TBWA ADVERTISING, INC. History

Address:

TBWA House
292 Madison Avenue
New York, New York, 10017
U.S.A.

Telephone: (212) 725-1150
Fax: (212) 213-2869

Private Company
Incorporated: 1970
Employees: 1,000
Sales: $1 billion

Company History:

TBWA is an independent, privately-owned advertising agency with offices in 16 cities around the world. The company was started in Europe and made a mark in the United States by promoting European products, such as Absolut vodka and Evian water. With a reputation for creativity and emphasis on international scope, TBWA is poised for a greater role in the global advertising market.

TBWA was founded in 1970 by four men who had all worked as European executives with advertising giant Young & Rubicam, Inc. William G. Tragos, a St. Louis-born American of Greek descent who spoke five languages and was known for his strong, blustering personal style, had been Young & Rubicam's general manager in the Paris office. He was joined by Claude Bonnange, a Frenchman who specialized in marketing research; Uli Wiesendanger, a Swiss citizen who headed up the creative end of the business; and Italian Paolo Ajroldi, who was put in charge of account management in the new enterprise. The agency's name was derived from the initials of the four founders' last names. The founders hoped to tap 'the richness of different cultures, the healthy frictions and the thrust that comes from diversity,' as chairperson Tragos later stated in a company publication. 'We started out our company ... with the crazy idea that because we were from different nationalities, and because we had all worked internationally, that we would develop the first advertising agency born international,' Tragos recollected in Advertising Age. 'The idea was that this was not going to be an American advertising agency, but an agency made up of three Europeans and an American and would expand internationally.'

TBWA began that expansion after only one year, opening an office in Milan. Frankfort was next in 1972, followed by London, Madrid, Zurich, and Brussels--each added at one year intervals. TBWA proudly adopted the motto 'Built, not bought,' but the going was not always smooth in the company's pioneering years. At one point in the early 1970s, top TBWA executives were forced to take pay cuts in order to avoid laying off employees.

In 1977 Tragos left Paris and returned home to open TBWA's first U.S. office. At this time the company acquired a small New York City agency run by Richard Costello--later an equity partner in TBWA and president of domestic operations. The New York City branch of TBWA started out with $7.5 million worth of billings in the first year. The branch worked for several small accounts that would later become large money-earners, including the European bottled water company Evian and Fromageries Bel, producers of Laughing Cow cheese. 'New York is a tough market for any agency that exists somewhere else,' Tragos later told a writer for Adweek. 'We weren't particularly famous.... We got the business we could and a lot of it was small and European.'

Then TBWA picked up an unknown Swedish vodka with a small advertising budget as a client; the subsequent ad campaign put TBWA on the map. The creative process that led to TBWA's print campaign for Absolut vodka began when the agency's art director, Geoff Hayes, stepped out of the bathtub one night and sat down in front of the T.V. with a sketch pad in hand to fiddle around with ideas for the new account. Admiring the package's simple lines, he sketched a halo and angel's wings superimposed on a bottle of the liquor and labeled his rendering 'Absolut Perfection.' This led to several other visual puns based around the bottle, with two-word headlines. In 1980 Hayes' drawing, minus the wings, became the first ad in a series that would continue for more than ten years, bringing TBWA numerous awards. Absolut's U.S. sales rose from 12,000 to over 3 million cases a year, becoming the best selling imported vodka in the United States and capturing 58 percent of the market. TBWA's long-running print campaign made Absolut a pop culture icon. 'We weren't just selling another vodka. We wanted to make this a fashionable product ... like perfume,' said one TBWA executive in a 'Marketing Success Stories' profile of the campaign.

In 1981 TBWA resumed geographical expansion by opening an office in Amsterdam in 1981, and a second U.S. office in St. Louis, Missouri in 1983. Throughout the mid-1980's, TBWA grew rapidly, adding $100 million a year in billings for four years running. The bulk of this growth took place overseas while the agency's U.S. operation stayed relatively small. A significant contribution to this growth was made by TBWA's Milan office which landed SEAT, a large Spanish car manufacturer, as a client in 1985.

Dusseldorf, TBWA's twelfth branch, opened in 1986. By this time TBWA had become affiliated with seven other agencies without owning any of them. The company's worldwide billings that year totaled $453.3 million, with non-American business contributing three-quarters of the agency's profits. The agency won the Ralston Purina account in the United Kingdom and the business of the Spanish subsidiary of Henkel, a German consumer products manufacturer.

In 1987 TBWA opened a third German office--this time in Hamburg. The company also began exploring the possibility of expanding beyond Europe and North America to the Pacific Rim. The company discussed the possibility of beginning operations in Hong Kong, Japan, or Korea, with Hong Kong the most probable location. Although TBWA had collaborated with the Japanese agency K&L on campaigns for Nikon cameras in Europe, forbidding barriers to Western participation in the Japanese advertising industry made a sizable commitment to that market unlikely. Overall TBWA billings reached $545 million in 1987, and the company became the world's 21st largest advertising agency.

For 1987's holiday season, TBWA made a splash with a special Absolut ad. The company bound a microchip into the print ad placed in issues of New York magazine and The New Yorker. When readers turned to the ad, the chip played snatches of Christmas carols. At a cost of fifty cents per advertisement, the campaign cost over a $1 million for production costs alone. The Christmas jingles came in the wake of a series of successful Absolut 'city' ads, among them, 'Absolut San Francisco,' a bottle shrouded in fog; 'Absolut Manhattan,' an aerial photo of the island displaying Central Park in the shape of a bottle; 'Absolut Chicago,' featuring the letters of the label blowing off the bottle; and 'Absolut L.A.,' a picture of a pool shaped like a bottle. At the suggestion of an executive at Cartillon Importers, Ltd., the liquor's U.S. distributor, an earlier campaign had featured the work of well-known pop artists, such as Andy Warhol, Keith Haring, and Kenny Scharf, who each gave their own interpretation of the vodka's bottle. The tradition of flashy Absolut magazine ads continued in October of 1988, when TBWA created a paper-weight-like bottle of clear vinyl with plastic snowflakes filtering down inside.

Also in 1988 TBWA's U.S. office launched what would become one of the most successful television campaigns for the company. The agency signed actors Tony Randall and Jack Klugman, of 'Odd Couple' fame, to appear in ads for Anheuser-Busch's Eagle line of snacks--an account TBWA had landed in 1982. The two spokesmen recreated their situation comedy personas in spots set in a grocery store, a kitchen, and on a living room couch; Randall's fussy persona highlighted the product's status as a premium brand, while Klugman's laid-back character insisted viewers should eat the snacks all the time--in mass quantities. The ads helped Eagle brands challenge Frito-Lay for part of the snack foods business and the company's products became third in terms of market share.

In June of 1988 TBWA merged the St. Louis TBWA office with newly acquired BFV&L advertising, one of the city's top five agencies. The company hoped to become the second largest advertising agency in St. Louis, behind D'Arcy Masius Benton & Bowles, the longtime market leader.

TBWA's New York billings neared $160 million in 1988. The agency had won several new clients, including Saratoga Mineral Water, Warnaco's Hathaway shirts, a few perfume brands from Avon Products, Western Union's business communications unit, The Atlantic magazine, and People's Bank of Bridgeport, Connecticut. However, TBWA lost a major account in 1988, when Spanish auto-maker SEAT left the firm for another agency. Air Plus, a Pan-European credit card, Barilla pasta, Bull Computers, Head Skis, and other clients remained on board, many using the agency's services in multiple locations. TBWA announced plans to buy two agencies in Europe; soon thereafter, the company opened offices in Barcelona, Spain, and Padua, Italy.

In April of 1989 TBWA increased involvement in the European advertising business, becoming involved in the attempted hostile takeover of a British firm by French advertising giant, Boulet Dru DuPuy Petit Group. TBWA spent $5 million on 2.6 percent of the shares of Boase Massimi Pollitt, eventually capturing more than three percent of the company's shares. Although the British firm was finally relinquished to an agency other than TBWA, the company did not consider involvement in the deal a failure. Remarked TBWA chairperson Tragos in Adweek, 'It established us as a player. It put us in the game.'

In August of 1989 TBWA purchased Kerlick, Switzer & Johnson, another St. Louis ad agency. TBWA once again merged the new purchase into the old St. Louis office and created TBWA Kerlick & Switzer. The new entity expected annual billings of $75 million. Four months later TBWA announced yet another acquisition, as part ownership of Posey, Quest, Genova, a small advertising agency located in Greenwich, Connecticut, was procured. This move brought the firm the account for, among others, Beiersdorf's Nivea skin cream. The agency unsuccessfully moved to acquire all of Robert Jenkins Advertising in the United Kingdom, but did manage to snag other new clients through a non-binding partnership with Graf Bertel Dominique/New York, which resulted in work for the Steuben Glass company and other makers of luxury goods. In 1989, the agency's billings topped $850 million. The following year TBWA again futilely entered bidding for a British agency--this time McCaffrey & McCall, owned by Saatchi & Saatchi, the leading British firm.

In an affiliation similar to the arrangement with Graf Bertel Dominque, TBWA entered into an agreement with the giant Japanese ad agency, Hakuhodo. This non-binding alliance allowed TBWA to compete effectively in areas of the world, such as the Far East, where it was not well-known due to its relatively small size. The pairing helped the agency to win the $12 million NEC Technologies video game account and the Nissan international corporate account with billings of $15 million. In addition the two firms worked together to open a Netherlands-based agency called TBWA-NETHwork.

In April of 1990 TBWA lost an original founder as Paolo Ajroldi died unexpectedly of a heart attack at age 57. In the months following his untimely death the agency neared the top ranks of the advertising industry and was finally invited to compete for big-name accounts. Attempting to win the $50 million Continental Airlines account, chairperson Tragos informed the airline's managers that the company should stop advertising until it had its own house in order--advice the airline didn't heed, from an agency it didn't pick. TBWA also took part in reviews for Nikon, for $20 million worth of Jose Eber haircare products business, and for the Benson & Hedges account, worth $50 million in billings. Although TBWA's efforts to win these clients failed, inclusion in the process of selecting the eventual winner brought the company a higher profile.

TBWA did snare several other new accounts, however, including Air France, a new product from Philip Morris, and the $12 million Woolite brand, along with the smaller Neet brand, of the Reckitt & Colman company. Yet another symbolic stride was made when TBWA became one of five finalists to create advertising for Pegasus, a new line of cars to be manufactured by Mazda. Although the agency represented Mercedes-Benz in Britain, Mazda in Belgium, Saab in Belgium and Germany, and Nissan in Holland and Spain, enrollment in the ranks of advertising agencies with national U.S. automotive accounts was a prize that TBWA badly wanted.

TBWA's desire to create advertising for a high-profile U.S. car company stemmed from the perception that TBWA's reputation lagged behind its abilities. Despite the company's steady growth, resulting in a tripling of business in a five-year period, and the flamboyant personality of chairperson Tragos, TBWA's profile on Madison Avenue remained relatively blurred. In some eyes the fame TBWA had gained through the Absolut campaign overshadowed the work accomplished for other clients. Outsiders saw the company as an agency specializing in magazine ads; many felt the Absolut achievement was a one-hit phenomenon. In addition, the agency's fame in the United States was limited by the narrow geographical scope of other campaigns. Both the Chock Full o' Nuts coffee brand work and the innovative ads for Southern New England Telephone, for instance, were seen only in the Northeast. Although TBWA worked with developing brands, some of which received national exposure, such as Evian--which had gone from annual sales of 5,000 to 150 million bottles in ten years--and Laughing Cow, overall, TBWA was still struggling to come into its own. Those efforts gained a bit of recognition when Adweek named TBWA one of several agencies of the year in 1990.

The agency got another boost in 1991, when resort operator Club Med offered TBWA a job. Although Club Med brought only $15 million in billings, prestige and glamour made the account a valuable addition to the agency's client list. In January of 1991 TBWA received the New York Mets account after sending a baseball home plate printed with the agency's phone number to those making the decision; two months later TBWA also won over Carvel, an ice cream vendor with a $6 million account. In Europe the company obtained new brands from old clients Beiersdorf and Henkel.

In the United States TBWA formed two subsidiaries--one to handle promotions and the other to manage direct marketing. In September of 1991 Japanese partner Hakuhodo strengthened existing ties with TBWA by investing $15 million in the agency. TBWA planned to use the money to finance expansion in Canada, Germany, and the formerly Communist nations of Central Europe. In its first Eastern foray, TBWA opened an office in Seoul in 1991. By the end of the year worldwide revenues had topped $1 billion for the first time and TBWA had become the world's 21st largest ad agency.

As the mid-1990's approached, TBWA continued questing for a prestigious and symbolic automotive account. The agency planned to open a U.S. office on the West Coast and to further develop Asian ventures. As the global economy became more thoroughly integrated, TBWA, international by design, was well suited to make the most of new opportunities.

TBWA ADVERTISING, INC. History

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