Minneapolis ad agency Carmichael Lynch and motorcycle legend Harley-Davidson Inc. are parting ways after a 31-year, award-winning run.

The agency said in its announcement Monday that it could take the Harley brand no further. Harley has struggled in recent years trying to appeal to a younger demographic.

"It's in our best interest to part ways," said Doug Spong, president of Carmichael Lynch.

Milwaukee-based Harley-Davidson said in a statement that it would not seek a new agency of record but would instead work with "a more diverse group" of ad agencies.

"Our strategies have been moving away from a singular consumer target and a one-size-fits-all agency solution," said Mark-Hans Richer, Harley's chief marketing officer. "Rather than accept this new reality, [Carmichael Lynch] chose a different path, and we respect that."

There was no word on staff cuts at Carmichel Lynch, although the agency said new business would take up the slack caused by the departure of Harley and its $10 million to $12 million in media spending.

"We made the decision to resign Harley-Davidson in part because we have won more than enough new clients this summer to replace whatever revenue we give up with Harley-Davidson," Spong said.

The new clients will be announced one by one in coming months, Spong said.

"We want some distance between the Harley-Davidson news and our news of competing for and winning new business," Spong said.

The Minneapolis advertising world scratched its collective head over the development Monday.

"This is a sickening surprise," said Craig Bryan, a communications professor at the University of St. Thomas in St. Paul. "No agency would say, 'No, see ya, Harley.' The stuff they did for Harley was fabulous."

The duration of Carmichael Lynch's relationship with Harley has long been a source of pride for the Minneapolis agency, with ads playing up the theme of independence. One showed a woman in her riding leathers applying mascara and using chrome on the engine as a mirror. Another showed a lone rider on an open road and said, "Somewhere on an airplane a man is trying to rip open a small bag of peanuts."

But the motorcycle manufacturer has struggled with image and relevance in recent years as its intensely loyal clientele aged.

Recently, Carmichael Lynch focused its work on attracting younger riders with advertising campaigns using the likes of supermodel Marisa Miller and rocker Shirley Manson to draw attention to the bikes. Carmichael Lynch's work also highlighted motorcycle use in ethnic circles including the Hispanic "Harlista" riders.

Carmichael Lynch Chief Executive Mike Lescarbeau said the agency's current favorable financial situation factored into the decision to leave the Harley-Davidson account.

"We anticipate that 2010 will be a growth year for us both in revenue and profit," Lescarbeau said.

Harley-Davidson has been under pressure to cut manufacturing costs and said recently it could move the Milwaukee facility and close other plants in Wisconsin.

"This is tough on this [Minneapolis ad] market," Bryan said. "Both financially and emotionally. Thirty-one years doesn't happen anymore."

David Phelps • 612-673-7269