Advertising executives in Dallas are concerned about the ripple effects on the region’s creative community caused by a large-scale loss of marquee customers by a big-name advertising agency.
Richards Group, the largest Dallas-based advertising agency with approximately 650 employees, plans to scale back as the reality of this week’s mass exodus of long-time clients stabilizes in its profits. The defections followed the furor over founder Stan Richards’ description of a new advertising campaign idea as “too black”
Owen Hannay, chief executive of Dallas-based advertising agency Slingshot, is concerned that the Richards group will have to free “hundreds of employees in an advertising community that can’t absorb them.”
“And that’s just the Richards group, folks,” he said. “You start looking at the editing companies, the freelancers, the shooters. … The service side of the advertising business beyond the agencies will suffer enormously because they can’t replace that business.”
Richards’ 44-year career at the helm of his eponymous agency came to an abrupt end on Thursday, when he actually quit over race-insensitive remarks he made during an internal meeting with some 40 employees.
After his comments were publicized, Motel 6 promptly fired the agency and started a bleeding week that saw half a dozen well-known brands and the Salvation Army charitable organization sever ties with the company. Many have worked with The Richards Group for decades.
Hannay said it’s very unlikely that a domestic client like home improvement retailer Home Depot will hire another Dallas agency.
The customer drain could also affect creative companies that Richards has spun off over the years with other advertising professionals, said Leon Banowetz, president and owner of Dallas-based advertising agency Banowetz + Co.
Richards created a multicultural agency called Richards / Lerma with agency veteran Pete Lerma in 2009. The agency was renamed to simply Lerma earlier this year. Two weeks ago, veterans of the Richards group Pete Lempert and Dave Kroencke launched a new consulting group called Richards Venture.
“When something like this happens in a corner of our community, it affects us all,” said Joe DeMiero, CEO of the Hawkeye agency, describing the Dallas creative and advertising community as close-knit.
Hawkeye has approximately 250 employees in Dallas and a total of 931 across 22 offices in the United States.
In Dallas, it’s typical for creative professionals to swipe between The Richards Group and Hawkeye throughout their careers and vice versa, DeMiero said. He said he thinks his agency might absorb some of the Richards staff.
“If there is a bright side to what is a horrible situation, it is that more and more customers are demanding that their partners’ values align with their values,” DeMiero said.
The 38-year-old executive said he also saw a shift in the way large companies view their relationships with advertising agencies.
Hawkeye, one of Dallas’ largest agencies, added 18 clients to its business during the COVID-19 pandemic and nearly all required data or a commitment to diversity and inclusion, he said.
“The transformation in the creative sector will require the buyer side to demand it on the supply side, and the supply side will proactively step up and meet those requests,” said DeMiero.
The University of Texas at Austin, where an advertising and public relations school is named after Richards, released Richards’ recorded apologies to the university and its students on Friday. She said in the video that she has never tolerated racist slurs and does not condone white supremacy, but acknowledged that her remarks were the biggest mistake of her life.
“In that moment, I wiped out years of trust,” he said. “I could hide from this, but I think it’s best to own it.”