Ally & Gargano’s demise isn’t an unusual story on Madison Avenue these days-small agencies merge with bigger ones and vanish almost monthly. In May, Ross Roy Communications, the agency that serves up Domino’s pizzas, signed an agreement to join the giant Omnicom Group. A month earlier Chiat Day, the creator of the Energizer Bunny, merged with Omnicom’s TBWA unit. What’s so disturbing about A&G’s collapse is that the agency once stood for the kind of cuttingedge, insightful advertising so rarely seen in the industry today. Its collapse also reflects what some believe is a growing trend in the advertising world: the decline of the small to midsize agency. Says marketing strategist Jack Trout: “It’s either crash or get merged.”
In the glory years, Ally & Gargano separated itself from the competition by breaking the rules. Founded in the early 1960s by Carl Ally, a former World War II fighter pilot, it was the first major agency to name a competitor in its ads. In 1966 it attacked the number-two car-rental company with the line, “For years Avis has been telling you that Hertz is No. 1. Now we’re going to tell you why.” The ad not only won critical acclaim but solidified client Hertz’s lead over Avis. During the next decade, Ally took on MCI, the then fledgling phone company, and dared to launch the telephone wars between it and giant AT&T. The agency, which by then included partner Amil Gargano, attracted the brightest talents in the industry, says Ally, with a corporate culture that was “full of laughter.” “If advertising was the toy chest of American business,” he says, “we were the F.A.O. Schwarz.”
After Ally left the agency in 1984, the toy chest began to look worn. A public firm for a short time, Ally was sold first to Marketing Corp. of America and later to Wesray Capital Corp., a venture-capital company. The buyout left the agency, which once had billings of $300 million, with an estimated $24 million in debt. At the same time, Ally’s creative flame was flickering. As former creative director George Tannenbaum puts it, “The founders with fire in their bellies now all had sailboats in them.” Wesray installed former Wells, Rich, Greene head Bill Luceno to pick up the pieces.
Luceno’s turnaround plan seemed wildly optimistic. For several years in a row at the combined company Christmas party and agency meeting, he told staffers that A&G could pay off its debt if it brought in two $15 million accounts or one $30 million account. But instead of attracting new clients, the agency continued to lose them. Dunkin’ Donuts, H.J. Heinz Co.’s Weight Watchers division and cigarette maker Lorillard all said adios, possibly out of concern for the agency’s solvency. By this summer, revenues had dwindled to an estimated $100 million, down from $284 million at the beginning of the year.
In the end, gallows humor seemed to be the only remnant left of the company’s creative past. When Lorillard pulled the plug on its $10 million account, workers joked that the agency’s name was about to be changed to “Seized by Federal Marshals.” Rumors also abounded that the boss planned to close the art department and open a nail salon. “Instead of the Federal Expresses of the world,” says Tannenbaum, “we were reduced to pitching the Bob’s Sofa Cities.” By late summer the number of A&G employees, which once totaled more than 300, slipped to a mere 10.
Who is to blame for Ally’s collapse? “When you’re in a recession people want safety, and safety means bigger agencies,” says Luceno. But others blame the agency’s downfall on its inability to manage debt. Regardless, says Ally, “they got what they deserved. Period.” One copywriter, who arrived at work one day recently only to find that he was out of a job, seemed to agree with the founding father. “Taking a job at Ally was the right thing to do,” he wrote in a note affixed to the company bulletin board. “I just happened to do it in the wrong decade.”
