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World war Hugh: is Hugh Pollard turning his agency or the advertising businesses on its ear?


Is Hugh Pollard turning his agency or the advertising business on its ear?

Hugh Pollard's 25th anniversary in the advertising business -- and the 73rd for the Brooks-Pollard Agency he heads -- probably wouldn't be considered by many as his best one.

During the past year, there has been staff defections from the agency, including Al Kohler, the president Pollard hired in January 1987 who left before six months were out, and the loss in March of the Riceland Foods advertising account.

After that account was moved by Riceland officials to Noble and Associates in Springfield, Mo., several B-P employees who had worked on the account departed. In June, there was another apparent round of belt-tightening when five other employees were fired. Also leaving was B-P's director of public relations, Carol Davis.

When the agency moved in October to 14,000 SF of space in the First Commercial Building, Pollard says he planned for 35 employees. Reductions have put the current count at 25, but he expects to expand to 30 by September. Agency billings are at $14 million.

Is there a bit of tarnish on Pollard's silver anniversary in the advertising business?

Pollard, an intense, outspoken man who some call a marketing genius and others a tyrannical boss, has been president of the agency since 1975. He declines to discuss the individual firings, but terms them a "correction" of the agency's fixed expenses.

He does say, however, that there has been some restructuring of the staff at the same time as new workers are being hired for clients who are expanding, particularly the agency's plum account -- TCBY Enterprises, the Little Rock-based yogurt franchise operation.

Many ex-employees say Pollard is a hard taskmaster, demanding long hours and devotion to the advertising and marketing work that emanates from the agency, yet willing suddenly to tear apart that work to better suit his own ideas.

Coming on the heels of the departures, several ex-employees of Pollard and the agency have discussed organizing a gathering of the clan. The party theme? World War Hugh.

Rather than seeing the departures and loss of the Riceland account as a sign of agency disruption, Pollard characterizes the changes as shifting B-P to a streamlined organization that will be prepared for what he sees as a downturn in the advertising business in central Arkansas.

Pollard says that advertising expenditures have been depressed in retail, banking and utility categories, and no new business is coming into this industry that has historically been fragmented. He says typical agencies view success in terms of getting business through brother-in-law deals and then hanging onto it. No longer can there be 40 agencies, all of which have a "piece of business," he contends.

But no agencies have rushed to consolidate. In fact, there are new agencies being formed out of the break up of partnerships or employees who bail out of existing companies to start their own.

In January 1987, in a survey of advertising agencies, Arkansas Business identified almost 20 agencies in the state with more than $1 million in billings.

During the past year, there have been several agency splits and spin-offs. Tim Irby, former CEO of Frazer Irby Snyder, recently left that agency to form his own. Four executives with Kirkpatrick & Associates left that agency last fall to form The Communications Group Inc., consisting of principals Dan Cowling, Neal Moore, Tom Frase and Dane Cowling.

Also former Woods Brothers agency executive Dewitt Shotts went out on his own a little over a year ago and formed Shotts-Vines agency (although initial partner Bill Vines has since left the firm).

"The industry is so fragile and suffering," comments Pollard.

Is the advertising industry in central Arkansas in as bad a shape as Pollard insists? That isn't the conclusion that several other agency executives reach.

"Our gross volume is down a little bit and staff is down a little bit, but our net profits are in good shape -- and as good as they've ever been," comments Steve Holcomb, president of the Mangan Rains Ginnaven Holcomb advertising agency, which has billings in the $12-$13 million range and 36 employees.

"Typically this business is a roller-coaster affair," says J. Sam Smith, principal of the $3.5 million in billings agency that bears his name. "The business ebbs and flows, there's no sameness to it."

He says that although June was somewhat slow, July has gone well for the agency. Smith, who formed his agency in 1974, estimates that about 50 percent of its business is in representing financial institutions, which have become active again.

"To characterize the local advertising market as stagnant or down across the board is incorrect," states Ron Robinson, president of Cranford Johnson Robinson Associates, the state's largest agency with $23 million in billings and 74 employees.

"I'm very optimistic about this community. Sure there might be some cyclical things.... There's no reason to be doomsday about central Arkansas."

Despite Pollard's gloomy outlook for the industry, his agency has had some apparent bright spots. TCBY Enterprises, which recently debuted national advertising spots, has more than doubled its payments to B-P.

Normally, agencies don't reveal billings on individual clients, but since Pollard has been a director on TCBY's board since 1984, those payments are required to be disclosed.

In TCBY's 1985 fiscal year (ending in November), B-P received $762,000 and the next year the amount grew to $1,248,000. In FY87, Pollard's agency received $2,997,000 in agency fees and commissions.

While B-P is doing more work for TCBY, the yogurt franchise operation is taking its advertising and marketing work nationwide. TCBY consistently has reported record earnings as it moves toward a goal of 1,200 stores by the end of 1988.

That rapid expansion has caused some saturation in its market and analysts have been closely watching company reports on same-store sales, a measure of sales at stores in operation during the two periods compared.

TCBY same-store sales had been lagging somewhat prior to the national campaign, but the second quarter same-store sales increased by 5.4 percent, prompting company officials to remark "that the advertising program favorably impacted store sales and inquiries concerning franchise opportunities increased 48 percent during this period."

Whether it be Pollard's doomsday assessment or other observers' business-as-usual comments, almost any discussion within the advertising industry gravitates toward the issue of consolidation. Are there too many agencies in Arkansas, particularly central Arkansas?

That wouldn't be the contention of Dewitt Shotts, who broke off to form his own agency in June 1987 and has built it up to about a $1 million in annual billings. "I think if you beat on doors and send out letters and follow up on those letters, the business is there."

He acknowledges that without a backer his agency wouldn't have survived the initial costs of operation. "We're making progress, breaking even," he says. "It's going to take us a year before we make a dime, maybe two years."

Given that mega-accounts like Tyson Foods, Riceland Foods and Dillard Department Stores have taken the bulk of their advertising work to out-of-state agencies in Missouri or Texas, Pollard asks and answers his own question:

"What does that say about the future of the ad business in Little Rock? What it says is Little Rock needs two or three agencies and let the rest of them drift."

His contention is that three major agencies can handle 80 percent of the clients without serious conflicts of interest between major advertisers, like financial institutions.

What Pollard can't factor into his consolidation theory is the reason for its fragmentation in the first place: partners unwilling or unable to get along or to give up a piece of the agency to young, talented upstarts moving into the market.

As Pollard realigns his agency in preparation for the downturn he sees coming, he can afford to be wrong.

"If there's no downturn, then I'm wrong...if I'm right, at least I'm going to be positioned with clients that will grow and pay."
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Title Annotation:changes in the Brooks-Pollard Co.
Author:Honeycutt, Tom
Publication:Arkansas Business
Date:Aug 1, 1988
Previous Article:Waiting for an angel.
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