Digital ad shop R/GA, viewed in New York ad circles as one of the hotter agencies working in the rapidly-expanding online arena, has been quietly setting up a Chicago operation for the past 12 months.

Still, it's way too early to say what kind of success R/GA will enjoy in Chicago, where so many agencies, big and small, are struggling. Sean McCarthy is R/GA's managing director in Chicago. Ken Erke, formerly the chief creative officer at Young & Rubicam/Chicago, and Matt Marcus, most recently an independent marketing consultant, have been brought on board to oversee creative. The Chicago shop's only two accounts so are S.C. Johnson and Dow, and one of those could be in jeopardy. S.C. Johnson said last week it is launching a global agency review, and all its roster agencies, including R/GA, will have to pitch if they wish to hold on to their part of the business, or possibly win more.

McCarthy's background includes a stint at DDB/Chicago, where he worked on the AT&T business. Before that McCarthy had a long tenure at DraftFCB/Chicago, where he would have become familiar with that agency's large chunk of S.C. Johnson business, which also could be in jeopardy.

Earlier this month, R/GA moved into 10,000 square feet of loft space at 217 N. Jefferson in Chicago's west loop district. The staff currently numbers 20. The agency's ability to grow will depend in part on the quality of the creative, and, even more, on how adept McCarthy, Erke and Marcus are at new business development. McCarthy had not run an agency before getting the nod at R/GA, so his role there will test his managerial capabilities.

How about a shocker for this otherwise tranquil fall afternoon? Chief creative officer Ken Erke has exited Young & Rubicam/Chicago. He's taking a job as executive creative director at the small Chicago office of R/GA, the digital agency founded by Bob Greenberg in New York. An official announcement is expected later today.

In addition to Erke, e-business consultant Matt Marcus is joining R/GA's Chicago office as an executive creative director. Marcus previously worked with clients such as Ermenegildo Zegna, National Geographic and CVS/Caremark. Erke and Marcus will be responsible for growing the Chicago office and will report to Nick Law, chief creative officer in R/GA's New York headquarters. Law described Erke as a "great brand story-teller" and called Marcus a "talented digital creative leader."'

Erke had been Y&R/Chicago's COO for the past three years, after joining the agency in the year 2000 from Cramer-Krasselt/Chicago. Erke oversaw Y&R work for Sears, Hilton Hotels and Miller Genuine Draft, among other accounts.

Erke wasn't immediately available for comment. But his departure from Y & R, of course, raises questions about the situation at that Chicago shop. It may be that Erke simply saw bigger opportunities long-term at R/GA, given its focus on the digital end of the ad business. Or it may be, as many observers have suspected in recent months, that a turning point in Y&R/Chicago's relationship with the giant Sears account could be looming. Sears has long been the dominant account at Y&R/Chicago. Should Sears exit, Y&R/Chicago would be left with a giant hole in its account roster.

There has been upheaval within Sears Holdings marketing department recently. And as we all know, when client marketing honchos come and go, it can often spell trouble for the agencies that suddenly find themselves reporting to someone new with different expectations and demands.

R/GA's Chicago office, which opened last year, currently has 13 employees. Principal clients served out of the Chicago office are S.C. Johnson and Dow Chemical.