Industry Crunch--With Its Layoffs--Is Spawning Spate of Small Shops
Even with the advertising industry in a tortuous tailspin, last week several tiny new agencies in Los Angeles and New York hung out shingles. That’s right. They opened for business.
Even as job security at agencies nationwide grows more tenuous, there are growing indications that the downbeat atmosphere could lead to a sudden surge of new, smaller ad shops opened by people who have nowhere else to turn.
“My wife says people will call, but if no one does, how can I stay in business?” asked Gary Szenderski, who, at 39, recently left a well-paying job as general manager of the Shalek Agency to open the one-man Los Angeles ad shop Szenderski & Associates. “Right now, it’s no staff, no clients and no sleep.”
On the other side of the country last week, six employees who were recently laid off from the New York agency Lord, Geller, Federico, Einstein Inc. banded together to open a small agency in the Greenwich Village area.
“Getting a job in the New York advertising business is not easy these days,” said Marisa Bolognese, the 34-year-old president of newly formed Bolognese & Partners. “We figured we’d have as good a shot at survival by doing this as anything.”
Indeed, things have gotten so bad in the advertising business that a growing number of those employed in it are losing faith in the same big-name agencies--such as J. Walter Thompson, Ogilvy & Mather and Chiat/Day/Mojo--to which they hitched their hopes years ago. Almost every major agency in the country has faced painful layoffs this year.
For years, New York and Los Angeles have been regarded as the yin and yang of advertising. While New York agencies have the fat advertising dollars and the big-name clients, Los Angeles is often regarded as the more scrappy and creative market where the nation looks for new ad ideas. But in bad times, the two markets are suddenly mirroring each others’ actions. And the fallout could ultimately lead to unexpected roses growing amid the industry thorns.
“When there’s a dry job market, and people are out of work, sometimes the only option is to open an agency,” said Raymond Coen, president of the 2-year-old Los Angeles agency Coen, Kalis & Moiselle. “They have no other way to make a living.”
Indeed, Szenderski said, he opened his firm--which will rely entirely on a pool of Los Angeles-area free-lancers--specifically because there are so many good advertising people who have been recently laid off. With little prospect of landing full-time work in a lousy market, these people are looking for part-time jobs. Szenderski says he has assembled a database of more than 100 advertising free-lancers that he hopes to eventually meld into a dozen teams.
“The timing is right for an agency like this,” said Szenderski, whose firm--in modest, rented space near Los Angeles International Airport--has virtually no overhead costs to pass along to clients. Besides relying entirely on free-lance help to create the ads, Szenderski will also hire free-lancers to work with clients, buy media time and even do research. “When everyone else is zigging, I’m zagging,” he said.
In search of clients, Szenderski said he even paged through pocket calendars dating back four years. “I called everyone I ever met just to tell them I’m in business.” So far, he still doesn’t have his first client. “My mom asked if she can invest in my company,” Szenderski said. “I told her to hold off.”
Those who run major agencies say the going is tough for rookie ad shops.
“If you’re a newcomer, and you’re just as good as everyone else, you’ll never get hired,” said Jack Roth, president of Admarketing. “You have to have a point of differentiation.”
Sometimes that difference can help you--but sometimes it can hurt you. “If you’re opening a small shop in Los Angeles right now, you have a plethora of good free-lance talent to choose from,” said Renee Fraser, general manager of the Los Angeles office of Bozell. “But good advertising requires continuity. You don’t usually get that from free-lancers. A free-lancer can work for your client one day, then work for your client’s competitor the next day and spill the beans.”
Instead of depending on groups of free-lancers, Bolognese & Partners is counting on the experience of a half-dozen employees who worked together at Lord Geller before they were laid off this year.
“We’re a group who worked together and who wanted to stay together,” said Bolognese, whose agency opens with a single client, Contel Telephone Operations, a telecommunications company that the group handled at Lord Geller.
In their new office, the employees don’t even have separate desks. Instead, they all congregate around one large, round table. Their furniture is secondhand--purchased dirt-cheap from the agency they used to work for. “We only have two telephones,” said Bolognese, “and we all dive for the phones when they ring.”
Admarketing Wins Rest of Fretter Account
When an agency picks up a portion of a client’s business, its real aim is often to eventually win the whole enchilada. That’s what the Los Angeles agency Admarketing did last week when it won the entire $20-million-plus advertising business of Fretter Inc., a Livonia, Mich.-based retailer of home electronics and appliances.
In April, the agency won only the national chain’s Chicago advertising business, worth about $5 million. Last week it was handed the remainder, which includes advertising in 12 cities, including Boston, Cleveland and Detroit.
Despite the big win, Admarketing President Jack Roth said the agency has no plans to open a branch office in the client’s home area of Detroit. Among Admarketing’s key strategies for Fretter has been to pull money out of print advertising and put it into broadcast ads. The chain’s slogan: It’s always better to shop at Fretter.
Utter Delight at Pair of Winning Agencies
The cows came home to two Los Angeles advertising agencies last week.
Alta-Dena Dairy of City of Industry handed its estimated $2-million annual advertising business to the Los Angeles office of Bozell. And Continental Culture Specialists Inc., the Glendale maker of nonfat yogurt, handed its estimated $1-million account to Coen, Kalis & Moiselle.
Bozell will try to position Alta-Dena--some of whose products are sold in health food stores--as the area’s top producer of natural dairy products, said Renee Fraser, general manager of Bozell. She also noted that the dairy’s 300 trucks could soon carry signs promoting the dairy.
Meanwhile, Coen, Kalis & Moiselle will likely concentrate on television advertising for Continental Nonfat Yogurt, said Raymond Coen, president of the agency. The firm is also working on ads for some undisclosed new products that Continental plans to introduce soon.
Reds’ Manager Is Hot Item on Speech Circuit
What a difference a World Series sweep makes.
Last year, just about no one was calling Lou Piniella to give motivational speeches. Now, a couple of weeks after the manager guided the Cincinnati Reds to a four-game World Series romp over the Oakland A’s, he is being besieged with requests.
The firm that represents Piniella on the West Coast is Calabasas-based Bruce Merrin Public Relations & Advertising. Last week alone, the firm received 25 inquires for Piniella, whose speaking fee has ballooned to $15,000.
“It’s the kind of response we were getting two years ago (after the Dodgers won the World Series) for Tommy Lasorda,” said Merrin. Now, Merrin says, requests for Lasorda speeches have slowed to a trickle. In the meantime, experts estimate, Piniella could pull in more than $1 million in speaking fees before spring training. And he could amass several million dollars more in product endorsements.
