A Closer Look At The Downfall Of Eisner Communications

Based on recent comments, we knew something strange was afoot in Baltimore. From The Baltimore Business Journal:

Jeremy Clarke says his ad agency publicly misstated how much money it was pulling in from clients. Clarke, who took over Steve Eisner's role as president of Eisner Communications Inc. in 2005, said he wanted to fix it.

"When I took over I was made aware of the differences between real billings and declared billings," Clarke said. "I was keen on getting to an honest figure."

Overstating billings put Eisner in an agency category befitting larger firms, he said. Consequently, Eisner went after "the wrong kind of clients," Clarke said.

Former Eisner employees say the company's capitalized billings, which is revenue multiplied by 6.7 to account for buying media placements, were less than one-third of the $182 million it reported in 2005. Though a little bit of puffery is common in the advertising industry, Eisner's numbers were inflated beyond the norm, they said.

Meanwhile, the agency continued to spend $100,000 a month on its office in Little Italy, according to two former employees close to the company's finances.

But Eisner's 53,000-square-foot office in the Bagby building was too big for a company with just 50 employees, GKV's Gray said. "You can put 60 employees in half the space," he said.

Then there's this:

Eisner Communications Inc.'s demise has left local broadcasters and newspapers with millions of dollars unpaid for ads the agency ran on behalf of the Maryland Lottery.

Eisner's biggest client, the Maryland Lottery wants to pay local media as much as $1.8 million for ads that ran in October. But the state agency cannot pay that money without legal authority to do so, Director Buddy Roogow said.

Millions? Where did all the money go?