After making commercials for the state lottery for decades, Boston advertising giant Hill Holliday said Thursday it will not seek to renew its contract with the agency.
A spokeswoman for Hill Holliday said the lottery account no longer fits its business model, which focuses on creating ads for corporate giants such as Bank of America Corp., Liberty Mutual Insurance Co. and Dunkin’ Donuts, among others.
Those ad campaigns can run into the tens of millions of dollars for Hill Holliday, while the Lottery account is typically several million dollars, and is prone to large swings in funding based on state finances. This fiscal year, for example, it is valued at just $2 million.
Spokeswoman Tracy Brady said the state account is too little for a firm of Hill Holliday’s size.
“It just doesn’t make sense for us, and it doesn’t make sense for the lottery to work with an agency of our size,’’ Brady said. Hill Holliday has about 850 employees and annual billings of more than $1 billion.
The firm’s contract with the lottery expired in December, but the relationship has remained in flux while lottery officials prepare to solicit bids for a new contract to be awarded this summer.
Hill Holliday’s decision comes as the firm finds itself entangled in the fraud and conspiracy charges filed against former state treasurer Timothy Cahill, whom prosecutors have accused of using taxpayer-funded lottery ads produced by Hill Holliday to boost his 2010 campaign for governor.
Neither Hill Holliday nor its executives are facing charges in the matter, but the legal drama has created a rare moment of political discomfort for a firm with a reputation for deftly managing relationships with Boston’s power elite.
Prosecutors have cited e-mails and phone records that they allege show Cahill contacting Hill Holliday soon after conferring with his campaign aides about running the ads. Cahill pleaded not guilty to the charges earlier this month; it is not known if Hill Holliday executives will be called to testify.
The company has developed ads for the lottery since the 1970s, when its founder and former chief executive, Jack Connors, struck up a business relationship with then state treasurer Robert Crane. Connors retired from Hill Holliday in 2006 and no longer has a financial interest in the company, which is owned by Interpublic Group of New York.
Over the years, Hill Holliday became a powerhouse in its industry while developing strong connections to Beacon Hill and its leaders. The firm hosted political fund-raisers and hired political operatives when they were between jobs. Among its former employees are John Sasso, a top aide to former governor Michael S. Dukakis, and Eric Fehrnstrom, a longtime aide to former governor Mitt Romney, who is working on his presidential campaign.
Despite the firm’s political connections, current and former employees said the lottery contract was not considered a major account. Even at its largest the contract promised about $10 million, a fraction of the company’s overall revenues.
“The lottery account was valuable to Hill Holliday from creative perspective, not from a business perspective,’’ said Will Keyser, a former Hill Holliday employee who also worked as a spokesman for the late senator Edward M. Kennedy. Keyser said the lottery account offered Hill Holiday’s creative staff the opportunity to develop more imaginative material than it could craft for bread-and-butter corporate clients.
The state’s current treasurer, Steven Grossman, said he is seeking to get the lottery’s ad budget increased next fiscal year, to $5 million. Lottery officials will begin soliciting bids within the next few weeks.
“I expect there will be a lot of competition,’’ Grossman said. “The ad business has changed dramatically, and I think we’ll get interest from smaller agencies that are incredibly fast, flexible, and entrepreneurial.’’