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It is rare for an advertising agency to enjoy the level of attention that Springer & Jacoby us currently attracting in Germany. True, others such as Saatchi & Saatchi have achieved it in their time, but the fall from grace of what was once Germany's most respected creative hot shop, is currently a buzzing topic on the business pages of the nation's newspapers, prompting Sunday broadsheet Die Welt am Sonntag (WAMS) to take a closer look at what has caused its problems.

Reinhard Springer

  
Back in 1997, founder Reinhard Springer was interviewed by TV director Lutz Werfel in a manner very much to his taste, say the newspaper's writers. Smiling and relaxed, he was dubbed by Wetzel as the 'sorcerer of the advertising industry'. Springer left viewers in no doubt that he considered the accolade entirely apt. "This firm", he said, self-assuredly, has only known one way to go so far - upwards." Anyone who might say otherwise, he added, was simply a 'misery guts'.

Eight years later, the world looks very different. Majority owner Interpublic now wants to get rid of its 51% stake in the agency. That, WAMS' writers say, will not be so easy and initial talks with potential takeover candidates have already concluded unsuccessfully.

Officially, the line from S&J is that there's no reason to hurry and that talks are continuing. Agency MD Oliver Schwall adds that there are just two buyers currently in the running - Electra Partners, a UK-based investment group that alreday owns a majority stake in local rival Scholz & Friends, and Elephant Seven AG, a stock market-quoted, Munich-based online advertising agency in which Springer & Jacoby's founders have a 19.7% stake.

This, WAMS says, leaves Elephant Seven particularly well placed to succeed in any takoever bid. Should it do so, the two agencies will remain as independent brands under a holding company traded on the stock market. "S&J and E7 would complement each other well on account of their expertise and corporate culture", Oliver Schwall tells the paper.

No details are available as regards purchase price, but the agency's value is not now that high, comments one rival agency owner. "An agency's value is established by the number of creatives it employs and the number of valuable clients it has", he says.

And that is the main problem at Springer & Jacoby. In the last three months alone, the bank Eurohypo, Veltins beer and Hamburg-based Mannheim have taken their accounts out of the agency. Core client Mercedes-Benz, which accounts for a full third of all revenues at S&J, has given it a temporary reprieve, says WAMS, but expects the management crisis to be resolved by the end of the year. If not, the company is "sure to find a queue of top agencies who correspond to the profile we require".

That, says Die Welt am Sonntag, would be a disaster for an agency that has been in turmoil for some months now. Founders Reinhard Springer and Konstantin Jacoby, who retain majority voting rights, surprisingly showed their German management team the door in August  'for cost reasons', with Oliver Schwall and creative head Erik Heitmann moved in to work to ensure continuity.

Doubt reigns among employees as to whether these two are the right men for the job, WAMS says. Springer & Jacoby, it adds, could not have found a more unloved replacement management team. 'testerone-driven', 'arrogant', 'incapable', 'not a clue about how to deal with people' are some of the more printable descriptions given to the newspaper's reporters.

Heitmann, in particular, comes in for criticism. Put in charge of the Mercedes-Benz account some years ago, he did not win the unconditional approval of the client, WAMS says. For that reason, he was replaced just two months later. The chances of S&J hanging on to its most important client can hardly have been improved by his appointment.

The first public appearance of the newly-appointed duo created a real PR gaffe, says WAMS. Schwall and Heitmann presented their new 'efficiency programme' under the motto 'Singing in the Rain'. As part of this programme, clients are to be offered a cut-price service alongside the standard version. This means just one team working on their account and only two agency members appearing at meetings. Should a decision not have been taken after three meetings, the client then pays extra.

It is, its originators say, designed to ensure that client relations are 'designed in a disciplined manner'. As the number of account moves since shows, clients clearly have little interest in this discipline. No wonder, then, that no-one has yet opted for this 'Aldi option'.

Nevertheless, Haltmann and Schwall are sticking to the concept, WAMS says, blaming the press for the adverse reaction. As Germany's no. 1 creative agency, says Schwall, S&J is under especially close observation. He does, however, admit that "our communication of the tariffs went particularly badly".

Agency employees were quick to show their feelings about the new concept, photocopying their naked bottoms, putting togather a book of the results and sending it to Haltmann and Schwall. Anger was caused particularly by the decision not to take part in any more creative pitches, again for cost reasons. "That's like doing away with the Olympics", said one creative, who has since left.

And he, says WAMS, is not the only one. Around 50 staff pre-empted the job cuts announced by leaving of their own free will. While this may have saved management the cost of paying them off, it also meant that the agency lost practically all its top creative heads.

The aim of the 'efficieny programme was to bring Springer & Jacoby out of its nosedive, says the newspaper. Since 2001, turnover has fallen from € 69 million to € 46 million and, while the rest of the industry is gradually dragging itself out of recession, S&J made a loss last year for the first time in its history.

Springer & Jacoby ignorantly let its reputation as a home for the creative elite become tarnished and missed trends emerging in the marketplace, says WAMS. 60% to 70% of its income still comes from above-the-line advertising - something which ignores what clients today are looking for. Big brands, WAMS says, now spend only around 30% of their money on TV, poster and print advertising, preferring to channel most of it into activities such as PR, direct marketing, online promotion or event sponsoring.

Reinhard Springer has eventually woken up to the 'malaise', says WAMS, after a period during which he had kept a fairly low profile. In an interview with the magazine Capital, he admitted some weeks ago that the crisis had been "created in-house", structures "damaged" and that the agency was now at "rock bottom".

This, say the writers of Die Welt am Sonntag, now has to be looked at in another light. Given that Elephant Seven AG is one of the potential buyers, Springer is also potentially part new owner of Springer & Jacoby. Its founder's harsh words can hardly have cause the purchase price to rise.

To read this article in German, click on the link below (left) to be taken to the corresponding page on the Dir Welt website. Alternatively, click on the link below (right) to be taken to Springer & Jacoby's website.