McMoon, a bubble that went pop

By PAUL PANCKHURST

Two years ago, Auckland agency McCarthy Moon was one of the up and coming stars of the advertising industry.

Eighteen months ago, a news report hailed it as "the little agency that could".

Behind the scenes, the reality was quite different.

Today, it is in receivership: a bubble that expanded and went pop.

Talking from Melbourne, one of the agency's founders, Paul Moon, said the agency - known in the industry as McMoon - ended up "chasing campaigns", taking on business at unprofitable rates.

Everyone saw the glowing publicity in the business press and the upmarket inner-city office in Pitt St and thought the business was prospering. There were problems, though.

One, said Moon, was that it had taken on clients at monthly fees that were too low.

Another: rampant growth coincided with instability as staff marched through a revolving door - not a good look in a business where personal relationships are everything.

One of the founders, John McCarthy, left the agency, while the other, Moon, was running the agency's new office in Melbourne.

Meanwhile, according to Moon, the agency strayed ever further from its original speciality of "below the line" advertising, the term for the unsexy stuff - such as direct mail - that is not commission bearing.

As Moon and McCarthy have told the story, McMoon started off in 1992 as an Auckland design house.

Moon was a graphic designer. McCarthy had worked in sales in real estate and for design agencies.

The business kicked off with Moon designing on a kitchen table in a suburban home but expanded into direct marketing and interactive services, before moving into "above-the-line" advertising, the category that includes such things as print, radio and television advertisements.

A flick through the archives shows McMoon - then called McCarthy Moon Design - picking up an award in 1997 for a CD-Rom advertising a worming product to vets. Vets won prizes by zapping worms on their computer screens.

The agency stayed under the radar of the wider advertising industry until early 1999, when it won the Australian advertising account of the personnel company Drake International.

McMoon already had the New Zealand business. New Zealand agencies are used to watching advertising and marketing work drift across the Tasman, so it was nice to snatch some back.

By June 2000, McMoon was talking of expanding the Melbourne office, after snaring a chunk of the telco Telstra's business.

The agency pitched itself as one of a new breed. In one media release, it said: "Unlike mainstream agencies, we don't automatically suggest an expensive above-the-line campaign and mentally calculate our media commission.

"We think about the issues from a communications perspective and develop an integrated strategy using any or all of our core skills to best suit the project, regardless of whether it's traditional or non-traditional media."

Not everything was running to plan, however.

Before his exit, McCarthy had indicated privately that the agency was not finding it easy going. Perceptions of "creaming it" were far from the truth.

Early last year, the company brought in former Saatchi & Saatchi media director Diane Maxwell to run the Auckland office.

Her account of the agency's downfall is different from Moon's.

Maxwell said she was surprised to discover on her arrival that neither the company's records nor its finances were in good shape. She said she renegotiated bad deals with clients and set about pulling in new business. It came. One notable addition to the client roster was the financial services company Sovereign.

The agency executed an underground campaign for the beer Lion Pils that tried to connect with young drinkers. It did some work for the ANZ.

McMoon also picked up an award as small agency of the year.

A newspaper report in May last year described it as "the little agency that could" and "on the way up".

In Maxwell's view, the agency made solid progress while she was at the helm.

"The thing shouldn't have gone under. By the end of 2001 it was in good shape."

One hitch, though: when she brought clients aboard it was, she said, with the promise that she and creative director Steve Abramowitz would work on their business.

In October last year, Maxwell and Abramowitz left the agency.

Maxwell said she left because she had been unhappy with some of Moon's business decisions - a coded statement that could mean anything.

The agency shed clients and limped through this year before a debenture-holder, the ANZ, pulled the plug last month.

Moon said he had spent six weeks in Auckland trying to salvage things.

"The agency was in a real hole, more so than I realised."

The receivers are yet to get a fix on how much creditors are likely to lose.

In Melbourne, Moon presses on, with the office now operating under the name Pritchard Moon after he brought in a new face.

The Melbourne and Auckland offices were separate companies.