$26-Million Tag on Newport Beach Agency : JWT Parent Reportedly to Buy Latino Ad Shop

One of the nation’s oldest and largest Latino advertising agencies is being sold to the same British marketing firm that owns ad giant J. Walter Thompson.

Newport Beach-based Mendoza, Dillon & Asociados Inc. is being purchased by WPP Group of London for an estimated $26 million, according to two of the firm’s senior executives who requested anonymity.

The purchase is an indication of ad firms’ burgeoning interest in the nation’s fast-growing Latino market. Several large agencies have created Latino divisions; others have purchased small Latino ad shops, and major advertisers have boosted spending on Latino ads.

Although few details of the purchase were made available late Monday, executives said that president Richard E. Dillon--who co-founded the agency in 1979--would remain as chief executive for several years. No layoffs are planned at the agency, which employs 40, executives said. Neither Dillon nor WPP Chief Executive Martin Sorrell were available for comment.

“It’s not as if we’ve been gobbled up by Saatchi & Saatchi,� said one executive at Mendoza Dillon. “WPP is really a financial group that is not going to stick its nose into our advertising.�

Mendoza Dillon creates ads exclusively for the U.S. Latino market. Among its largest clients are Miller Brewing Co., Johnson & Johnson and General Foods. The firm recently created several Latino ads for Seagram’s wine cooler.

Dillon co-founded the agency in 1979, bringing with him several accounts from Johnson & Johnson and General Foods, where he served in top marketing posts. By 1980, the agency was posting annual billings of about $2 million.

Nationally, Leo Burnett Co. of Chicago recently created an in-house Latino division after prodding from Procter & Gamble, one of its largest clients. Procter & Gamble will spend an estimated $12 million on Latino advertising in 1987, second only to Philip Morris Cos., which expects to spend an estimated $13.3 million. That is why several other ad agencies, such as W. B. Donner & Co. and Grey Advertising, also created Latino divisions this year.

According to some estimates, billings at Latino ad shops are growing at more than twice the rate of conventional U.S. ad firms. The top 40 Latino advertisers in the United States will spend an estimated $491 million in advertising in 1987, up more than 23% from 1986’s $398 million, estimates Hispanic Business Inc., a Santa Barbara-based publication.