were at the time the only periodicals prepared to accept "paid solicitations" from manufacturers. Wayland Ayer thought no one would take him seriously because of his age, so he named his company NW Ayer & Son after his father. Until that point, most periodicals and their representatives effectively charged advertisers whatever they thought they could get away with for ad space. However, in 1875 Ayer effectively introduced the first rate card, publishing the prices to be charged for space in client publications, and charging the publisher a flat commission on those rates as his own fee. This truly revolutionized the infant industry, and he even bought space for himself to promote the virtues of the advertising process. "Keeping Everlastingly At It Brings Success," he exhorted to potential clients.

The agency prospered, inspiring numerous competitors, notably J Walter Thompson and, later, Lord & Thomas. Ayer opened offices in several major US cities, and took on salesmen whose sole job was to search out new business. He also hired dedicated full-time copywriters and graphic artists. As a result, by 1900, NW Ayer & Son was without question the largest advertising agency in the United States. The company created what was probably one of the first national ad campaigns, and certainly the biggest, for Uneeda Biscuits, a new cracker from the National Biscuit Company (later Nabisco). It was the first $1m account. Ayer also won business from several of the country's most important early advertisers, including the The American Telephone & Telegraph Company (AT&T) and HJ Heinz. In 1928, Ayer won the account for Ford's Model-A car, and at Henry Ford's urging began to establish an international network to handle the account. Offices were opened in London, Montreal, Sao Paulo and Buenos Aires.

During the early years of the 20th century, the agency was a training ground for several future giants of the industry, not least Raymond Rubicam and John Orr Young who worked there until setting up their own agency in 1923. Ayer was responsible for several of the century's most iconic campaigns including "When it rains it pours" for Morton Salt (from 1912), "The instrument of the immortals" for Steinway (written by Rubicam in 1919), "I'd walk a mile for a Camel" for Camel cigarettes (1921), "A diamond is forever" for DeBeers (1948), "Reach out and touch someone" for AT&T (1979) and "Be all that you can be" for the US Army (from 1981). Yet there were also some significant problems, common to many agencies of course, but a sign of what was to come in the 1980s and 1990s.

After World War II, Ayer was slow to adapt to the rapid changes taking place in the industry, especially the new breed of creative-led advertising boutiques which sprang up during the late 1950s. Still headquartered in Philadelphia, quickly becoming a backwater compared to New York, Ayer gradually developed a reputation for being staid and old-fashioned. According to a later NY Times profile, the popular conception of Ayer was that it was run by "the scions of well-heeled WASPs. When paychecks were handed out, legend has it, they were simply dumped in desk drawers and forgotten". And while other agencies were opening international offices, Ayer set about closing its own. This dyed-in-the-wool approach eventually led to a near-disastrous series of account losses in the mid-1960s, starting with Hills Brothers coffee, then United Airlines, and peaking in 1966 with the defection of the agency's long-held Plymouth automobile account (to Ray Rubicam at Y&R ironically). Worth $30m in billings, Plymouth was at the time the biggest account loss in not just Ayer's but the industry's history. Even its flagship AT&T account, which it had held since 1908, came under threat. Those reverses cut the agency's billings in half and led to the closure of several offices.

Ayer gradually returned to form in the second half of the 1960s under new CEO Neal O'Connor. He eventually moved Ayer HQ out of Philadelphia and into the industry heartland of New York, and also led a gradual move back into Europe, forming a series of joint ventures with local partners. Billings doubled, and between 1976 and 1986, under O'Connor's successor Louis Hagopian, quadrupled. No longer regarded as a spent force, Ayer was now seen as "the quiet waking giant". In the UK, the company established a joint venture with British agency Charles Barker in 1975 to create Ayer Barker, which was to become the training ground for many of Britain's most influential ad executives. There were similar deals during the 1970s and 1980s with agencies in France, Germany and Spain. By the mid-1980s, Ayer had stakes in more than 70 agencies worldwide including TAPSA Ayer in Spain and Wilkens Ayer in Germany. In 1987, the company acquired New York agency Cunningham & Walsh, which held the advertising business for several of Procter & Gamble's food brands.

But this burst of activity would turn out to be the agency's swansong. The 1980s also saw the beginning of NW Ayer's slow and seemingly inexorable downward slide. This began with a financial scandal involving the prestigious US Army account. Ayer had held the account since 1967, and scored a big success in the early 1980s with the "Be All You Can Be" campaign. At around the same time, the Army changed its marketing payment structure from a commission system to time-based billing. In 1984, after analyzing Ayer's timesheets, the Army's auditors claimed the agency was overcharging. A year later, an Ayer executive working on the account was found to have been taking kickbacks from suppliers. The $80m account - representing around 12% of Ayer's billings - was put into review and was won by Y&R. Ayer firmly denied the over-charging claim but eventually settled with their former client for $750,000.

Ayer shrugged off the loss by picking up a mammoth piece of business from Burger King, in what was at the time the largest account win in advertising history, worth around $150m. But the business stretched the agency to its limits. Burger King was having problems of its own, not only dealing with franchisees under fire from rival McDonalds, but coping with in-fighting within its own management team. Finally in 1989, Ayer was dismissed from the account. Shortly afterwards, another major client, Continental Airlines, also pulled its account. The same story was repeated time and again over the following years. Whenever Ayer won an important new client, it didn't seem able to hang on to it for long enough, while its reserve of long-standing core clients also gradually drifted away over the years.

An attempt to merge with Hal Riney & Partners failed at the negotiating table and in 1993, the company was acquired by Adcom, an investment group controlled by British adman Richard Humphreys and Korean media magnate WY Choi. They appointed a new CEO, Steve Dworin (previously Donny Deutsch's partner at Deutsch Inc), to resuscitate the dwindling business. However, despite a couple of minor account wins, the plan soured after Dworin, Humphreys and Choi all fell out with one another. Dworin left after little more than a year as CEO; Humphreys soon afterwards. At around the same time Ayer sold its stake in its European network, Wilkens, back to the individual agencies. (They in turn sold on the shares to fast-expanding German agency Springer & Jacoby, which eventually sold them to FCB in 1997).

After a series of further account losses, the ailing Ayer was rescued in 1996 by MacManus, the newly created parent of what was then DMB&B. This brought temporary security to the agency, but also led to the loss of the AT&T account after 88 years as a result of client conflicts. (DMB&B handled rival SBC, the company which, ironically, later bought the ailing telecoms giant and adopted its name). To cut costs further Ayer sold its media services division, The Media Edge, to Young & Rubicam, and transferred interactive business Blue Marble to DMB&B. A welcome piece of good news came with the recapture of the Continental Airlines account. However the process of consolidation among major advertisers caused more pain in 1999, when Procter & Gamble shifted $100m of business out of Ayer and into sister network D'Arcy. The following year, Ayer lost its slice of the General Motors corporate account, which it had held since 1972.

Eventually the agency fell victim to the spring cleaning which followed the purchase of MacManus by Leo Burnett, and then of both by Publicis. In April 2002, it was announced that the agency would be merged into another MacManus purchase, Kaplan Thaler. In fact, the merger was effectively a reverse takeover, with the smaller agency moving into Ayer's New York HQ and putting its own name above the door.

Last full revision 3rd October 2017

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