Foote, Cone Turns Aggressive as Ad Market Gets Tougher
“Love them Blues . . . Oh yeah!”
Levi’s 501 Jeans Commercial
The San Francisco office of the Foote, Cone & Belding advertising agency was riding high a year ago when a Levi Strauss & Co. “501 blues man” commercial helped focus national attention on the agency’s financial and creative success.
In 1985, the office--which oversees West Coast operations of giant Foote, Cone & Belding Communications of Chicago--won the prestigious Clio award for the Levi’s 501 blues television commercial. That same year, it was named Adweek magazine’s regional agency of the year after it became the first West Coast firm to pass the $200-million mark in billings.
The office was so celebrated that by the end of 1985, employees felt enough levity to dress up like rock stars such as Tina Turner and Bruce Springsteen and close their annual Christmas party with a rousing rendition of the song “We Are the World.”
But a tougher advertising climate has the office singing a different tune these days.
To reverse a slowdown in business and stiffer competition for clients, the San Francisco office is having to abandon its tradition of servicing mainly a small stable of blue-chip firms such as Levi, Clorox and Pacific Telesis. As a result, the agency finds itself adopting the more aggressive business stance of its sister offices in Los Angeles, Chicago and New York.
“This agency, like the industry itself, is going through a time of trial and tribulation,” said Dennis P. Wilkinson, a senior vice president at the firm. “It’s been cyclical, but it happens. Our challenges are multiple.”
Added John Balousek, San Francisco executive vice president: “Our feeling is that anybody who advertises, that’s got anything meaningful to say--we ought to have that business. We’ll manage our growth and we’ll bring the people aboard that’s necessary to do the job.” He added that the firm’s more aggressive attitude is “not the way we’ve grown” in the past.
The new approach, most recently illustrated by the office’s aggressive but unsuccessful bid this spring for the $6-million advertising account of the California Almond Growers Exchange in Sacramento, will play a critical role in the bottom line of parent FC&B.;
The publicly held firm, with 1985 revenue of $287 million and net income of $16.3 million, had been mentioned as a possible buyer of troubled Doyle Dane Bernbach Group of New York. (On Sunday, Doyle Dane announced that it would merge with BBDO International and Needham Harper Worldwide. See story, Part 1, Page 1.) Industry sources say FC&B;’s West Coast unit, which accounts for about 25% of the agency’s annual billings, contributes a higher share of the parent agency’s profits.
“The West Coast operation has been an outstanding leader in the region by a country mile,” said Norman W. Brown, FC&B; corporate chairman in Chicago. He denied that his agency has had any talks with Doyle Dane. Brown refused to comment on the profitability of his California unit, saying only that “it is a very important part of Foote, Cone & Belding.”
For years, the Western division of Brown’s agency, which includes offices in San Francisco and Los Angeles, had a reputation as the gray lady of West Coast advertising.
“Foote Cone & Belding . . . has three distinct images,” observed Don Mitchum, president of BBDO/West. “In New York, they are very bland; in Chicago, they are very strong creatively. Here, they give you the best of both worlds--big agency ties and good creative work.”
With 265 employees in San Francisco, another 360 in Los Angeles and combined billings of $426 million in 1985, the Western unit is nearly twice as large as the West’s second-biggest agency, Ogilvy & Mather. It sports eight subsidiaries and a stable of 28 big-spending clients ranging from Sunkist Growers and First Interstate Bank in Los Angeles to Clorox and Pacific Telesis in San Francisco.
In an industry notorious for the volatility of agency-client relationships, the division has enjoyed rare client stability. Officials estimate that about 70% of its growth during the past 10 years has come from existing clients--some of whom, such as Clorox and Levi, have been with the firm for more than 50 years.
That stability has conferred prestige to match the agency’s size. In the West, FC&B; is the agency to work for, observers say. Last year, for example, Daniel Odishoo, president of rival Ketchum Communications advertising, amicably left his Ketchum post to join the firm’s San Francisco office as a group management supervisor of the Pacific Telesis account.
Despite its size and prominence, some FC&B; executives say, their firm has lacked the public visibility of flashier West Coast advertising firms such as Los Angeles-based Chiat/Day and Hal Riney & Partners in San Francisco and thus hasn’t done as well recently attracting new business.
“I think we could do more in terms of self-promotion,” said Hugh Duncan, who resigned amicably last month as president of the agency’s Los Angeles office to join a local real estate development company. “Because we are the biggest shop in town, we tend to figure we are on everybody’s shopping list.”
Billings Drop 6.7%
Billings for the San Francisco office dropped 6.7% to about $201 million from 1984’s record $215 million, primarily because long-term client Levi lowered ad spending following the 1984 Los Angeles Olympic Games.
The Los Angeles office, which recently picked up $12 million in business from Mattel and $15 million in billings from American Medical International, has compensated for the slump somewhat.
In the last two months, the agency’s once-solid hold on two other clients seemed to slip a bit when they began to shop around for some of their advertising services. In March, client Pacific Bell, California’s largest buyer of spot television ads, switched to a media buying service on a trial basis to determine if it could cut FC&B;’s ad placement costs. Then this month another big client, Clorox, said it planned to shift some its advertising budget among the San Francisco office and two other agencies.
Although the financial impact of the Clorox shift is not yet fully known, some FC&B; officials fear that their shop will be a slight loser in the swap of business among three agencies. Meanwhile, overall billings in San Francisco have been flat for the first four months of 1986, according to Adweek.
When the San Francisco office competed for the Almond Growers’ business, however, Christine McGlasson, the Growers’ director of advertising, said they presented a tenacious new face.
“Foote, Cone & Belding did a lot of homework on almonds and a lot of background research we didn’t expect,” said McGlasson, who added that officials made several follow-up calls to her office to check on their bid. “You generally don’t see an agency go to the length they went to to get our business. It was above and beyond the call of duty.”
She said that although growers were impressed, the San Francisco office didn’t get the advertising account because its parent agency also represents Frito Lay, which has products that potentially could conflict with those marketed by the Almond Growers.
But opinion is divided over whether aggressiveness alone is the solution to the slowdown.
Most public advertising agencies saw a downturn in ad spending during 1985, according to the industry trade magazine Advertising Age. Formerly fast-growth advertising categories such as computers, office equipment and apparel declined in the first half of 1985, cutting agency revenue, the magazine said.
Even so, company Chairman Brown has called for more aggressiveness and “a dramatic improvement” in the quality of the agency’s creative work as a means to strengthen its profitability.
Creativity Is Critical
“Creativity is absolutely critical to the development of new business in that it is a fundamental part of what an agency sells,” said Brown. “We stand on the platform of creativity and accountability. It’s basic to our success.”
FC&B; wasn’t generally known for its creative work until May, 1984, when the agency teamed with South African director Leslie Dektor, who filmed a series of more than a dozen free-spirited, documentary-style Levi’s blue jean commercial with a rhythm and blues sound tracks that galvanized the advertising world.
The gritty urban look of the commercials, which were shot using a blue filter in order to accentuate the blue jeans’ color, proved to be trendy without offending long-time Levi’s customers. The “501 Blues Man” spot, for example, intercuts shots of an old blues guitarist with a youth on a skateboard and others youths in a pickup truck talking about their Levi 501 jeans “shrink to fit.” The spot drew widespread critical acclaim, winning more than a dozen awards.
More importantly, sales of Levi’s jeans--which had been hurt by weak distribution and by competition from designer jean makers--were 20% higher in 1984 than in 1983. Levi’s share of the blue jean market grew by 2% during the same period.
Meanwhile, a host of apparel, soft drink and other youth-oriented manufacturing companies began airing commercials with break dancers and popular music in order to mimic the youthful, free-spirited urban look of the Levi commercial.
“I admire advertising that goes in a different direction than the category it’s in,” said San Francisco FC&B; group creative director Geoffrey Thompson, who worked on the Levi campaign.
Renewed Focus
The Levi’s campaign seemed to set off a renewed focus on creativity at the agency. It held its first worldwide conference of creative directors in 1985 and established an “Executive Creative Council” to better exploit the talents of the agency’s creative personnel.
In the wake of that move came a much-improved first quarter in 1986 as every office, except San Francisco, reported signing major new clients, including AMI and Mattel in Los Angeles, Ciba-Geigy in Chicago and Fred Alger & Co. in New York.
Despite the San Francisco office’s failure to sign a big new client, Chairman Brown is satisfied with the office’s performance.
“We’d love to have additional accounts in San Francisco,” Brown said. “But there isn’t nearly as much opportunity to grow there. San Francisco is not nearly as big a market as L.A. But it is holding its own.”
