The World: Mercedes departure rattles Springer & Jacoby

The 'mothership' of German advertising is reassessing after losing its biggest advertising account, Mark Tungate reports.

If you were asked to name two iconic German automobile brands, it wouldn't take very long to come up with the names Mercedes-Benz and BMW. Naming two iconic German ad agencies might be more of a challenge, but there's a good chance that Jung von Matt and Springer & Jacoby would be up there. Now, all four companies are embroiled in an account reshuffle that has changed the German advertising landscape.

The basic facts are simple: Mercedes has left Springer & Jacoby for Jung von Matt. Accordingly, Jung von Matt was forced to resign the BMW account. BMW is therefore seeking another agency. It would be perfect symmetry if BMW went to S&J, but few people in the market are expecting this fairytale ending.

Indeed, S&J has been forced to weather accusations in the German media that its glory days are over. The executive creative director, Erik Heitmann, plays down this view. "We still have great clients, we are still pitching, and we are still doing great work," he says. "Obviously, the loss of Mercedes was a huge change for us, because we had worked on the business for 16 years. But that does not mean we are going away." He compares the agency to another car brand, Porsche: "We go through different phases, but we always reinvent ourselves."

Some say S&J invented modern German advertising. Reinhard Springer opened his agency in 1979, at the dawn of the country's commercial television service. The copy- writer Konstantin Jacoby joined him four years later. Together they mastered what was effectively a new medium, injecting into their ads a universal humour that made a strong impact at Cannes. For more than two decades, the agency has appeared to be unstoppable.

In 2000, it sold a minority share to True North, which was later acquired by Interpublic. Since then, S&J has been repositioning itself as a fully integrated marketing services agency. Even in 2005, it topped the creative rankings of the local ad journals Werben & Verkaufen and Horizont, ahead of DDB and Jung von Matt. Its clients include Muller, Olympus and Commerzbank. Yet there's no doubt S&J has been battered by the ailing German economy. The loss of Mercedes, which accounted for one- third of its billings, is a deep wound.

Over at Jung von Matt, there is certainly no gloating about what has happened to its rival. "It remains a school and a reference for the German ad community," Karen Heumann, a board member and strategic planner, says. "S&J is the sort of mothership from which many of Germany's most talented advertising people have emerged."

They include Holger Jung and Jean-Remy von Matt, who left S&J to start their own agency in 1991, taking with them the car rental company Sixt. The agencies have shared DNA and similar systems, based on strong discipline and a "form follows function" approach to advertising.

"At Jung von Matt, our mission statement has always been 'we remain unsatisfied'," Heumann says. "If it is four in the morning before a presentation and somebody says the whole thing needs reworking, we'll rework it."

So was the agency dissatisfied with its relationship with BMW? No-one is saying - although it's understood Jung von Matt agonised over the decision to resign the account. Insiders say BMW hampered the agency by not giving it all the elements of the business - in particular, the online work - which made Mercedes a more attractive option.

So why did Mercedes fall out with S&J? The agency was already suffering before the auto brand packed its bags. A critical article in the newspaper Die Welt am Sonntag at the end of last year pointed out that S&J made a loss for the first time in 2005, with turnover falling from EUR69 million in 2001 to EUR46 million. As Heitmann and the managing director, Oliver Schwall, moved to tighten up running costs, the newspaper claimed that 50 staff pre-empted job cuts by "leaving of their own accord". Some rival agencies also factor in the loss of the highly regarded creative Amir Kassaie to DDB, back in 2003.

However, Mercedes' parent company, DaimlerChrysler, says it simply wanted a "fresh start" for Mercedes, which has image problems of its own. Klaus Maier, the executive vice-president of the Mercedes Car Group, responsible for sales and marketing, says: "People rightfully expect our brand to provide top performance in every respect - something we also seek to achieve in our brand communication. With Jung von Matt, we aim to use intelligent, emotional and efficient communication measures."

In fact, Mercedes had been talking about an account review for some time. This put a strain on S&J's relationship with Interpublic, which now has a 51 per cent stake in the agency. Now it looks as though its shares will be sold to Elephant 7, a former subsidiary, in what amounts to a management buy-out. "Elephant 7 is our spun-off multimedia agency," Heitmann explains. "It has grown fast; it has some investors and they are willing to buy S&J."

E7 - whose name refers to the colour its walls are painted - is still in the same building as S&J. Heitmann says: "I wouldn't call this a comeback, because we haven't been anywhere. But you could perhaps refer to it as a relaunch. The fact we're looking at joining forces with a multimedia agency indicates that we have our eye on the future."

Mercedes concedes that S&J "contributed to the success" of the brand during their unusually long collaboration. Perhaps this is what future clients will remember.