Minneapolis-based Periscope ad agency sold to Wisconsin firm

Periscope, the Twin Cities' largest independent advertising agency, has been sold to Wisconsin-based printing company Quad/Graphics Inc. for $132.5 million.

The sale, expected to close early next year, continues the reshaping of the local advertising landscape by acquisitions of well-known homegrown creative agencies.

"This was really about finding a partner and ownership structure that would basically do what we are doing with Periscope but with rocket fuel," said Liz Ross, president and chief executive of Periscope.

Periscope employs more than 500 people, most of whom work out of its Minneapolis headquarters. Its office will remain in the Twin Cities. The name Periscope will also stay as is "for now," Ross said.

"As the landscape in the U.S. in particular changes, the opportunity to build and continue to expand in the Twin Cities is one we feel really fortunate to have," Ross said.

Periscope generated $83.8 million in revenue last year, making it the 133rd largest agency in the United States, according to the most recent agency report by Ad Age DataCenter. Some of its clients have included Trolli gummy candy, the BASF Corp. and Target Corp. The full-service firm also has offices in Chicago, Hong Kong and Delhi.

While Quad/Graphics is publicly traded, the company is family-managed and family-controlled, offering a more independent structure than the typical holding company, Ross said.

Periscope will continue to pursue outside work while also providing creative and strategic services for Quad/Graphics clients as part of its "Quad 3.0 transformation" into an integrated marketing solutions provider.

Ross will serve as the president of agency services for Quad/Graphics and lead a team of about 1,700 staffers in partnership with Eric Ashworth, executive vice president of product solutions and market strategy at Quad/Graphics. Periscope's leadership team, including its Chief Creative Officer Peter Nicholson and CFO and COO Virginia Hines, will also serve to lead Quad/Graphics' marketing staff.

Periscope's reputation and the alignment of Ross' vision about the industry helped make the partnership a fit, said Joel Quadracci, chairman, president and chief executive of Quad/Graphics, who was in Minneapolis on Tuesday.

"They were already trying to create the agency of the future where you not only execute from a production standpoint, but you tie it up with the concepting as well," Quadracci said. "I think they didn't really probably at first realize that a printer might be a great place to be because of our relationships with lots of big brands. … The execution of content is a very important part of integration of all the channels."

Quad/Graphics, which is based in Sussex, Wis., near Milwaukee, is one of the nation's top printing companies and produces numerous catalogs and magazines as well as retail inserts and in-store signage for clients like Condé Nast, Adidas, Target and J.C. Penney. It earned $107.2 million on revenue of $4.13 billion in 2017. Late last month, Quad/Graphics announced the $1.4 billion acquisition of printing competitor LSC Communications Inc.

Quadracci, whose father founded the company in 1971, said Quad/Graphics' customers have been asking for a larger scope of services. The company has responded by developing its own creative operations division called BlueSoHo and continuing to add to its marketing capabilities. In February, Quad/Graphics announced the acquisition of Texas-based marketing firm Ivie & Associates. Also this year, Quad/Graphics purchased a majority stake in Rise Interactive, a digital agency in Chicago.

Periscope has been one of the last major agency holdouts in the region to remain independently owned. Most of the Twin Cities' major creative firms are owned by holding companies including Carmichael Lynch (Interpublic Group), ICF Olson and Colle McVoy (MDC Partners).

The local scene still boasts growing independent shops like Space150 and Broadhead as well as a growing base of smaller boutique shops.

"I think that this acquisition is just a unique partnership that is going to give just another leg up for the Twin Cities and Midwestern advertising industry," said Alex Denholm, president of the Advertising Federation of Minnesota (Ad Fed) and account director at the Hunt Adkins ad agency.

The number of agencies that have entered Ad Fed's annual awards event "the Show" has doubled in recent years thanks in no small part to small, independent agencies, Denholm said.

"We see a healthy balance of independent and network agencies within the Twin Cities, and it's going to continue to offer regional, national and international advertisers a breadth of best-in-class agencies and services to choose from," Denholm said.

Periscope was founded in 1994 by Bill Simpson and his brother Jim after they merged the family's typesetting and production business CTS Creative Graphics with creative agency Kauffman Stewart Advertising. The combined firm was rebranded Periscope.

The all-cash deal was looked at as a way for chairman and owner Bill Simpson to be able to step back from the business like he wanted and allow the company to continue to grow.

"Our companies share a common vision for the future of integrated marketing and operate with very similar values," said Bill Simpson. "The result of this business combination will be tremendous growth opportunities for our people, Periscope and Quad, and provide significant additional value for our clients. I'm excited to see what can be accomplished together."

Nicole Norfleet • 612-673-4495 Twitter: @nicolenorfleet