Advertising agency that failed to dictate political agenda goes bust

Yellow M, the agency that looked after the Conservative Party's advertising at the last election, has gone into receivership.

The firm, based in Newcastle, is the latest victim of the advertising recession and has failed to live up to the image given to it by the Tory party of a plucky outsider.

William Hague, Conservative leader at the time, hired the agency in 2000 because he was impressed with its work in the local elections. The Tories said they wanted to get away from the London clique of companies. A party spokesman had said: "We don't think Islington and Hampstead should dictate the political agenda to the rest of the country." But there was speculation that bigger agencies – including M&C Saatchi, which masterminded the party's previous campaigns – had ruled themselves out for fear of being associated with a lost cause.

Yellow M lost the £10m account shortly after the Conservatives' election defeat in June 2001. It has now called in the receivers and about 25 jobs are likely to be lost. The owner and chief executive, Mike Dethick, could not be contacted for comment.

Caroline Marshall, editor of Campaign, the advertising industry magazine, said yesterday: "We have looked at this agency in the context of them threatening to open an office in London and never actually doing it. It was a surprise when the Conservatives chose them as their ad agency."

The agency's best-known advert for the Tories was a poster of a grinning Tony Blair framed by a bubble, with the line: "Go on, burst his bubble."