It is little wonder that the US agency Fallon McElligott is looking at overseas expansion – what with US billings of $500m (312m), a 33 per cent year on year increase in gross income to $48m (30m), and an account list that includes BMW, Nikon, United Airlines and Miller Brewing
Yet its decision to consider London as its first port of call (MW April 24) – it is, after all, one of the most overcrowded markets in the world – is surprising. The London office will presumably act as a co-ordinating centre for any pan-European work. Further international expansion is certainly on the cards.
The agency, launched in Minneapolis in the early Eighties, is hunting for creatives, planning and client directors working in existing London agencies to create a “joint venture”. Chairman Pat Fallon says it is not planning to take over another agency but that may be the only way to make an instant impact on the market.
Fallon’s motives are confusing to observers of the London advertising scene. Unlike other US agencies which have opened European offices, including Doner, and Wieden & Kennedy, Fallon McElligott claims it is not under pressure from any of its US clients to take their business across the Atlantic.
Doner set up in London in 1987 after winning international BP oil business but did not expand until 1995. Wieden & Kennedy opened an office in Amsterdam to operate its pan-European Nike business. It is also considering opening a London office.
Fallon McElligott’s expansion may more closely resemble Chiat Day’s, which set up its London office in 1989 with no clients but soon won some high profile accounts such as Midland Bank. Fallon McElligott’s ex-creative chief Tom McElligott in fact helped to set up the Chiat Day office in London.
Andy Law, a founding director of Chiat Day, now St Luke’s, in London, says: “In many respects, it has chosen a good time to come. London advertising has lacked a new launch this year, and the ground is clear. At Chiat Day, we only had the US reel, but this didn’t matter as long as we talked logically about it to clients.”
Pat Fallon says the reason for choosing London is that the city has “great talent and great people and lots of good agencies”. So many good agencies, in fact, it is surprising Fallon believes there is room for one more.
“Our brand can be exported and with the right partners we can work out smart client partnerships. We have done an analysis and think we have a chance of being a successful agency if we come in with a respectful attitude,” says Fallon.
He claims that none of his clients are “holding a gun” to his head and insisting on international expansion. Only after partners have been found and the London agency set up, will Fallon tell his clients that they’ll have the opportunity to use the agency for advertising in the UK and Europe.
These clients include Coca-Cola, for whom Fallon McElligott handles the Diet Sprite and Fresca brands, BMW, Miller Brewing, United Airlines, Black & Decker, Timex, Jim Beam Brands and Lee Jeans. Despite its formidable reputation, Fallon will be hard-pressed to prise the likes of BMW from WCRS, Lee Jeans from Grey, Miller from Rainey Kelly Campbell Roalfe and the non-US part of United Airlines from Young & Rubicam. (?)
Fallon talks of his agency’s strong creative credentials. But are they really so strong that they can take on the London agencies, which have built an almost unrivalled international reputation for their work? Some observers refuse to believe that the agency doesn’t have a client lined up looking for entry into Europe or the UK.
Don Riesett, president of Doner International and the man who set up Doner in London, says: “Coming to London is not a whim: there must be something in the pipeline.”
According to Fallon the only thing in the pipeline is the transfer of the agency’s brand values to the UK. “Creativity is our leading edge, we are best known for it, but we are also strong strategically. We have an integrated strategy, and we have acquired a design firm called Joe Duffy.” This integrated approach, including design and direct marketing, would also be offered by the London office, he says.
This contrasts with Doner, which built its business in the UK gradually, on the back of BP, until it took over GGK in October 1995. It retained new business director Andrew Hawkins and creative director Paul Cardwell with the renamed Doner Cardwell Hawkins.
Fallon says the relationship between its Minneapolis and its New York offices could be a blueprint for the London venture. Fallon McElligott went into partnership with Andrew Berlin, formerly a creative partner at the Goodby Silverstein agency, creating Fallon McElligott Berlin in New York.
This offshoot has built an astounding $100m (62.5m) worth of billings since it set up two years ago, and some important wins have come from existing Fallon McElligott clients. It won BMW motorcycles and an extra slice of Coca-Cola work. However, chairman Andrew Berlin claims the connection only helped his agency on to pitch lists, and most of the new business, such as the Bankers Trust and The Washington Post, have been won through competitive pitches.
One observer says the New York operation had more chance of success than a similar venture in London, as there was a gap in the market for a creative agency. The Fallon McElligott name was well-known in New York – it is the 46th-largest agency in the US according to Advertising Age figures – whereas it is virtually unknown in the UK.
With some estimates of the over-supply of advertising agencies in London as high as 25 per cent, Fallon must believe his agency has something very different and very strong to offer clients and future members of staff.
Chiat Day created a profitable agency, Doner has built on a client it had for eight years. Inevitably, Fallon McElligott will be seeking partners that can bring in clients. Beyond that, it will be taking a close look at its existing client list, which could make for some interesting agency reviews in the next two years.