Aggregated from: NYTimes
http://www.nytimes.com/2010/09/09/business/media/09adco.html?_r=1&ref=todayspaper&pagewanted=print
By STUART ELLIOTT
THE recently acquisitive MDC Partners is at it again, with a deal that is indicative of the growing recognition along Madison Avenue of how much more interested marketers are becoming in using public relations to reach consumers.
Kirshenbaum Bond Senecal & Partners in New York, which is owned by MDC, is acquiring a majority stake in Kwittken & Company, a public relations agency in New York with annual revenue approaching $10 million and clients like Better Homes and Gardens Real Estate, McGraw-Hill and Thomson Reuters.
The acquisition is costing MDC an estimated $10 million to $15 million. Kwittken will become an operating unit of Kirshenbaum Bond Senecal, the second-largest MDC agency after Crispin Porter & Bogusky. Additional information about the deal is to be announced on Thursday by executives of Kwittken and Kirshenbaum Bond Senecal.
The transaction is the third in five months for MDC involving a public relations agency; the others were Sloane & Company in New York, in April; and Allison & Partners in San Francisco, in May. And it is the sixth deal over all for MDC since last September.
None of the six agencies in which MDC has bought majority stakes specialize in traditional ad tasks like creating television commercials. Rather, their specialties, in addition to public relations, include social media, database marketing, experiential marketing and analytics.
Marketers want “to find firms that can deliver performance,” said Miles S. Nadal, chairman and chief executive at MDC, which is based in Toronto, and public relations agencies are excelling in “understanding the changing dynamics of the marketplace,” as what happens with a campaign in social media and earned media has become as important as its presence in paid media and owned media.
As a result, Mr. Nadal said, “we love the P.R. space — social, blogging, crisis management, events.”
Although public relations was not immune to the downturn in marketing communications last year, the industry has been rebounding faster than it did during its last slump in the wake of the dot-com bust, the trade publication Advertising Age reported.
“P.R. is taking on a higher strategic importance based on its unique role in amplifying a brand’s message in today’s digitally focused, social media world,” said Lori Senecal, president and chief executive at Kirshenbaum Bond Senecal.
Kwittken and her agency got to know each other, Ms. Senecal said, when they teamed up to work on a project for WGSN, a fashion trend forecaster in London. “It went successfully,” she recalled, “so we thought, ‘There’s something more here.’ ”
Kwittken will join operating units of Kirshenbaum Bond Senecal that also include Dotglu, for digital and customer relationship marketing; Lime P.R. and Promotion, which works primarily on consumer brands; and Media Kitchen, which offers media services like planning, buying and search-engine marketing.
Kwittken’s services include brand management, reputation management and issues management. The agency was opened in 2005 by Aaron Kwittken and Jason Schlossberg, who had worked together at what is now Euro RSCG Magnet in New York, part of the Euro RSCG Worldwide unit of Havas.
“I really missed being part of a larger organization,” Mr. Kwittken said, “and I’m looking forward to being part of one so like-minded,” in that Kirshenbaum Bond Senecal “is an agency that values public relations and invests in it.”
The 22 employees of Kwittken will remain with the agency, said Mr. Kwittken, 39, who continues as chief executive and managing partner. Mr. Schlossberg, 37, continues as president and partner, and both he and Mr. Kwittken will have minority ownership stakes in the agency. Mr. Kwittken will report to Ms. Senecal.
MDC and Kirshenbaum Bond Senecal have been busy lately in adding to the services offered by the agency to clients, which include BMW of North America, Church’s Chicken, Coca-Cola, Mohegan Sun, the Pinnacle Foods Group andWeight Watchers International.
Adrenalina, an MDC agency specializing in marketing to Hispanic consumers, was recently merged with Kirshenbaum Bond Senecal. So, too, were two MDC agencies in Atlanta: Fletcher Martin and TrendCore, which gave Kirshenbaum Bond Senecal an Atlanta office, its first outside New York since 2006, when an office in San Francisco was closed after nine years.
Last fall, MDC described plans to spend $100 million on acquisitions in the coming 12 to 18 months. “Already, we’ve spent $75 million,” Mr. Nadal said, “and we’ve got lots more planned.”
Although “nobody knows what’ll happen in the short term,” Mr. Nadal said, referring to the economy, “we’re going to be in a continued slow recovery.” He wants MDC to be prepared to take advantage of the “consistent spending of a lot of marketers,” he added, even if others are cutting budgets.
