Small Agencies Beating Out Some Madison Ave. Giants--Here’s Why
Every time an ad for Gallo wine flickered on the television set, Dolores Krauss ordered her husband to hush up. The narrator’s hypnotic voice gave her goose bumps.
But her husband, who had to sit there button-lipped, happens to be vice president of advertising at General Motors Acceptance Corp. Observing the effect this voice had on his wife, Charles Krauss decided to sign up its owner for a GMAC commercial. “I told my ad agency to find that guy with the voice that stops women in their tracks,” Krauss said.
But his ad agency, Campbell Ewald, didn’t like what it found. It seems that the man behind the voice was also running the San Francisco office of a major rival. His name: Hal Riney. Not wanting to hire a direct competitor, the agency tried desperately to get Krauss to change his mind.
Krauss, however, was adamant and insisted on Riney. Eventually, Riney recorded a TV and a radio spot for GMAC. In exchange, Campbell Ewald got Krauss to agree not to use Riney in any more ads.
Four years later, General Motors has once again turned to Riney, this time with a $100-million assignment. Now running his own firm in San Francisco, Riney had--among other things--created the highly memorable Bartles & Jaymes characters for E&J; Gallo Winery.
General Motors has handed Hal Riney & Partners the huge responsibility of creating advertising for a brand new car division. That division, Saturn, plans to produce cars to directly compete with the Japanese imports.
The lengthy selection process this spring, which included an endorsement of Riney from Krauss, was news itself in the advertising world. After all, this is General Motors’ first new car division since 1918.
And the selection of Riney’s firm was a stunner. This choice--along with several other recent actions by major auto makers--sends some clear signals that some automotive heavyweights are ready to look beyond the giant, double-chinned, Madison Avenue advertising agencies. And that is very big news in the ad world.
“There is an inbreeding between car advertisers and the big agencies that has gone on for 60 years,” said Larry Postaer, co-founder of the relatively small Los Angeles ad firm that handles American Honda’s advertising, Rubin Postaer & Associates. “They not only share the same buildings, but in many cases, literal marriages have taken place between these clients and their agencies.”
Sometimes, this coziness can reach an extreme. At the ad firm Campbell Ewald, the company says that only executives who drive Chevys are eligible to receive bonuses. What’s more, employees who drive Chevys get preferred parking spaces.
Now, some of these partnerships are being put to their toughest test.
“The problem in the auto industry right now is that there are too many cars and not enough people to buy them,” said Jack Mayne, editor of Automotive Age, a trade magazine. “Consequently,” he said, “the auto makers are looking at new things--including their advertising agencies.”
Of course, there are other reasons, too. For one, most of the big New York ad firms already have automotive ad accounts, so some of the newer auto advertisers are essentially being forced to look elsewhere. “It’s hard to find a big agency in New York that doesn’t have an automobile account,” said David F. Hubbard, national advertising manager of the new luxury Infiniti division of Nissan.
At the same time, some companies, such as Nissan, have been turned off by the inability of the big Madison Avenue agencies to bolster product image. For Nissan, “taking a chance is a prudent business decision when you have nowhere else to go,” said Tom Healey, director of advertising research at the Westlake Village automotive research firm, J. D. Power & Associates.
Auto makers seem to be lining up lately to take their chances.
General Motors is staking the image of its new division on an ad agency whose total billings could fit into the car maker’s corporate glove compartment. “GM people don’t live in a vacuum,” said GMAC’s Krauss. “Maybe an agency doesn’t have a large number of offices or a real strong media department, but you can always buy those things. It’s creativity that sets agencies apart.”
That is much the same thing that executives at Nissan were thinking late last year when the company placed its $150-million advertising budget in the hands of Chiat/Day, a Los Angeles ad firm with fewer employees worldwide than some competing ad firms have in a single branch office.
Then, late last week, Nissan also announced that its Infiniti car division had narrowed its choice of an ad firm to two relatively small ad agencies, better known for their ability to develop creative ads than for their agility at cocktail party chatter. These agencies are Boston-based Hill, Holliday, Connors, Cosmopulos, which created provocative ads for Wang Laboratories, and the Bloom Agency, an aggressive but small Dallas ad firm that created the off-beat Pentax camera ad that shows people moving back and forth like zoom lenses on their cameras.
Still, the Big Three auto makers are generally sticking with the ad agencies that they’ve used for decades. Chevrolet, for example, has trusted its image to Warren, Mich.-based Campbell Ewald for 74 years. And the Chicago ad firm Leo Burnett has handled Oldsmobile’s advertising for 54 years.
With these kinds of long-term relationships, the decisions of Nissan and a General Motors division to seek out younger, smaller ad firms is noteworthy. Nearly 5% of the total $24.9 billion spent on all advertising in the United States last year was automobile related, estimates Leading National Advertisers, a New York-based research firm. When auto makers go looking for ad agencies, the reverberations can be felt industrywide.
Not just any ad agency, however, can handle a major auto account. Auto executives generally say that an ad firm must have annual billings of at least $100 million to $200 million, and it must employ a minimum of 100 to 200 before it can be considered a serious candidate. The job is a complex one. The agencies create and place ads in all media--radio, TV, billboards, newspapers, magazines--and must coordinate with dealer groups that do their own advertising.
Postaer, who handles advertising for American Honda, takes some credit for the recent decisions by Nissan and General Motors. “It’s fairly well known that both Saturn and Nissan view Honda as one of their key targets,” he said. “They’ve seen that Honda has had great success with a less than monolithic ad agency. So they figure if it worked for Honda, it might work for them.”
How might some of these recent actions affect automobile advertising? “If Riney is a success with Saturn,” said Guy Day, retired co-founder of Chiat/Day, “it will be one of the most significant marketing events of this decade.” Day insists that is not hyperbole.
Can a relatively small ad firm make a big success out of a new, American car line? That’s what many in the ad business are waiting to see. And in the process, “car advertising is becoming the epicenter of something really interesting in the ad business,” Day said. “The chokehold that the big New York agencies have on these major ad budgets is disappearing. It’s a whole new ballgame.”
CAR COMPANIES’ AD AGENCIES
Ad Agency Years General Motors Chevrolet Campbell Ewald 74 Oldsmobile Leo Burnett 54 Pontiac D’Arcy Masius Benton & Bowles 53 Cadillac D’Arcy Masius Benton & Bowles 52 Buick McCann-Erickson 29 Ford Motor Co. Ford J. Walter Thompson 43 Lincoln-Mercury Young & Rubicam 9 Chrysler Motor Co. Dodge BBDO 40 Chrysler-Plymouth Bozell, Jacobs, Kenyon & Eckhardt 9 Jeep-Eagle William Esty 1
Source: Company reports
