SKC Advertising unveils ambitious expansion plan
SKC Advertising of Harrison said it will acquire three local ad agencies as part of its plan to become a national player.
“Our goal is to build a company as large as we can,” said Rocky Cipriano, co-founder and creative director of the 6-year-old advertising agency.
SKC, which grossed $3.1 million last year, intends to buy six area agencies within the next two years. Cipriano said he expects to sign deals with three of them within a month. He declined to name the agencies, but said at least two are in Westchester.
Cipriano made a presentation July 28 in New York City to 11 prospective candidates, several of which expressed interest in exploring the idea further, he said.
JML Creative Solutions Inc. is a likely suitor, but its owner, Joe Lawrence, declined comment.
SKC’s expansion plan follows its June decision to merge with New Paradigm Corp., a New York City venture with strong Internet capabilities but insignificant revenue.
SKC, which provides advertising and public relations services, will retain its name and continue to be located at 550 Mamaroneck Ave.
Mark Blundell, an Armonk resident who started New Paradigm in 1993 and brought it public two years later, said the merger is mutually beneficial: “I need their clients and they need my Internet capabilities.”
SKC’s clients include The Castle at Tarrytown and KemWel Holiday Autos, a car rental business in Harrison. New Paradigm lists among its clients such companies as Swiss drug manufacturer Novartis and the National Multiple Sclerosis Society.
Blundell said New Paradigm was interested in a partner that can handle a “full range of ad services.” It also wanted a partner that “was in a position to influence the marketing plan of a company as opposed to executing” an ad campaign for a client.
Stock analysts do not follow New Paradigm, whose shares are traded over the counter. The shares recently traded for 35 cents each.
New Paradigm hopes to be a mid-sized company with $50 million in annual revenue, Blundell said. “We have a very aggressive growth plan.”
Adam Handler, president of Fastforward Communications Inc., an advertising and public relations agency in Valhalla, said he has noticed a strong push toward mergers lately. “I have been approached more in the last year than in the prior 12 years.”
Handler said is not considering any mergers because his business is growing solidly. “In our case, no one has approached who is a perfect fit,” he added.
Mergers between compatible partners can provide operational efficiencies and business expansion opportunities, he noted.
“The promises are always great, but the results are mixed,” he said, adding the outcome often depends on the right mix.
According to the U.S. Census Bureau, the number of ad agencies grew from 11,100 in 1990 to 13,700 in 1994, the latest year for which statistics were available. Employment grew by only 1,000 to 138,000, and revenue rose from $5.4 billion to $6.2 billion.
Martha Brown, a spokeswoman for the American Association of Advertising Agencies, a trade group in New York City, said the mergers began in the early 1980s, but she had no statistics on the number of deals.
“The cent trend is more toward consolidation,” she said.
According to the Census Bureau, U.S. companies acquired 14 domestic advertising services in 1996 valued at $843.9 million and two overseas deals at $1.4 million. Foreign companies made no acquisitions in that year.
Co-founded by Cipriano and Milton Kapelus in 1992, SKC grossed less than $200,000 in its first year of operation. Last year, however, the company earned $725,000 on revenues of $3.1 million.
Cipriano expects the merger to help SKC grow. “When you are a small company, you are limited in terms of potential, in terms of how big you can grow, with whom you can do business,” he said.
“We felt there was a tremendous opportunity in being part of a large organization. It will allow us to work with larger companies.”
He also expects the merger to help SKC compete with the nearly 2,000 firms crowding the New York metro area. Ad agencies have mushroomed since the early 1990s because many downsizing workers became entrepreneurs, he said.
Under the deal, Cipriano and Kapelus will each receive 250,000 shares in the new entity, plus $750,000 to $1 million in cash over three years, based on SKC’s future revenues.
“My long-term goal is to stay with the company,” said Cipriano.
“I am pretty excited about it. It will allow me to flex my creative muscle.”
Copyright Westfair Communications Aug 10, 1998
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