GSD&M's Idea City

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GSD&M's Idea City

828 West Sixth Street
Austin, Texas 78703
U.S.A.
Telephone: (512) 242-4736
Fax: (512) 242-4700
Web site: http://www.gsdm.com

Wholly Owned Subsidiary of Omnicom Group Inc.
Incorporated: 1971 as AdVantage Associates
Employees: 850
Gross Billings: $1.7 billion (2006)
NAIC: 541810 Advertising Agencies

GSD&M's Idea City is one of the top 20 advertising agencies in the United States, with clients that include AT&T, Southwest Airlines, MasterCard, and the U.S. Air Force. The firm has built a reputation for creating ads that are irreverent and witty, winning many industry awards for work like the "Don't Mess with Texas" antilittering campaign. GSD&M was founded in Austin, Texas, in 1971 by six University of Texas graduates, four of whom continue to hold key management positions.

EARLY YEARS

GSD&M's Idea City 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 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 just six months when a newspaper ad ran too small. Early on the firm 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. 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. The firm, which had by this time had decided to shorten its name to GSD&M, soon began to attract other major clients. By 1980 GSD&M was doing work for U.S. Home Corp., Pearl Beer, and Church's Fried Chicken, and had opened additional offices in Dallas, San Antonio, and Houston.

SOUTHWEST AIR ACCOUNT WON IN 1982

This rapid growth began to cause problems for the company, however, and in 1981 GSD&M lost its top three accounts, Church's, U.S. Home, and Pearl, which accounted for $10 million in billings and 80 percent of its total work. Luckily, a short time later the firm won the account of Southwest Airlines, with billings worth $4 million, which gave the agency its first national campaign.

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

In the latter half of the 1980s other major accounts were landed including First Texas Savings, Gibraltar Savings, and the Texas Department of Commerce. GSD&M also continued 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. The company's award-winning "Don't Mess with Texas" antilitter campaign, launched in 1986, 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 jettisoned ads with heartthrob actor Mark Harmon in favor of ones 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 that 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.

SALE TO GGT GROUP IN 1990

In 1990, GSD&M was sold to Michael Greenlees' GGT Group for approximately $48.5 million, the final total of which was based on the next five years' revenues. The so-called earn-out agreement was requested by GSD&M's partners, who wanted a clear incentive to grow the 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 GSD&M had made for the work. The state comptroller ruled that the company could keep the assignment. Also in 1992, the firm 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.

COMPANY PERSPECTIVES

GSD&M takes branding to its most fertile territory yet. Purpose-based Branding (PBB) is the art of discovering a company's core purpose and then infusing that purpose with language and ideas that motivate audiences. PBB distinguishes a brand by detecting and embracing the fundamental role that brand plays in the world. When a company identifies its genuine and authentic purpose, it becomes destined, not lucky, to win. An extraordinary byproduct of PBB is also its ability to transform a company's culture. When an authentic purpose is uncovered and articulated well, everything begins to move along the same circuitry.

In 1993, GSD&M gave up a regional contract with Coca-Cola to produce a national image-building campaign for distant third-place cola maker Royal Crown. The $8 million to $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. Afterward the firm opened an office in Chicago to coordinate its media buying efforts, which it was seeking to increase across the board.

COMPANY MOVES INTO IDEA CITY IN 1996

By 1996, GSD&M was doing work that represented $400 million in ad billings with 360 employees. New accounts continued to come in, including clothing maker No Fear; Pennzoil/Jiffy Lube; and 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.

During 1997 GSD&M, which was ranked among the top 30 ad agencies in the United States, 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, however. January 1998 saw 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 ads were credited with a 75 percent reduction in roadside litter since their 1986 debut. 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.

In 1998 the company expanded Idea City to house its rapidly growing staff, which numbered more than 400. During the year the company became the agency of record for telecommunications giant SBC Communications, began working for the Country Music Association, and opened an office in San Francisco to handle work for Pacific Bell Mobile Services. The firm's management had decided to get involved in the entertainment business, and a subsidiary was launched that sponsored screenwriters to work at its headquarters, with television productions eventually planned.

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:: Office opened in San Antonio to facilitate work for Pearl Beer.
1981:: GSD&M loses top three clients.
1982:: Southwest Airlines chooses firm to handle its $4 million account.
1986:: Company creates "Don't Mess with Texas" antilittering campaign.
1987:: Firm begin working for Coors Beer and Wal-Mart.
1990:: Company is sold to GGT Group of United Kingdom for $48.5 million.
1995:: GSD&M wins $86 million MasterCard media buying account.
1996:: New Austin headquarters building completed.
1998:: Omnicom Group becomes firm's owner with purchase of GGT Group.
2000:: Billings top $1 billion as firm wins first auto account for Land Rover.
2003:: Film-making unit Mythos Group's first project, Texas: The Big Picture, debuts.
2006:: Firm loses longtime Wal-Mart account.
2007:: Company changes name to GSD&M's Idea City.

The company was actively seeking 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 1999 the company was given the nod and began to handle media planning and buying for Dreamworks' Features, Home Video, and Game-Works divisions, which had total billings of $100 million. Also during the year, the firm 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 that traded advertising services for equity in Internet companies.

In 2000 the firm won more business from SBC 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 recruitment advertising. The firm's $1.2 billion in billings for the year put it above the billion dollar mark for the first time, though the impact of the slowing U.S. economy caused it to lay off 35 employees in the fall. That year also saw GSD&M's newly formed publishing unit, Idea University Press, issue its first title, a children's book written by a staffer.

In early 2001 the firm began working for the makers of Dial soap, as well as for the Kohler 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.

PUBLIC SERVICE ADS CREATED FOLLOWING 9/11 ATTACKS

The September 11 terrorist attacks on New York and Washington, D.C., presented a major challenge for the firm as sales for Southwest Airlines plunged after Americans drastically curtailed their plans to fly. GSD&M quickly began conducting research to assess the ramifications of the nation's new, more somber mood while working to revise campaigns for Southwest, the U.S. Air Force, and other firms affected by the tragedy. Company head Roy Spence also led a voluntary company initiative to create patriotic public-service spots for the nonprofit Advertising Council that were shown on television, in Wal-Mart stores, at football games, and sent via e-mail to more than a million people. Other 9/11-influenced ads were created for the American Red Cross's Texas office.

In December 2001 GSD&M won the $30 million Kinko's account, and in early 2002 it added 5,700-store convenience store chain 7-Eleven and boosted its work for Charles Schwab. During the spring of 2002 the company's film unit began shooting an Imax movie for the Texas State History Museum Foundation called Texas: The Big Picture. The 39-minute, $5 million film made its debut the following year.

In the summer of 2002 the firm lost the Land Rover account to Young & Rubicam, the agency for the Ford Motor Company, Land Rover's new owner, but it added senior citizens advocacy group the AARP as a client. In October the company resigned from the 7-Eleven account due to a conflict with existing client Krispy Kreme Doughnuts, which was seeking to expand its coffee line and brand profile.

In the spring of 2003 GSD&M began working for the antismoking agency, American Legacy Foundation, and early the next year GSD&M's movie unit, Mythos Studios, began filming a $1.5 million comedy feature, Drop Dead Sexy, which starred Crispin Glover and Jason Lee. Released the following year, it played at film festivals and art houses, but made little impact on critics or the general public.

In the spring of 2005 the company was tapped to create an ad campaign for Frito-Lay's Sun Chips brand, and in the fall it was awarded the $150 million North American advertising account of BMW. GSD&M had been actively seeking another carmaker after losing earlier bids to serve Subaru and Kia.

WAL-MART ACCOUNT LOST IN 2006

In October 2006 the firm lost the account of Wal-Mart, as the nation's largest retailer sought to move its image upscale with new agency Draft FCB. When Wal-Mart decided to reconsider the decision after irregularities in the bidding process surfaced, it asked the company to resubmit its proposal, but GSD&M declined to participate. On a happier note, during 2006 the firm's publishing arm, now known as Idea City Press, published a book commemorating the 20th anniversary of the popular "Don't Mess with Texas" ad campaign.

Revenues for 2006 hit $112 million while total ad billings increased to $1.7 billion, with the firm's recently formed interactive division, which bought Internet ads, accounting for $135 million. With this figure expected to grow by 50 percent over the next year, the unit began adding staff.

In early 2007 GSD&M took more hits when it lost the $110 million Chili's Grill & Bar account, as well as work promoting Frito-Lay's Tostitos brand. During the spring and summer the firm picked up new work for retailer Cost Plus World Market and tractor maker Deere & Co., however.

With troubles mounting and reportedly under pressure from owner Omnicom, in August the company changed its name to GSD&M's Idea City and Roy Spence gave up the title of president to chief operating officer Duff Stewart, though he would continue to serve as chairman and CEO. At the same time an outside search was begun for a new chief idea officer, a position also formerly held by Spence.

Immediately after these changes were made, top client AT&T (as SBC was known following the telecommunications giants' merger) announced it would consolidate its $3.34 billion advertising account with a single agency by year's end. It asked the four firms it worked with to submit proposals, and GSD&M appeared to be ramping up for another major battle.

Midway through its fourth decade in business, GSD&M's Idea City was struggling to regain its footing after the loss of several key clients. Though four of its founders were still involved, they were shifting to less prominent roles. The company's future success appeared to depend in part on how well it filled those shoes, as well as on its ability to continue to come up with memorable, motivating spots for its clients.

Frank Uhle

PRINCIPAL DIVISIONS

GSD&M Mythos Group; Idea City Press.

PRINCIPAL COMPETITORS

TM Advertising LP; The Richards Group, Inc.; McCann Worldgroup; Ogilvy & Mather Worldwide; Draft FCB Group; Leo Burnett Worldwide, Inc.; JWT; Young & Rubicam Brands; Crispin Porter & Bogusky; Deutsch, Inc.; Fallon Worldwide; The Martin Agency.