Attack of the Belt-Tighteners: Horror Stories About Agency Cost Cutting
Just how bad are things in the ad business? For 99 cents, you can find out.
At least, that’s all it cost one executive at a Los Angeles advertising and public relations firm. This official, who asked not to be named, recently received a rather disquieting long-distance call from an anxious New York client.
The client wasn’t calling to discuss current business strategy or to make plans for 1991. Rather, the client wanted a full explanation of a 99-cent postal fee that the agency had billed as part of an expense reimbursement report.
“At first I thought it was a joke,” said the executive. “But it was clear they were serious. So I ordered my secretary to look into it.” Although the explanation did finally satisfy the client, the executive at the agency certainly wasn’t too keen on the interrogation. “The whole thing is based on fear,” said the official. “On the client side, more and more people are being forced to act out of fear.”
While chasing down documentation for penny-ante client expenses may be the extreme, the current economic climate has some advertising agencies and their clients scrambling for ways to save money. Some clients are paying bills more slowly or negotiating with their agencies for lower commissions. In addition to laying off employees, many agencies are cutting back on travel, relying less on costly outside vendors and generally accepting the penny-pinching antics of clients who are tightening their belts before the uncertainties of 1991 arrive.
In the annals of how to save a buck on advertising, few could top the action recently taken by one client at the Los Angeles firm Asher/Gould Advertising.
The client was having an out-of-town franchisee meeting to which it had invited three members of the agency--the president, executive vice president and an account supervisor. When the three senior ad executives arrived at the hotel, they discovered that the client had booked all three men into a single room.
“The first thing I asked was, ‘Who’s going to take the first shower?’ ” said Bruce Silverman, president of the agency, who noted that the client had also booked its staff three to a room. OK, so the rooms were actually suites. But one of the executives still had to sleep on a couch that pulled out into a bed.
“It’s a sign of the times,” said Silverman.
A realization of just how bad things have become recently hit Peter Stranger, president of the Los Angeles office of the ad firm Della Femina McNamee. During a speculative pitch for new business, the agency left behind some print advertising with a prospective client. When a different agency was chosen, the ads were sent back to Della Femina overnight--with $50 postage due.
“Hard to believe, isn’t it?” posed Stranger.
One client recently demanded that the Los Angeles agency Robert Elen & Associates cut its commission--about 15% of the advertiser’s total budget--in half. The agency refused. Result: After Jan. 1, the agency will no longer represent the client. “I’m not going to be a bank for my client,” said Robert Elen, president of the firm. “None of us can afford to do that.”
Perhaps even harder to believe is what one client requested last month from its Los Angeles agency, Fotouhi Alonso Inc. Advertising & Marketing.
The agency was planning to photograph a client’s product for a print ad. Besides the photographer who takes the photo, such shoots often require an art director who makes certain that the lighting is right and that the product is shown in the best possible manner. But art directors do not come cheaply. Some command daily rates of $500 or more.
So, in an attempt to cut costs, the client ordered the agency not to send an art director. The agency argued against it, but to no avail. The result? “We ended up spending about $800 to retouch the photo,” said Farida Fotouhi, president of the agency. “Sometimes, in the sincere effort to save a little money, people can make decisions that actually cost more money.”
Meanwhile, Fotouhi is also taking administrative chores much more seriously. For years, the agency was losing up to $500 each month by not billing clients promptly--or at all--for things such as overnight deliveries or courier packages. Now, it sends out monthly statements for these things. “You have to organize the no-brainer stuff,” said Fotouhi. “Otherwise you can get killed.”
At the Campbell & Wagman agency, executives are turning less often to headhunters who sometimes charge 20% to 30% for executive placements. There’s a “new degree of intensity” of cost cutting at the agency, said President Craig Campbell.
Advertising free-lancers--who can command up to $3,000 per week--are being used sparingly by many agencies. “You could have someone on staff for a month for that kind of pay,” said Rick Colby, president of Larsen Colby Koralek.
And many of the costly outside vendors--such as photography studios and editing houses--that the agency D’Arcy Masius Benton & Bowles used to rely on now have to look elsewhere for business. “We’ve set up a complete studio in-house,” said James Helin, managing director. “We can do everything now without going outside.”
Sometimes, however, agencies can go overboard on cost cutting. One executive said he recently took a client to lunch, and both men sat eyeballing the check long after the meal was finished before the client finally picked it up.
“The horror stories go both ways,” points out Richard Zien, president of Mendelsohn/Zien. There’s one agency executive Zien knows of who recently pulled one of the all-time low moves in cost cutting. “The guy took his client to lunch one day,” said Zion. “Later on, he not only sent the client the bill, but he added on an agency commission.”
Wienerschnitzel Ad Pokes Fun at Quayle
Does the “Wiener Dude” have the wrong attitude? Perhaps Dan Quayle would think so.
If you’re not familiar with Wiener Dude, this unseen commercial character is an invention of the Newport Beach fast-food chain, Wienerschnitzel.
In a new radio spot, a phone call is received at the White House. “Mr. President, there is a Wiener Dude on the phone,” an operator says.
Responds the president: “Tell the vice president I’m busy.”
To that, the operator replies, “Not a wiener, a Wiener Dude.”
Executives at Wienerschnitzel say they’ve received only one complaint about that radio spot. “If this was something we were getting a lot of calls on, we’d consider pulling it,” said Tom Amberger, marketing director for Wienerschnitzel. “We’re just trying to break through the clutter of traditional fast-food advertising.”
Magazine Makes Its Home on the Range
At a time when many magazines are riding off into the sunset, along comes one looking for its own home on the range--Cowboy.
The quarterly is written for, by and about cowboys. “The overriding theme of the magazine upholds the mythical image of the cowboy who conquered the wide-open spaces,” said Darrell Arnold, editor and publisher of the Colorado Springs, Colo., publication.
Although the majority of the magazine’s 10,000 readers are in Nevada, Texas and Colorado, it has subscribers who are “cowboys at heart” in Australia, said Arnold.
Full-page color ads cost $1,500. Among its early advertisers--the Cowboy Country General Store of Hollywood, which specializes in mail orders of Western essentials.
No word yet on whether the biggest cowboy advertiser of all, the Marlboro man, will show up in any issues.
Sony Subsidiary Plans Video Game Ad Blitz
A Nintendo licensee is about to give Southern California TV viewers the sort of ad blitz that only happens at Christmastime.
Between now and mid-January, CSG Imagesoft--a Sony subsidiary--will air an estimated 1,600 TV spots regionally for its “Solstice” video game. The ad features a dwarf chasing after a magic wand that transforms the dwarf into a giant.
“We think it’s the heaviest media blitz in video game history,” said Jack Roth, president of Admarketing, the Los Angeles agency that created the campaign.
Each of the ads mentions a retailer--such as Target or Toys R Us--that sells the software. Yet none of the retailers are paying for the ads. So why mention them? “Those manufacturers who know how to become important to retailers are the ones who will get shelf space,” said Roth.
