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October 21, 2002 - Strategy Magazine
Special Report: Marketing in Western Canada

What killed Lanyon Phillips?
Declining market and network clashes cited as factors

by Sara Minogue
page 15

News of a major agency leaving the market came as a shock to many in the advertising industry and left many Vancouverites saddened.

On Sept. 20, BBDO Canada announced that it would merge its Vancouver-based agency Lanyon Phillips Communications into the Vancouver offices of DDB Group Canada and TBWA Worldwide, both owned by the Omnicom Group, effective Jan. 1, 2003.

Some blame the shop closure on the economy. Others feel that merger-induced management problems were a factor, while still others worry that Vancouver no longer has the number of clients it once did.

Gerry Frascione, head of national business with BBDO Canada in Toronto, offers a short, simple answer: "I took a look at all of the growth opportunities that we have across the country and felt it would be in the best interest of our clients to focus our business in Toronto and Montreal.

"It's been a very, very busy year for us," he continues. "We're in good stead, but we're in the process of reinvigorating BBDO Canada, and part of that overall strategy is to make sure that we focus in the areas that promise the greatest return. I believe there are more growth opportunities right now in Central Canada, and we felt it would be in the best interest of our clients in Western Canada to merge Lanyon Phillips with our two other sister agencies in Vancouver."

While surely there are many contributing factors in the closure, Frascione delivers the one explanation that Canadian agencies feared most during the merger heyday of the '80s and '90s: BBDO Canada ate Lanyon Phillips.

It's the economy

It is generally agreed upon that ad agencies in the smaller Vancouver market have felt the sting of the slowing economy more than Canada's eastern ad centres, with Lanyon Phillips feeling it most profoundly. In 2001, the agency had $40 million in bookings with a client list including BC Hydro, Boston Pizza, Investors Group and Telus - premiere clients in Western Canada. This year, the agency had already seen staff shrink from 70 to about 25 before the consolidation was announced.

Chris Staples, founder of Vancouver boutique Rethink, posits, "Over the last 15 years, Vancouver as a market has been dealt quite a few serious blows with clients moving advertising out of market or just going under. Ikea moved to Toronto, then out of the country. Canadian Airlines was a huge account before their merger [with Air Canada]. The Woodwards bankruptcy in the early '90s was a big deal. The cutback in government spending has added to the pressure."

"It's a small and, in many ways, a declining market," says Peter Lanyon, a founding partner of Lanyon Phillips and soon to join Palmer Jarvis DDB as a network strategic consultant. "Vancouver is just not large enough to support a large number of agencies. This market is, for many companies, a sales district, so there is work in promotional sales support. And the real estate industry means there is a market for design services. But the advertising will, I think, shrink."

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