One of the biggest advertising agencies in Dublin, Doherty Advertising, is set to form a strategic partnership with a Japanese agency.
Under the proposed arrangement, the Japanese firm will take a stake in Doherty in return for a capital injection. But it will not amount to a takeover of the company. Doherty is the latest full-service agency to form an international partnership, although this is the first deal with an Asian-owned agency.
The agency's name will be released when final contracts have been signed. Full-service agencies offer media buying, planning and creative services to clients.
Doherty was taken over in 2001 by Mr Mark Beggs and Mr Antony Martin of Indigo, and employs 36 people. It has lost several prominent accounts in the last year, including the Eastern Regional Health Authority, Boyle Sports and Suzuki, although it gained electrical company Bosch and the Dublin Daily newspaper.
Mr Martin said the agency's dependence on semi-state business had reduced from 70 per cent of turnover to less than 20 per cent. "It is this success which attracted the Japanese interest to our business," he said.
Doherty is one of the biggest ad spenders in Dublin. According to figures from the National Newspapers of Ireland, it was the fourth-biggest spender in the Republic last year, placing €7.9 million of ads. Its accounts to April 30th, 2002, were recently lodged with the Companies Office.
They show pre-tax profits dropping to €534,618 from €797,753. While turnover rose, the firm's administrative expenses rose to €3.8 million from €2.6 million.
Mr Martin said the firm had to carry several exceptional costs during 2001-02, which reduced profitability. But he said the firm had put the right structures in place in the past two years and could now grow, particularly on the back of the link-up with the Japanese firm.
Mr Martin said Doherty had discussions with an Irish agency but could not find a suitable partner locally which could bring the "expertise and synergies which will result from our tie-in with the Japanese agency". He added: "As negotiations progressed in Ireland, Mark was engaged in discussions with the Japanese and it has now been decided that this is where the future lies for Doherty."
