Burrell Communications sells 49% of firm to Publicis.

Will black ad agencies have to merge to stay alive?

So, should it be viewed as an isolated incident--or a preview of things to come in the universe of African American advertising agencies? Only time will tell for sure. But, after months of behind-the-scenes deal-making, Burrell Communications Group Inc., the nation's leading black-owned marketing communications agency, finally sold a 49% stake in the company to Paris-based Publicis SA. (See "Dogfight on Madison Avenue," June 1999.)

Company chairman and CEO Thomas Burrell says the move was the next critical step if his company was to move forward.

"In order to be competitive, we have to grow. That's why we chose this partner," says Burrell. "We already have a sizable African American component, and now we'll be able to go after majority advertising. It's easier to do that with a major company."

The new alliance, which took approximately four months to finalize, is expected to propel Burrell Communications onto the global scene. Burrell says the move should help the company significantly expand its target audience.

For Maurice Levy, chairman and CEO of Publicis, the alliance allows his company to perform "a full range of services for all our clients, including our minority clientele." Publicis has affiliates in 122 cities in 72 countries, and reported $6 billion in revenues for 1998. Levy cites several factors that led his company to forge the partnership with Burrell, such as the firm's blue chip roster of clients, including Bell Atlantic and Procter & Gamble, and Burrell's overall reputation as a marketing agency.

So with Burrell's deal, and rumors of pending moves by the UniWorld Group and Don Coleman Advertising, is the writing on the wall for black-owned ad agencies? Is stiff competition making it necessary for these agencies to participate in alliances in order to stay alive?

Al Anderson, chairman and founder of Anderson Communications (No. 12 on the BE ADVERTISING AGENCIES list with billings of $16.3 million), says alliances go on within the industry all the time, "but never with black-owned agencies." "This merger can provide more revenue for the company, as long as Burrell maintains its autonomy. Black companies don' t necessarily need to merge; they just need blue chip clients," says Anderson. "The global corporations know they don't often have the insight to sell in the black segments, so they buy these firms to control and acquire black-owned agencies."

But Heide Gardner, of the American Advertising Federation Foundation in Washington, D.C, says that in order to remain buoyant, black agencies may have to make strategic moves, including moving beyond the African American market. "This is the year of consolidation. Everybody has to consider aligning themselves with someone with deeper pockets," says Gardner.