For months it’s been us versus them in the war room at Idea City, the headquarters of the Austin advertising agency GSD&M. “Us” is Us magazine, the entertainment monthly that on March 17 will switch to a weekly called (what else?) Us Weekly. “Them” are high-circulation magazines like People, Entertainment Weekly, and TV Guide that Us Weekly will compete against for the attention of millions of showbiz junkies who can’t get enough celebrity news and gossip — and for advertisers with very deep pockets.

It’s not the first time that publishing icon Jann Wenner, whose privately held Wenner Media also owns Rolling Stone and Men’s Journal, has tapped an ad agency to reinvent one of his titles. His last agency, Minneapolis-based Fallon McElligott, developed the famous “Perception/Reality” campaign for Rolling Stone that ran from 1984 to 1994, poking fun at the perception of the magazine’s stereotypical reader — a pot-smoking hippie — and humorously contrasting it with demographic data showing that the actual reader was really an upwardly mobile baby boomer. What’s driving the Us makeover, though, isn’t so much perception as the reality of the wired world. With entertainment news available 24 hours a day on the Internet and cable TV, a monthly magazine makes no sense. The new slogan the GSD&M team came up with for Us — “A Lot Can Happen in a Week” — acknowledges the time crunch, and Wenner loves it. “This is going to be one of the most exciting things in publishing this year,” he tells me during a telephone interview from his New York office.

It’s going to be equally exciting for GSD&M, which was just named Southwest Agency of the Year by Adweek for the second year in a row. Once a boutique shop best known for selling Texas to the world in campaigns like “Don’t Mess With Texas” and “Texas. It’s Like a Whole Other Country,” it’s undergoing a transformation of its own: from a regional player to a national one; and from an old-fashioned ad agency to one that’s also a newfangled entertainment-services company. Wenner Media is merely one piece in GSD&M’s long-term plan to broaden its mission, and a small one at that; estimated billings, which include forthcoming work for Rolling Stone and Men’s Journal, are just over $10 million. Much more significant was last year’s snagging of DreamWorks SKG, the studio formed by director Steven Spielberg, producer Jeffrey Katzenberg, and music mogul David Geffen. DreamWorks’ decision to send its coveted $100 million account to the Third Coast made headlines in Daily Variety and The Hollywood Reporter, and GSD&M co-founder and president Roy Spence boasts that it’s only the beginning. “There’s going to be a convergence, a blurring of the lines between advertising and entertainment,” he says. “We want to be at the forefront.”

True to his no-holds-barred form, Spence isn’t waiting to react to that convergence; he’s doing his part to accelerate it. In 1998 he set up a subsidiary called Idea Entertainment that aims to be a content provider of sorts — producing television shows, documentaries, and movies and promoting concerts, even publishing books. For example, GSD&M is co-producing a pilot with Austin PBS station KLRU called Idea City, an exploration of the source of creative ideas; if it flies, Spence hopes to take it national. He says he stumbled across a book that he thinks would make an “awesome” movie (he can’t disclose the name of it yet). Jim Dauterive, a writer and co-producer of the animated TV show King of the Hill, dropped by the agency’s offices last year to perform a staged reading of a new screenplay. “Every copywriter in the advertising business is writing the Great American Novel,” Spence says. “Every director and every producer in the ad business is doing the Great American Film. They’ve all got the screenplays done. So I’m saying to them, ‘If you want to do advertising and books and movies, let’s do it here.'”

Skeptics inside and outside the agency, though, question whether such projects will produce tangible payoffs for the agency and its clients. “Roy is such a dynamic person,” says a former top employee. “On the one hand, he generally gets what he wants, one way or another. But sometimes he gets an idea and it’s cotton candy; once you delve into it there’s nothing but air.” Spence acknowledges he is taking some risks but adds that he’s just sticking a toe into the entertainment waters, not jumping in. “Hell, it’s dangerous” he admits. “Some people say, ‘It’s another Roy thing.’ But I like to plant seeds. I’ve made a lot of mistakes, but my feeling is that in this business you’re growing only if you’re creating.”

That GSD&M could even hope to be relevant in the glamorous but cutthroat world of entertainment is partly a function of its size. Its workforce has grown astronomically, doubling in two years’ time to about six hundred. Many of the new hires are in the media department, which negotiates and places TV, radio, and print ads; media-only accounts now represent a third of the agency’s total billings, which this year are expected to hit $1 billion. Twenty-eight years after it got fired by its first client, a men’s wear company, for running a newspaper ad too small, GSD&M boasts a blue-chip roster that includes Southwest Airlines, Pennzoil, the PGA Tour, Wal-Mart, and MasterCard. Its single-largest account — some $250 million in annual billings — is SBC Communications, the San Antonio-based telecommunications giant.

Being based in Austin has also proven to be an asset as the agency ventures into entertainment. Filmmakers, directors, and actors live and work there, and the South by Southwest Music Festival and the Austin Film Festival have put the city on the cultural map (GSD&M participates in both by hosting events and donating time and agency talent). “Austin is a brand in itself,” Spence says. “And the brand is distinctive: It’s high tech, it’s music, it’s movies.” The more that Austin becomes an entertainment mecca, he adds, and the more GSD&M can associate itself with creative projects, the easier it is to recruit new hires and land new clients, which means it can grow even more.

Just as important as GSD&M’s size is its style: The agency is high-spirited, edgy, aggressive, and quick on its feet and plays to emotion in its creative work — a real accomplishment when you consider that it’s no longer owned by the ragtag bunch of University of Texas pals who founded it in 1971 but by a huge New York-based holding company, Omnicom Group. “They like to portray themselves as the little engine that could,” says Stuart Elliott, the advertising columnist for the New York Times, “but they have a giant company buying all the coal to stoke the boiler.” It was that combination of size and style that won over Jann Wenner, who says he wanted an agency that mirrored his company — “one that’s agile and quick to move and fast to react” but also offers the quality and services of a big firm. “Roy has put that together,” Wenner says.

Yet it’s a fragile balance. Like another successful start-up of the same era, Southwest Airlines, GSD&M is finding it harder and harder to preserve the entrepreneurial approach that got it where it is today — the close-knit corporate culture in which everyone was family (staffers recall Super Bowl parties at Spence’s house in the early days), played hard but worked hard, was idealistic but didn’t take things too seriously and turned smallness to an advantage. Spence says Sam Walton, Wal-Mart’s late founder, taught him and his colleagues that “you can grow big by acting small.” That’s being put to the test, though, now that the agency is so large that many employees are strangers. To combat the problem, Spence and two other co-founders, CEO Steve Gurasich and executive vice president Judy Trabulsi, are teaching classes at Idea University, an in-house training program, on such topics as “History, Vision, and Values.” (The fourth co-founder, Tim McClure, is mostly occupied these days with running the M Group, a special-projects offshoot of the agency that focuses on technology start-ups. The fifth, Jim Darilek, left the agency in 1974 to pursue a career in magazine design.)

And Spence personally indoctrinates new hires, as I learn while watching him in action during an orientation called Culture Camp. Blond-haired, theatrical, and irreverent, he is part-showman, part-preacher — a natural at blending advertising and entertainment. On this November day he looks younger than his 51 years in a black wool jacket, black slacks, a checked shirt, and cowboy boots. Seventy or so Gen X’ers, mostly in blue jeans, sit cross-legged on the floor of Idea City’s lobby, eyes fixed on the man with the mike who still sounds like the quarterback he once was in his hometown of Brownwood. As Spence spouts his well-known “Roy-isms” (i.e., “A tight corporate culture is the tiebreaker”), the faithful can’t help but notice the words spelled out in the tile floor: freedom, responsibility, curiosity, community, integrity, restlessness, and winning. Later, Spence tells me that it’s hard to instill the agency’s values into so many new people. “We’re not good enough at it,” he says, “but we believe it’s important, and we’re willing to spend the time and talent and the dollars to do it.” And, he hastens to add, he himself bears much of the burden: “I’m going to lead the company and show the way. Attitude is so important. I can teach them attitude.”

Attitude is certainly on display at Idea City, the shining symbol of GSD&M’s growth, success, and ongoing transformation. In 1997 the agency moved into the jazzy new three-story, 137,600-square-foot complex that occupies almost a block of West Sixth Street in a funky neighborhood of older homes and Austin institutions like Katz’s Deli and Hut’s Hamburgers. Built of brick, concrete, and glass, it’s a monument to creative impulse, with a $300,000 state-of-the-art movie theater, a 54,000-square-foot studio, a skybox with a wine closet and office space for clients (reps from the record label BMG plan to hang out there for several days this month during South by Southwest), and a formal garden that Spence personally designed.

His goal, he says, was to build “the most imaginative, energetic, eclectic, most creative environment in the United States,” and you’d be hard-pressed to say he hasn’t. For instance, an old sign made out of steel tops the new studio at Idea Entertainment. “I actually found neon lights that don’t work,” he says with obvious delight. “They flash, like they’re old — like out of Psycho or something. And I’ve got sound, so when you’re walking down the street, you actually hear zzzzzzt, zzzzzzt.” Inside, are a series of rooms that look like mini-Hollywood sets where employees can go for inspiration. There’s the Diner, which serves soda fountain treats; the Bookstore, where you can browse and have coffee; the City Scape, a Brownstone facade; and the Backyard, with a deck, a swing, and picnic tables. Each space has music to set the mood: hip-hop in the City Scape, jazz in the Bookstore, golden oldies in the Diner, country in the Backyard. “I wanted to create areas where there’s cross-pollenization going on without anyone knowing it,” Spence says. “I want a very diverse and eclectic place, because that’s the marketplace. That’s the world.”

In that new marketplace, GSD&M’s sell line — posted right there on its Web site — is “Imitation is the sincerest form of a lack of imagination.” Hence the need to stir up the creative mix and try new things. “My theory has always been ‘Don’t worry about your competitors — be a better us,'” Spence says. “Because if you try to be like them, the best you’ll ever be is a worse them.”

Kathryn Jones wrote about her family’s ranch near Glen Rose in the November 1999 issue of Texas Monthly.