Carmichael Lynch Inc.

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Carmichael Lynch Inc.

800 Hennepin Avenue
Minneapolis, Minnesota 55403
U.S.A.
(612) 334-6000
Fax: (612) 334-6090

Wholly Owned Subsidiary of The Interpublic Group of
Companies, Inc.
Incorporated : 1962
Employees : 200
Gross Billings : $200 million (1997 est.)
NAIC : 54181 Advertising Agencies

Carmichael Lynch Inc., lauded for its recreation-related ads, was purchased by Interpublic Group in 1998. Propelled by cofounder Leland T. Lynch, the Minneapolis-based shop ranked as one of the largest independently owned agencies in the United States prior to the sale. The agency offers a wide range of marketing communication services, including advertising, direct marketing, sales promotion, research and account planning, media, and print and broadcast production. The firm also offers public relations through its division, Carmichael Lynch Spong Public Relations, founded in 1990, and design via Carmichael Lynch Thorburn, which was founded in 1996. Carmichael Lynch in general focuses on mid-sized clients, with annual billings ranging from $2 to $20 million, but also seeks out accounts with great brand names such as Schwinn, Formica, and American Standard.

Early Days in the Ad Biz: 1960s-80s

The Hamm’s Beer bear was king of the “land of sky-blue waters” when Leland (Lee) Lynch and Jack Carmichael launched their Minneapolis advertising agency in 1962. Carmichael left the agency in 1969, and Lee Lynch fixed his mark on the business and the growing Twin Cities and community. Carmichael Lynch earned Best of Show honors from The Advertising Federation of Minnesota in 1971 and in 1975 debuted in Communication Arts, a highly respected trade magazine.

The Twin Cities ad industry started making significant waves on a national level in the early 1980s. Rival agency Fallon McElligott & Rice’s unconventional approach helped it earn Agency of the Year honors from Advertising Age magazine in 1984. The same year, Carmichael Lynch earned two Effie awards from the American Marketing Association—a feat confined to New York agencies until then. “And, unlike the creative awards,” wrote Donna Dailey in a February 1985 Corporate Report Minnesota article, “only 31 Effies are awarded each year for demonstration of measurable results.”

Despite growing popularity, Minnesota ad agencies were still viewed with some derision by their big-market counterparts, who sometimes referred to the advertising style coming from the region as “Minneapolis cute,” according to Dailey. Furthermore, Carmichael Lynch and other Minneapolis/St. Paul-based ad agencies had trouble earning business from giant companies within their home state.

General Mills and Pillsbury, which ranked among the top U.S. advertising spenders, typically hired East Coast or Chicago ad agencies. Start-up companies willing to take advertising risks to break into the market kept the coffers of creative shops such as Carmichael Lynch full.

As the ad industry grew in Minnesota during the 1980s so did Carmichael Lynch. The agency’s 1987 billings were $70.9 million compared with $46 million just four years earlier. Lynch acquired a string of smaller agencies, both within and outside of Minnesota, during the 1980s and into the 1990s.

Growth upped the agency’s need for space, and Carmichael Lynch vacated the neighborhood mansions it occupied for nearly half of its 25 years in business. Lynch and Lou Bacig, president and partner, defied conventional wisdom and invested in a building located in a rundown area of downtown Minneapolis. They transformed the place into a symbol of the agency’s creative energy and helped begin a revitalization of the area.

“Forty-one conference rooms are marked by bizarre decor reflecting parts of the agency’s business. The cow room, with its udder-stated furnishings, represents agricultural clients. The urban-guerrilla room, with chain-link fence and tire tracks on the wall, honors longtime client Harley Davidson,” wrote Dan Wascoe, Jr., in an April 1988 Star Tribune article.

Carmichael Lynch was riding the wave of one of the fastest-growing industries in Minnesota, but the growth produced its share of challenges. The burgeoning marketplace created intense demand for creative talent. In 1989, Lynch and Bacig set up an employee stock ownership plan to try to counter the loss of employees in an industry plagued with a high turnover rate.

In addition to retaining talent, the company encountered other marketplace pressures. “In the last year, more clients have demanded an answer to the question, ‘Does this [advertising] really work?’” said Lynch in a June 1988 Corporate Report Minnesota article by Bob Geiger. “If it doesn’t work you’re looking at budget cuts,” Lynch added.

Push for Continued Growth: Early 1990s

The American Association of Advertising Agencies (AAAA) named Carmichael Lynch agency of the year in 1991 on the strength of its sporting and recreational ads. Lynch, however did not want to see the agency pigeonholed in a single area. “It’s a daily struggle to overcome this image,” said Lynch in a December 1991 Corporate Report Minnesota anide. “People used to say that the only thing we could do was long copy, fish ads, and print.”

Carmichael Lynch, in fact, spread its $100 million in billings among recreational and sporting goods accounts, business-to-business and technology, retail, services, and public relations activities. The agency added a public relations subsidiary, Carmichael Lynch Spong, in 1990 to handle increasing business in that area.

Lynch wanted the agency to continue growing, but big national accounts, particularly in the important auto industry, eluded them. “Some feel that Carmichael-Lynch is at a disadvantage because it isn’t well-known nationally; they point to Bacig’s anti-press attitude as part of the problem. Others are convinced that Lynch himself is an obstacle to Carmichael-Lynch’s growth. Yet, in the last decade, the agency has bounced back and forth between Martin-Williams and Fallon McElligott in the hierarchy of Minnesota firms, no small accomplishment in a fiercely competitive climate,” wrote Roy er.

Even as controversy swirled around Lynch—ex-staffers were known to criticize the party atmosphere fostered by the exuberant CEO and the lack of a concrete plan for succession of leadership—the agency continued its award-winning ways and pulled in another AAAA award for creative excellence in 1993. On the year, the agency gained ten new accounts while losing only one. Carmichael Lynch’s client list included Pentax Corporation, Korbel Champagne, Cargill Corporation, and Schwinn Cycling & Fitness.

Fifteen-year veteran Jack Supple was named president of the 170-employee agency in September 1994. Lynch continued in the capacity of chairman and CEO, and Bacig assumed the posts of vice-chair and managing partner. Supple had held the head creative post in the agency since 1989. “Our mission is finding mid-sized clients who we feel offer the best opportunities for us to do good work, in terms of being able to actually make something happen—where you can really feel the impact,” said Supple in a July 1995 SHOOT article by Kathy DeSalvo.

Under Supple’s leadership, the agency brought in a number of key clients including Boston Beer Company and Minnesota-based National Car Rental, the fourth largest U.S. car rental company. Still, many in the industry and the press continued to think Lee Lynch when they thought of Carmichael Lynch.

Lynch, in turn, contended it was not merely his personality that shaped the climate of the agency, but the clients whom they served. “You need to seek clients who want you to take risks,” Lynch said in a June 1996 Twin Cities Business Monthly article by Russell Scott Smith. Schwinn Cycling & Fitness took a risk with an ad that read: “Schwinns are red. Schwinns are blue. Schwinns are light and agile too. Cars suck. The end.... It took a great client to let us do that,” Lynch said. The agency received the Stephen E. Kelly Award from the Magazine Publishers of America in 1994 for its Schwinn bikes campaign.

Change in the Air: Late 1990s

Supple weathered a volatile year in 1997, one marked by account turnover and the departure of prominent staff members. Fortunately, new accounts balanced out the losses, and the agency continued to show a profit. Nonetheless, the volatility raised questions regarding the future of the agency.

Advertising Age reported in January 1998 that Carmichael Lynch and Interpublic Group had been holding talks since October 1997 regarding the purchase of the agency. The New York-based holding company went on to purchase Carmichael Lynch for more than $30 million.

Company Perspectives

Advertising with an Attitude.

You look, and you know. You feel something certain. You believe. That’s advertising with an attitude.

Edge. Not somewhere in the middle. Tell the world where you stand. Shout it. Whisper it. Just don’t mumble it.

Every ounce of what your product or service can be, that’s what your advertising must be. There, in the style, the tone, the spirit, the conviction. Make a distinct impression. Build an image, become that image.

You cannot be all things to all people. Neither can Carmichael Lynch. This is our attitude. We’re not looking for clients who keep pushing us to make the logo bigger; we’re looking for clients who keep pushing us until the logo becomes a tattoo.

The premium price “reflects the reputation earned by Carmichael Lynch for clever, effective work, particularly in print,” wrote Stuart Elliott for the New York Times. The typical asking price for agencies was one times revenue: Carmichael Lynch’s 1997 revenue was $24 million. Client billings had exceeded $200 million.

According to a February 1998 Star Tribune article by Ann Merrill, Carmichael Lynch had sought a buyer in order to finance growth and close out its employee stock ownership plan. Its affiliation with the world’s third largest agency also would allow Carmichael Lynch to build an international presence.

Barry R. Linsky, senior vice-president for planning and business development at Interpublic Group spoke highly of the agency and its executives. “What attracts them to us,” said Linsky to the New York Times, “is their terrific creative reputation, strong client list and defined and distinctive culture.” The agency would continue to operate under its own name and retain a good deal of autonomy. Senior executives including Lynch, Supple, PR head Doug Spong, and design unit head Bill Thorburn continued in their posts.

The purchase was part of the consolidation trend in the slow growth advertising industry. Big holding companies pushed return on investment to the 15 to 20 percent range through new acquisitions, according to a June 1998 Star Tribune article by Merrill. In addition, the big players—Interpublic Group had billings of $21.1 billion—yearned for broad geographic coverage. Interpublic Group, which already held partial ownership of Minneapolis-based Campbell Mithun Esty, purchased Carmichael Lynch as part of its Midwest expansion.

During the months following the purchase, Carmichael Lynch expanded its available expertise through a strategic partnership with sister agency Weber Public Relations Worldwide. Weber was known for its technology clients such as Lotus and Digital Equipment Corp. Carmichael Lynch also acquired the Minneapolis office of Valentine-McCormick-Ligibel and gained Northwest Airlines Inc. as a client in the process. In early 1999, the agency’s longstanding reputation for sports and recreation enthusiast ads helped lure its first ever auto manufacturer assignment: Porsche Cars North America.