Premium Big Snaps Up Top Boutique Aligning one of the hottest promotion agencies with one of the fastest-growing firms in specialty and premium product distribution, HA-LO Industries, Inc., acquired Chicago-based Upshot.

HA-LO, founded by Lou Weisbach, president, ceo, and chairman, bought Upshot for two million shares of its stock, said HA-LO vp financial relations Michael Nemlich.

The Niles, IL, company is exceptional among premium distributors in its diverse client base, servicing more than 20,000 companies. Most of them are use promotional products for internal incentive award programs or for incenting trade customers.

The company stands out for its rapid growth. HA-LO booked $414 million in 1997 sales compared to $22 million when it went public in 1992. It has purchased 21 companies in six years, mostly in ad product distribution but also branching into areas including telemarketing, sports marketing, and event planning.

Fortune magazine in September ranked the company 39th among the country's fastest growing firms, based on earnings per share growth, which was a 96 percent compounded annual rate over three years.

The promotional products industry has been growing at 16 percent to 18 percent for the past five years as companies appreciate the value of a targeted gift or incentive, said Nemlich.

With an emphasis on strategic planning and brand marketing program development, Upshot has posted torrid growth, gaining clients from Coke to Sony.

Its revenues have grown more than 100 percent per year in the last four years, with net revenue of $10 million in 1997. The agency shot to third place in the 1998 promo 100 ranking of agencies on the strength of its growth rate and revenues.

Other clients include Anheuser Busch, Absolut vodka, and Wrangler jeans.

"This new partnership affords us the ability to maintain our purity of vision and culture while providing both our current and future clients with an even further expanded breadth and depth . . . of brand marketing," said Upshot's ceo John Kelley.

"Upshot has a goal of exponential growth within the promotion marketing arena. After months of entertaining discussions with various global advertising and communications holding companies we've found the perfect partner in HA-LO," he added.

Top ad agencies, sources say, were courting the agency, which was founded in 1978.

A world of strategic planning and creative for brand promotions opens up to HA-LO with the merger.

"They are three to five levels above us on the food chain. This gives us a whole new dimension as to what we can do for our clients. We've been looking to acquire a sales promotion marketing agency for a couple of years," said Nemlich.

Upshot principals, including Kelly, will continue to run Upshot as a division of HA-LO, he added. HA-LO is traded on the New York stock exchange under the symbol HMK.

Cash Advance Gage Marketing Group's partnership with AHL Services, Inc., Atlanta, infuses cash into Gage's marketing services business, and helps the full service marketing agency's strategic promo planning side.

AHL will buy Gage's Marketing Support Services division for $81.7 million. In return, Gage will acquire AHL stock, becoming its second largest investor. E.C. "Skip" Gage, Gage Marketing's chairman and ceo, will continue to manage the MSS business and will sit on AHL's board. The MSS division has sales of $80 million and employs 1,600.

The deal is a way to generate capital, and combine strengths in marketing services in a consolidating industry where companies increasingly need to create efficiencies.

The Minneapolis-based marketer placed No. 50 in promo's 1998 agency ranking, with $123.6 million in net revenue.

"This allows us to grow on both the strategic and marketing services sides of the business," says Gage marketing communications manager Geoff Gage.

AHL provides contract staffing and fulfillment services. The MSS division has services including consumer fulfillment, trade fulfillment, including in the auto industry, and fast food, teleservices, and a lettershop. As an example of the merger's benefits, MSS will use AHL's fulfillment house on the West Coast where it has lacked such a facility, says Gage. AHL is publicly traded on NASDAQ.

Gage Marketing Group will continue to own and operate its marketing agencies which are not directly involved, and have a marketing alliance with Gage MSS. The marketing agencies include promotions and direct marketing units, and P-O-P and database marketing sections.

Staying private was one Gage goal. "We were being approached by a lot of people for a partnership. We looked at the big picture. We don't want to sell out to some one or go public," says Gage.

"This partnership on the fulfillment business with AHL allows us to grow this business at a faster rate and enable us to devote more capital to our marketing agency business."

MGR Bounces Back If you don't believe promotion marketing is a peaks-and-valley business, talk to the folks at MGR in Wilton, CT.

A year ago things looked pretty grim at the 10-year-old agency. Miller Brewing had consolidated its agencies, going from eight to two, Zipatoni and GMR. MGR lost the account and about 20 percent of its revenue and profits.

"We had been one of their leading brand agencies, plus we had done a lot of regional marketing. We were their highest rated agency among their own people," claims MGR managing partner Mickey Goodman.

"One minute with Miller we are growing 50 to 60 percent a year; the next our profits are erased," Goodman says.

With the Miller business, MGR reached $125 million in billings with $19 million in net revenue in 1997. Other clients included Unilever, Tropicana, and Kraft.

Rather than drop the 25 people on the Miller business, the agency tried to keep all the best people, reducing staff among those who didn't want to relocate.

Then it went out and aggressively solicited new business. The firm bounced back after only six months by snaring three major new accounts.

Pepsi Cola tapped MGR for account-specific work on Mug, Slice, and Lipton's Brisk. The agency will work on a number of Conagra's Healthy Choice brands. Plus, it has been named the agency of record for First Brand's Glad Bags.

"By the end of this year we will have regained everything, and even be a little bit ahead," says Goodman.

Question: What promotion from the past continues to inspire you? The Jack Daniels Country Squire promotion has always inspired me for a number of reasons. By rewarding heavy users with a deed to a tiny piece of land in Lynchburg County, TN, home of the distillery, users become "Country Squires." Their feelings of connection to Jack Daniels Country are continuously reinforced by periodic, personalized correspondence that includes updates on their land. Not only does the promotion strengthen the brand's old-fashioned Southern heritage and its positioning as an extraordinary bourbon, but it works effectively to build and maintain loyalty among the brand's most valuable customers. - Jon Kramer, president, J. Brown/LMC Group, Stamford, CT

About 10 years ago, before CDs, McDonald's delivered a sound sheet with the Big Mac song on it via a solo newspaper insert. The sound sheet had an instant win message at the end of the song and the insert delivered food coupons as well. I think this is a great example of integrating a critical brand message into a promotion, reinforcing awareness, and delivering it in a unique and intrusive way. It had to generate a lift just by the shear power of the medium. - Howard Steinberg, president, Source Marketing, Westport, CT

Back in the late '60s, early '70s, The Shell Make Money Game was a landmark event for the promotion industry. It was the first time a match-and-win technique was used. It was brilliant and so simple. Every time you gassed up your car you were given one side of a dollar bill with various values. Just find a matching right and left side and you won. It had three great aspects: it was easy to get involved, it created lots of word of mouth (collector clubs sprung up), and it had never been done before. Yes, it inspired me, and I believe a lot of other folks too! - Robin Austin, principal, Fusion 5, Westport, CT

Many promotions ask for the "big idea" but only provide a promotional tactic that is hidden behind a big communication idea. True promotional greatness comes from concepts that in some way remind the consumer of what the brand is and what it stands for in the consumer's consciousness and subconsciousness. The Coca-Cola card embodies everything that leads to promotional greatness.

The card leverages the ubiquity of the Coke icon and the relevance of the brand to everyday life. Coke is everywhere; therefore promotions should provide the consumer with total access. In a world where there are no new ideas, the card is unique in design and in its delivery to the consumer. The card provides fun. The promo leverages the muscle of the Coca-Cola bottling system from both a marketing perspective and by using the system. The promotion becomes bigger than life. - Bruce Perlman, co-president, BEN Marketing Group, Roswell, GA