Gray Kirk & Evans and VanSant Dugdale, Baltimore's fifth- and sixth-largest advertising agencies, have signed a letter of intent to merge, an official at VanSant confirmed yesterday.
With combined annual billings of about $75 million, the resulting firm would be the second-largest advertising agency in Baltimore, behind W. B. Doner & Co. It would displace Richardson, Myers & Donofrio, which has annual billings of about $60 million and has long been in second place.
"There has been a letter of intent to merge," said Thomas Nagle, VanSant senior vice president of account services. "I cannot say anything else. A statement will be released" at a later date.
However, advertising agency executives and other industry observers said yesterday that a Gray Kirk-VanSant marriage will most likely bea strong one and good for both companies as long as some long-standing conflicts between members of the two firms are resolved.
VanSant was dealt a crippling blow last December when its most prized client, USF&G Corp., cut back its ad budget to reduce costs.
The $11 million the insurance giant spent with VanSant annually was cut "significantly," agency officials said then, and the firm had to lay off some of its 60 employees.
A merger will strengthen the 79-year-old agency's position considerably.
Gray Kirk, on the other hand, receives more than half of its billings from the Choice International hotel chain, which is based in Silver Spring.
Industry observers said yesterday that it was time for the firm, which was formed in 1989 through a merger of Smith Burke & Azzam and Evans/McLaughlin, to diversify so that it would not be crippled if it were to lose the Choice business.
VanSant is a well-respected business-to-business advertising agency, and Gray Kirk has established its strengths in consumer, retail and entertainment advertising. The resulting firm will have expertise in all those areas.
Martin Marietta Corp. and Legg Mason Wood Walker are two of VanSant's bigger local clients; Gray Kirk's are Choice, the Hamburgers retail chain and the Bank of Baltimore.
However, industry observers are curious about one potential conflict that could result from the merger of the two agencies.
Jeff Millman, an award-winning creative talent at VanSant, and Roger Gray, head of Gray Kirk, had a falling out in the late 1980s when Mr. Gray was head of Smith Burke & Azzam.
Mr. Millman, who helped make Smith Burke into one of the East Coast's most creative shops, left the firm to join VanSant, taking with him the Trump Castle account (which VanSant later lost).
It was not clear yesterday who will take the helm of the new agency: Mr. Gray, now the chief executive of Gray Kirk, or Kenneth Mayhorne, the chief executive of VanSant.