GSD&M Advertising

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GSD&M Advertising

828 West Sixth Street
Austin, Texas 78703
U.S.A.
Telephone: (512) 427-4736
Fax: (512) 427-4700
Web site: http://www.gsdm.com

Wholly Owned Subsidiary of Omnicom Group Inc.
Incorporated: 1971 as Advantage Associates
Employees: 630
Sales: $86.7 million (2000)
NAIC: 541810 Advertising Agencies

GSD&M Advertising is one of the top 30 advertising agencies in the U.S. The firm’s clients include Wal-Mart, Southwest Airlines, Charles Schwab, DreamWorks SKG, and Brinker International and its Chili’s restaurant chain. GSD&M’s ads are often irreverent and witty, and the company has won many industry awards for work like its “Don’t Mess With Texas” anti-littering campaign. The firm was founded in 1971 by six University of Texas graduates, four of whom continue to hold key positions. GSD&M is owned by Omnicom Group, the third largest advertising conglomerate in the world.

Early Years

GSD&M traces its beginnings to the campus of the University of Texas, where in 1970 six friends were tapped by the dean of students to create an orientation film. Calling themselves ’Media 70,“ the six, Roy Spence, Tim McClure, Steve and Bill Gurasich, Judy Trabulsi and Jim Darilek came up with a multimedia presentation that combined references to the Beatles, Janis Joplin, the Vietnam war, and campus mascot Bevo the Longhorn. The group subsequently put on a series of shows both on and off the campus, and upon graduation in 1971 decided to form an advertising agency together. They initially used the name Advantage Associates, but later changed it to Gurasich, Spence, Darilek & McClure (Judy Trabulsi, believing that she would get married and leave the firm, decided not to be listed).

The partners’ first account was Jack Morton’s Menswear, but it was lost after six months when a newspaper ad ran too small. Early on the firm also began what would develop into a long association with the Democratic Party when it created ads for senatorial candidate Ralph Yarborough, though his bid for office was unsuccessful. Getting a toehold in the ad business took time, and the company’s first years were difficult ones. Roy Spence recalled that during this period he took home just $85 a month and slept on a mattress under an art table in the firm’s offices, using a nearby gym to take showers.

The company’s first big break came in 1974, when it won the account of the Austin Savings Bank (later NationsBank), which represented $1 million in media billings. For the firm, which had decided to shorten its name to GSD&M, this was a breakthrough into “the establishment,” and it soon began to attract other major clients as well. By the end of the decade the company had added to their client list U.S. Home Corp., Pearl Beer, and Church’s Fried Chicken, and had opened additional offices in Dallas, San Antonio, and Houston.

Stumbling, then Bouncing Back with Southwest Air

Growth was not proving to be completely healthy for GSD&M as an organization, however, and by the start of the 1980s the company began to falter. In 1981, the firm lost all three of its top accounts, Church’s, U.S. Home Corp., and Pearl, which accounted for $10 million in billings and 80 percent of its business. Luckily, a short time later GSD&M was able to win the account of Southwest Airlines, which became the company’s first national campaign, worth $4 million in billings. This helped revive the firm’s morale, and it soon began to grow once again.

By 1985 GSD&M was working for 80 different clients with combined billings of $76 million. Four of the original founders remained in charge, Jim Darilek and Bill Gurasich having left to pursue other interests. A reevaluation of the agency’s priorities previous to this time led to the decision to make creative work the firm’s focus, rather than other activities such as media buying. The company soon closed its outlying offices and consolidated its operations in Austin.

In the latter half of the 1980s other major accounts were landed with First Texas Savings, Gibraltar Savings, and the Texas Department of Commerce. GSD&M was also continuing to be allied with Democratic political candidates, having worked on the presidential bid of Walter Mondale, as well as for Texas governor Mark White.

GSD&M campaigns often reflected the input of the company’s president, Roy Spence, along with creative director Tim McClure. The colorful Spence declared his company’s niche to be “cutting against the grain,” and its campaigns frequently refocused a client’s image. For Southwest Airlines, which had earlier emphasized its ties to Dallas’s Love Field, GSD&M came up with new slogans: “Just Say When” and “The Company Plane.” For one Southwest ad, Spence flew to Detroit and spent $150 driving around town with a cabdriver whose input was incorporated into promotions for flights from that city. An award-winning anti-litter campaign called “Don’t Mess With Texas” featured entertainers like Willie Nelson and Jerry Jeff Walker making offbeat pitches to keep the state clean.

For a new, national Coors Beer campaign, GSD&M also jettisoned heartthrob actor Mark Harmon and came up with lines like “The First Draft in a Bottle” and “The American Original.” Coors, run by a highly conservative family, had stunned the advertising community in 1987 when it shifted its account to a firm which was well-known for working with Democratic politicians. A Coors spokesman commenting on the choice cited GSD&M’s “history of sound strategic decisions, excellent production capability, and values at reasonable cost.” The firm had previously handled Coors’ Hispanic advertising work. The end of the decade saw GSD&M attracting other high profile clients, including The Wall Street Journal, Wal-Mart, Brinker International, and CompuAdd Corp. Annual billings topped $150 million by 1989.

Early 1990s Sale to GGT Group

In 1990, GSD&M was sold to Michael Greenlees’ GGT Group for approximately $48.5 million, the final total of which would be based on the next five years’ revenues. The so-called “earn-out” agreement was requested by GSD&M’s partners, who wanted a built-in incentive to continue to grow their business. GGT, a publicly traded advertising and consulting company based in the United Kingdom, had been pursuing a strategy of acquiring regional American ad agencies since 1988. GSD&M’s management and independence remained intact after the sale.

Two years later the firm was awarded a contract to produce ads for the Texas state lottery, a move that was protested by a rival agency which alleged improprieties in the pitch it had made for the work. The state comptroller ruled that GSD&M could keep the assignment, however. Also in 1992, the company won the account of Tandy Corp., owner of the Radio Shack electronics chain. That year GSD&M was recognized by industry journal AdWeek as its Southwest Agency of the Year.

In 1993, GSD&M gave up a recently won regional contract with Coca-Cola to produce a national image-building campaign for distant third-place cola maker Royal Crown. The $8-10 million program featured RC’s first television spots in 20 years. GSD&M’s ads, launched the following summer, were characterized by AdWeek as “bizarre,” and featured deep-sea fishing boats hooking Coke and Pepsi drinkers, who were reeled in and put on display while a bemused RC drinker looked on. A later campaign for Royal Crown’s Kick beverage similarly made fun of rival soda Mountain Dew.

The mid-1990s saw further growth for GSD&M, with clients such as Doubletree Hotels, Fannie Mae, and Advanced Micro Devices added to its roster. In 1994, the company spun off its Hispanic media buying division, which was renamed Amistad Media Group. The next year saw another coup for GSD&M, when the firm won the media buying account of MasterCard, worth $86 million in billings. Though the company had previously bought very little network television time, had no previous credit card experience, and no apparent connections to the client, it prevailed over a number of heavy players to win the work. Speculation in the industry focused on MasterCard CEO H. Eugene Lockhart’s 76-year old father, who lived in Austin, as a key player in the deal. Though he proclaimed himself a fan of Roy Spence, the senior Lockhart denied playing a role in the transaction. Whatever the reasons were, the result was a triumph for GSD&M, which was soon rumored to be seeking the creative side of MasterCard’s business as well. After the account was won, the firm opened an office in Chicago to coordinate its media buying efforts, which it was seeking to increase across the board.

More New Accounts and a New Headquarters

By 1996, GSD&M was doing work that represented $400 million in ad billings and employing 360 people. New accounts continued to come in, including clothing maker No Fear, Pennzoil/Jiffy Lube, the Yellow Pages, Mobile Systems and Cellular One businesses of Southwestern Bell, the latter worth a total of $60 million in billings. At the end of the year the company also moved to a new 100,000 square foot corporate headquarters in downtown Austin. Dubbed “Idea City,” the building utilized a blend of architectural styles and gave secretarial and support staff window views, placing the executives in the center of the building. Different parts of the interior were made up as “neighborhoods,” with themes such as Greenwich Village for the area where the company’s artists and writers worked.

Company Perspectives:

Core Purpose: Discover visionary ideas that get our clients where they want to go faster than anyone thought possible. Visionary ideas transform the way we think about things, force us to widen our horizons and view the world differently. They raise the bar and help us win for our clients in the marketplace. And that’s the thrill of it all.

During 1997, GSD&M, which was now ranked among the top 30 ad agencies in the U.S., landed the accounts of Power Computing and Haggar Clothing Co., as well as the media buying for Bank of America. A pitch to win the work of carmaker Mazda proved unsuccessful, a big disappointment to the firm. January of 1998 saw the company’s owner, GGT Group, sold for $235 million to Omnicom Group of New York. Omnicom, the third largest agency conglomerate in the world, had annual revenues of $2.6 billion.

At about this time GSD&M voluntarily gave up its work for the Texas Department of Highways and Public Transportation, for whom it had created the popular “Don’t Mess With Texas “ spots. The company’s ads were credited with a 75 percent reduction in roadside litter since they began in 1986. GSD&M president Roy Spence stated that the move was made to allow other Texas agencies a shot at the job, although some speculated that it had been done to enable the firm to better focus on its corporate accounts.

1998 also saw the enlargement of “Idea City” for the company’s rapidly growing ranks of employees, now numbering more than 400. GSD&M was lately becoming increasingly interested in the world of entertainment and launched a subsidiary that sponsored screenwriters to write at the company’s headquarters, with television productions also planned. The firm began working for the Country Music Association as well, helping promote concerts, compact discs, and books that were part of a public service campaign. During 1998, GSD&M also became the agency of record for telecommunications giant SBC Communications, and opened an office in San Francisco to handle work for Pacific Bell Mobile Services.

A major effort was taking place during this period to win the account of Dreamworks SKG, the new movie studio launched by Steven Spielberg, Jeffrey Katzenberg, and David Geffen. GSD&M and the other finalist for the job, Focus Media, were each given a film to promote, with the final choice to be made after the respective ad campaigns were over. In March of 1999, the company was given the nod and began to handle media planning and buying for Dreamworks’ Features, Home Video, and GameWorks divisions, which had total billings of $100 million. Also during the year GSD&M was hired by the U.S. Olympic Committee, the YMCA, Mirage Resorts, and Wenner Media, publisher of Rolling Stone, Us, and Men’s Journal magazines. Leaping into the dot-com waters, in November GSD&M launched Idea Ventures, a division which traded advertising services for equity in Internet companies.

The firm won more business from SBC in 2000 when that company gave it additional work for its Ameritech subsidiary, worth $100 million in ad billings. GSD&M also won its first automobile account, Land Rover, and was retained by Charles Schwab & Co., as well as by the U.S. Air Force for its recruitment advertising. Billings for the year topped $1 billion for the first time, though the impact of the slowing U.S. economy caused the company to lay off 35 employees in the fall. Also during 2000, GSD&M’s newly formed publishing unit, Idea University Press, issued its first title, a children’s book written by a staffer.

In 2001, the company began working for the makers of Dial soap, as well as the Köhler Co. Efforts to win the $200 million account of Cingular Wireless, a joint venture of SBC and Bell South, failed, however. In late August the firm celebrated its 30th anniversary with a party in Austin for employees and friends. Starting its fourth decade in business, GSD&M continued on an upward trajectory, its proven “formula “ of energetic, creative, slightly askew thinking bringing it continued new business and accolades from the advertising industry. Still run by four of its original six founders, the company was looking toward further growth and success in the years to come.

Principal Divisions

Idea Ventures; Idea Studio; Idea University Press.

Principal Competitors

DDB Needham Worldwide Dallas Group; Temerlin McClain LP.

Key Dates:

1971:: Six University of Texas graduates found Advantage Associates in Austin, Texas.
1974:: Firm wins first major account, Austin Savings, and is renamed GSD&M.
1978:: The company opens an office in San Antonio to facilitate work for Pearl Beer.
1981:: GSD&M loses its top three clients, but then wins account of Southwest Airlines.
1986:: The company debuts its “Don’t Mess With Texas “ anti-littering campaign.
1987:: GSD&M begin working for Coors Beer and Wal-Mart.
1990:: The company is sold to GGT Group (United Kingdom) for $48.5 million.
1995:: GSD&M wins 86 million MasterCard media buying account.
1996:: New Austin headquarters building is completed.
1998:: Omnicom Group becomes firm’s owner when it acquires GGT Group.
2000:: GSD&M top $ 1 billion in billings and win first auto account for Land Rover.