‘thirtysomething’ Shows Peril of L.A. Agencies’ Reliance on One Client

When an ad agency goes down the tubes, the general public rarely notices. But when that agency happens to employ two co-stars of the popular ABC television show “thirtysomething,” plenty of people notice--even if the agency is only real in a TV script.

During the past few weeks, the show has been tackling one of the most feared issues in the ad business: What happens when your biggest client dumps you?

Well, in the case of two “thirtysomething” co-stars, who together ran a struggling advertising agency, Michael & Elliott Co., it meant bankruptcy. “We felt there was enormous creative potential in seeing what happened if the ad agency failed,” said Marshall Herskovitz, the show’s co-creator and executive producer.

It might seem that a tiny, fictional ad firm on a TV show would be pretty far removed from the Los Angeles scene. But there is a striking similarity: the dependency on one large client.

The agency on “thirtysomething” happened to rely on a baked goods company. Many of the biggest agencies in Southern California depend heavily upon Japanese car makers. Executives say that in Los Angeles, more major agencies rely upon single, huge clients for the bulk of their business than in any other big city.

“When you’re a small, struggling agency, you often have only two choices,” said Dean Fueroghne, senior vice president at the Good Guise, a small Encino ad firm. “You either merge with someone else or you go under.”

To make that point, last week Fueroghne’s agency mailed hundreds of T-shirts with bold lettering across the front that suggests that the agency on the TV show has been acquired by what is in real life the world’s largest ad firm, Saatchi & Saatchi.

The T-shirts spell out a newly merged “Michael & Elliott Co./Saatchi.” This is the kind of long name that newly merged ad agencies tend to use, such as the recently merged mouthful, Della Femina, McNamee WCRS. A note along with the Saatchi T-shirt said, “It’s hard to tell where the reality ends and make-believe begins.”

“Sure,” said Gerrold R. Rubin, president of Los Angeles’ Rubin Postaer & Associates, which counts on Honda for about 60% of its business, “I’ve spent time in bed looking up at the ceiling wondering, what the hell would I do if I ever lost that business?”

For that reason, the agency has pressed hard for other clients--then tried to coax those same clients to boost their ad budgets. It has persuaded clothing maker Bugle Boy to triple its annual budget to $6 million over just the past two years.

But many Los Angeles agencies seem to be thumbing their noses at the industry’s general rule of thumb: No client should represent more than 20% of an ad firm’s business. Executives estimate that at least eight of the Los Angeles area’s top ad firms depend on one client for more than half of their business.

“If an agency is dependent on one account, it’s really skating on thin ice,” said Fred Danzig, editor of the magazine Advertising Age. “But that seems to be a crap shoot that a number of Los Angeles agencies are willing to take.”

It’s mostly a matter of geography. The big packaged goods makers are mainly in the East and Midwest, so that is where many of their agencies are. That leaves West Coast agencies with little option but to rely on the film studios, the Japanese car makers and a mishmash of smaller clients for virtually all their business.

The Los Angeles office of the city’s largest ad firm, Chiat/Day, counts on Nissan for about 80% of its business. And the Torrance office of Saatchi & Saatchi DFS, which creates ads for Toyota, estimates that nearly 90% of its business comes from the Japanese car maker. Similarly, the Culver City ad agency, Vic Olesen & Partners, says more than 60% of its business comes from Chevrolet. And Campbell & Wagman estimates that more than 60% of its business is generated by client First Interstate Bank.

What’s more, Japanese car makers represent a majority of the ad business for Southland offices of Foote, Cone & Belding (Mazda), Rubin Postaer (Honda), Della Femina, McNamee WCRS (Isuzu) and Key/Donna/Pearlstein (Suzuki).

“There are only two bad consequences that could result from this,” said Alan Gottesman, analyst at the New York investment firm Paine Webber. “The client leaves, in which case the consequences are clear. Or, the client doesn’t leave, in which case you sometimes wish it did.”

Agencies fight like the dickens to land those big Japanese car makers, which often spend more than $100 million annually apiece on advertising. And when the agencies win them, they are the envy of every other shop in town. But sometimes the agencies become so dominated by the client that they have a tough time landing other business.

“When an agency is so glued to a major account, it doesn’t have the time or wherewithal to look for other business,” said Cy Schneider, executive vice president at the New York Bozell, Jacobs, Kenyon & Eckhardt, and former chairman of the agency’s Los Angeles office. “And you can spend so much time on that account that the culture of your office becomes the culture of that account.”

On Monday, Saatchi & Saatchi even announced that it was changing the name of its West Coast operations to Saatchi & Saatchi DFS/Pacific, in part, to try and attract more Pacific Rim business in addition to Toyota. “When clients have such an apparent dominance,” said James Lindsey, chairman of the office, “there can be a problem in attracting other clients who are concerned that they won’t get the attention they want.”

Many Los Angeles ad firms originally opened to service a single advertiser. In some cases, that can be highly profitable--such as it has been with Rubin Postear and Honda. But it can also be risky. In May of 1987, the agency William Esty closed its Los Angeles office when it lost the Nissan ad business, although it has since reopened with another smaller client. And in 1988, the New York ad firm Scali, McCabe, Sloves backed out of the Los Angeles market two years after its key client, Continental/West airlines, went belly-up before the agency could create its first ad.

One way to avoid such headaches is to rely less on a single client. “That’s easier said then done,” said Craig Campbell, president of Campbell & Wagman, a 2-year-old agency with annual billings of $53 million that depends on First Interstate Bancorp for well over 60% of its business.

“Clearly, that’s too much,” said Campbell, whose agency has slowly picked up a few other advertisers, including Marshall’s department stores. But with a client as big as First Interstate, he said, “some potential clients won’t even talk with us because they feel we’re dominated by one account.”

Few Los Angeles ad agencies are so dominated by a single client as Chiat/Day is by the Japanese car maker Nissan. More than $200 million of the office’s $250 million in annual billings are from Nissan.

“I’m sure,” said Advertising Age’s Danzig, “Jay Chiat has spent some time wondering what would happen to his Los Angeles office if it lost Nissan.”

In fact, Herskovitz said, Chiat/Day officials have even been consultants to “thirtysomething.” Chiat/Day was repaid the other week when its name was passingly mentioned on the show.

“But we don’t spend much time thinking, ‘Oh no, what if we lost this or what if we lost that?,’ although that may be the nature of many Los Angeles agencies,” said Lee Clow, president of Chiat/Day. “That’s because there are only so many clients to go around here. For a West Coast ad agency, an account like Nissan is the gold ring.”

For years, the gold ring at the Los Angeles office of Ogilvy & Mather was Mattel. Just five years ago, the toy maker accounted for nearly 80% of Ogilvy’s business. “We were perceived as an agency that just did toy advertising,” said Gerald McGee, managing director at Ogilvy.

Now, however, Mattel represents less than half of the office’s total billings, said McGee. For one thing, Mattel has since cut back on advertising. And it also handed some of its advertising to a competing agency, Foote, Cone & Belding. This forced McGee to hunt up new business, including clients like Carnation, Microsoft Corp. and Tandem Computer. But none of this new business came easy.

About two years ago, Ogilvy’s New York office put the pressure on McGee to find more business in Los Angeles. It got so intense that the Adweek magazine even ran a story that detailed the tremendous pressure McGee was under. McGee reacted as any creative ad man would. He pinned a special button to his suit that read: “I’m under tremendous pressure.”

So is Herskovitz. After all, the Hollywood-invented ad agency that has been a key setting for “thirtysomething” is history. “We even destroyed the set,” Herskovitz said. “It was very weird. A lot of people who work around here still can’t believe it’s gone.”

Aussie Firm’s S.F. Chief to Step Down

Just one month after Chiat/Day made a bid for the Australian ad firm Mojo/MDA, the chairman of Mojo’s U.S. headquarters in San Francisco has resigned.

Donald F. Dorward, 57, said Monday that he would leave the agency April 30. The office is scheduled to be merged with Chiat/Day’s San Francisco office, and Dorward said in an interview Monday that he didn’t intend to play second fiddle to anyone.

“I certainly haven’t been forced out,” said Dorward, who would not reveal his plans. “As a matter of fact, I approached them about it. But I’m too old to be the No. 2 guy and too young to retire.”

The newly combined office would be run by Fred Goldberg, president and chief executive of Chiat/Day’s San Francisco office.

New Agency Likes Rent-A-Wreck’s Name

Rent-A-Wreck has long been apologizing for its oddball name in its advertising.

“Don’t let the name fool you,” has been the slogan of the Los Angeles-based car rental company for the past two years. But last week, Rent-A-Wreck named a new Los Angeles ad firm to handle its $1-million-plus account. And the new agency, DCA Advertising Inc., says it plans some big changes in the campaign.

“You don’t want to apologize for your name,” said Chuck May, senior vice president at DCA. But, he added, the ad firm might want to explain what the company is all about. For example, he said, most of the cars the agency rents are actually less than 2 years old--although some are as old as six or seven years. “They’re walking a fine line with the name,” he said, “but we’ll come up with a new slogan.”

Ads for Volunteers Pitch Brotherly Love

For years, public service ads for Catholic/Jewish Big Brothers have tried to shame people into volunteering. Typically, the ads show some lonesome kid in need of a father figure.

But in a new commercial produced in Spanish--aimed at drumming up 300 Latino volunteers--the Hispania division of the Los Angeles office of J. Walter Thompson has tried a new twist.

In the ad, a Big Brother volunteer and his “little brother” shoot the breeze while washing a car together. “We decided not to focus on the guilt angle,” said Steve McNally, vice president and associate media director at Thompson, and a former Big Brother volunteer. “Traditional stuff, like washing a car together, is really what being a Big Brother is all about.”