Grey Group is the smallest of the "Big Four" advertising networks within WPP, but has enjoyed several years of strong performance since 2010. Its reputation for careful account management has earned the loyalty of several long-standing advertisers, not least Procter & Gamble and GlaxoSmithKline, both clients for the past 60 years, and Canon for almost 40. Despite the strength of such client relationships, Grey was traditionally better known for careful and methodical account management than for outstanding creativity. However, the agency has taken giant steps since the mid-2000s to improve the overall quality of its output, with its New York and London offices leading that charge. That has led to a string of significant account gains. Prior to its acquisition by WPP, the group had long been the subject of merger speculation. Although a small number of shares were traded publicly, Grey was to all intents and purposes a private company, controlled by patriarch Ed Meyer. Those years of speculation finally came to an end in 2004 when it was revealed that Meyer was prepared to consider a sale. The deal with WPP finally completed in March 2005.
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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. See also our pages for:
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Adbrands Weekly Update 3rd Aug 2017: Grey celebrated its centenary this week, and marked the occasion with the promotion of current president Michael Houston to global CEO. Jim Heekin - CEO since 2005, and chairman-CEO since 2007 - will remain executive chairman of the network. He is 66 this year, so close to retirement by normal standards. However, ad executives tend to keep going till they drop, especially at Grey. Heekin's predecessor Ed Meyer was CEO for 30 years until he sold the business to WPP at the age of 80. Heekin's boss, WPP's Sir Martin Sorrell, is 72 and still going strong.
Adbrands Weekly Update 4th May 2017: Grey New York chief creative officer Andreas Dahlqvist has resigned to return home to Sweden where he will become CCO for a newly created DDB Nord entity, uniting DDB's Scandinavian operations across Sweden, Norway, Denmark and Finland. Dahlqvist joined Grey in 2014 after three years at McCann's Commonwealth agency overseeing Chevrolet. Stepping into his shoes will be John Patroulis, currently creative chairman at BBH NY. Patroulis will take charge at New York, but also assumes the role of global chief creative officer, a role that has been vacant since the departure of Tor Myrhen in 2015. Grey is also losing group creative director Joao Coutinho, named as North America executive creative director for Y&R, reporting to CCO Leslie Sims.
Adbrands Weekly Update 23rd Feb 2017: Following news that Droga5 had been appointed as the new creative agency for cosmetics brand Covergirl, Grey disclosed that it had resigned its role on all the former P&G brands now owned by Coty a few days earlier. In addition to Covergirl, Grey had handled Clairol, Wella and Hugo Boss fragrances. Grey's statement cited financial differences as the reason for its resignation. Coty is known to be a tough bargainer on terms. In its 2015 global media review (subsequently won by Zenith) it specified 150-day payment terms as a condition of contract. Incumbent agency OMD had declined the opportunity to repitch for the business on that basis.
Adbrands Weekly Update 9th February 2017: Grey CEO Jim Heekin, in a memo to staff obtained by Adweek, revealed that Grey will be the lead advertising agency within WPP's new Team WBA vertical agency for Walgreens Boots Alliance, working with Mediacom (for media), Burson-Marsteller (for PR) and Townhouse (for production). WPP had not previously disclosed which agencies would be contributing to Team WBA.
Adbrands Weekly Update 22nd Dec 2016: Grey named Debby Reiner as CEO of its cornerstone New York office, taking over from Michael Houston, now global president. Reiner previously led Grey's global P&G business.
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Free to all users | see full profile for current activities: The Grey advertising business was originally founded in August 1917 by 18 year-old college graduate Larry Valenstein. During his vacations, Valenstein had worked as an errand boy for a small-time advertising agency, and now felt like trying his hand at the business himself. Funded by a $100 loan from his mother, he rented a tiny office at 309 Fifth Avenue in New York. Stuck for a name, he named the company after the colour of the walls in the office - he thought his own name too hard to pronounce and remember - and began touting his services to the shops and suppliers in the neighbourhood as Grey Art Studios.
Initially, Grey specialised in the production of a twice-yearly direct mail brochure containing ads sold to local businesses, mostly in the garment trade. Gradually he began to expand the business, moving to new offices on East 29th Street in around 1921, and taking on two staff: an art director and an office boy. Ironically it was the latter, 17 year-old Arthur Fatt, who was to make the most significant contribution to the company. Fatt quickly began suggesting ideas to his boss. In particular, he proposed increasing the frequency of the mailer and turning it into a slick magazine under a new name, Furs & Fashions. The content was expanded to offer a merchandising guide to local department stores. This proved extremely successful, and Fatt was quickly promoted to head salesman. The company name was altered to Grey Advertising in 1925, and a year later it booked its first national advertisement for an existing client, Mendoza Beaver Furs, in the August 1926 issue of Ladies Home Journal. Mendoza soon gave Valenstein a new lesson in business – the ad was never paid for.
The company developed steadily through the 1930s, picking up other garment trade and retail clients including Van Heusen and Dan River. Valenstein promoted office boy Arthur Fatt to full partner in the 1930s, and the two men oversaw the running of the company for the next 40 years. Billings topped $28m by the 1950s, but despite attracting its first packaged goods client, Mennen, in the mid-1940s, Grey was still largely regarded as a soft goods specialist with a particular niche in the retail trade. One major factor was that Grey was one of comparatively few advertising agencies owned and run by Jews at a time when, even in New York, the mainstream business world was still largely gentile. (Gradually, however, those old prejudices began to change after World War II and other supposedly "Jewish" agencies began to spring up in the 1950s. In fact, one of these was to establish itself as arguably the most influential advertising agency of the decade, Doyle Dane Bernbach, founded by former Grey employee Bill Bernbach.)
In the early 1950s Valenstein and Fatt appointed former newspaper salesman Herbert Strauss as general manager, with a brief to move the agency into the packaged goods sector. His first success was to capture the business of the Block Drug Company in 1955. A year later he was able to pull in Grey's first piece of Procter & Gamble business, for Lilt home permanents. More importantly he recruited a team of eager young turks from another P&G agency, The Biow Company, after its founder retired. (In 1953, Biow testified that he had paid a California lobbyist $90,000 to help him win the Schenley account. In just three years, Biow’s billings dropped by 50%). Among these recruits was young account manager Ed Meyer, who led the P&G account. Meyer had impressed the detergent giant by suggesting it retarget its struggling Ivory Flakes soap brand for baby clothes and diapers. The refocus was a big success, and P&G began feeding Grey ever larger pieces of business. Another coup for the agency was to build Kool-Aid from a minor powdered drink into America's #3 soft drink by the 1970s.
In the meantime, Grey also set about building a network. The first office outside the US was established in Canada in 1959. This was followed by London in 1962, followed by Grey Daiko in Japan the following year, a joint venture with local agency Daiko Advertising. As such, Grey was one of the first US agencies to make inroads in Japan, even before it had established a national presence within its home market. In the US, an office was opened in Los Angeles in the mid-1950s, followed by San Francisco and Detroit in 1966, a year after the company went public. A Chicago office was established in 1970 as a result of the acquisition of local agency North Advertising. That same year, Ed Meyer became CEO of Grey Advertising, acquiring a controlling stake in the business. Larry Valenstein left the firm the same year and died in 1982; Fatt left in 1976, and passed away in 1999. Meyer controlled the development of the company almost single-handedly for the next 35 years.
Over that period, Grey continued to evolve and expand its offering. It launched below-the-line division Grey Direct in 1979, followed by PR arm GCI four years later. In 1986, the group acquired Gross Townsend Frank Hoffman healthcare agency, which became the core of Grey Healthcare. Acquisitions in 1999 included Innovative Customer Solutions, a healthcare contract sales and consulting organization, which joined the Grey Healthcare Group; and a clutch of US PR agencies including Boxenbaum Grates, Kamer-Singer, and Dragonette, all of which joined the GCI Group. In early 2002 the group snapped up Atlanta-based US integrated agency 360, a partner on the BellSouth account.
Yet in all other respects, the generally conservative group took almost no part in the rush to consolidate that characterized the industry from the mid-1980s onwards. The group's financial performance dipped dramatically in 2001 as a result of a reduction in client spending as well as write-offs of several internet investments, but improved the following year as the agency won a strong portfolio of new business. In 2002 the group was reluctantly involved in an embarrassing lawsuit when it transpired that a supplier, New York print services company Color Wheel, had bribed Grey employees to win contracts and potentially defraud both Grey and several clients.
In June 2004, with the group showing clear signs of emerging from the advertising recession, news broke that Ed Meyer, still chairman & CEO, but by now aged in his 70s, was considering a sale of the business. Industry commentators initially considered Publicis to be the most likely buyer as a result of a personal friendship between Meyer and Publicis boss Maurice Levy, as well as the fact that the two groups shared a major client in Procter & Gamble. Ironically, the shared P&G account proved to be more of an obstacle than an asset to such a deal. Changing years of habit, P&G was said to have voiced concerns about pooling all its brands within a single marketing organisation.
This apparently left the way open for WPP, despite the British group's association with P&G's traditional rival, Unilever. Later Havas confirmed that it too had entered a bid, despite opposition from several of its own shareholders. Buyout firm Hellman & Friedman, previously a backer to both Y&R and Digitas, was also reported to have submitted an offer. However WPP was named as the winning bidder for Grey in September 2004. By the time the deal completed in March 2005, the WPP offer was worth around $1.7bn in cash and WPP shares. As Grey's largest shareholder, Ed Meyer received $473m in cash, shares and bonuses. Ed Meyer finally retired as chairman & CEO of Grey Global Group on January 1st 2007, just days short of his 80th birthday. Jim Heekin, who had been CEO of the Grey Worldwide network since August 2005, became group chairman & CEO.
For 2003, its last full year as an independent company, Grey Group reported revenues up 9% at $1.3bn, and said business continued to be difficult in Europe, and especially in Scandinavia. However the tough trading environment in North America appeared to have improved. That region accounted for almost 45% of revenues. This was only slightly ahead of the contribution from the EMEA region, although the latter was affected by very poor performance in Scandinavia, where the group reported substantial operating losses. Asia and Latin America between them contribute almost 11% of revenues. After a $24.4m loss in 2001, net income was back in the black in 2002, but jumped almost 60% in 2003 to $29.1m. The group's last reported accounts were for the first half of 2004, in which revenues rose more than 14% to $708m, and net income jumped by three-quarters to $17m. Procter & Gamble is by far the group's biggest client, accounting for 10.6% of revenues, or around $14m, in 2003. No other client contributed more than 5%. No audited financials are available for Grey since it became a WPP subsidiary. See full profile for current activities
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