‘91 Was Painful, but Not Lethal, for L.A. Ad Firms
Two weeks from today, a chartered jet will take off from LAX bound for Las Vegas. Some 80 people on that jet will be whisked by limousine to the MGM Desert Inn Hotel & Casino, where they will be handed free rolls of quarters, then treated to a holiday feast.
All of this will be paid for by their employer: a Los Angeles ad agency.
An ad agency? At a time when the business is so bad that local unemployment at agencies is estimated to be upward of 30%, it may be hard to believe that the firm footing the bill is Asher/Gould. But the agency actually saw its business grow a little in 1991--and it is projecting further growth in 1992.
Despite the industry downturn, most Los Angeles agencies will turn a profit in 1991. It hasn’t been easy.
Many accomplished the feat only after two painful years of layoffs, wage cuts and delayed salary increases. Industry headhunters say they have never seen so many talented advertising executives pounding the pavement on Wilshire Boulevard.
Most agency chiefs recognize that any growth in 1992 will not likely come from current clients, but from business stolen from rival agencies. As advertisers search for any way to bump up sales, ad executives may need score cards to keep up with all the agency changes expected in 1992.
Yes, doom and gloom remain the industry bywords--and will continue to be repeated in 1992. But while the ad business is sickly in Los Angeles, it is not dead.
“It’s like going to a party and everyone seems to be having a good time--until you ask them,” said Gerald D. McGee, managing director at Ogilvy & Mather’s Los Angeles office, which will post a flat year.
But several familiar Los Angeles agencies will have a tremendous year in 1991. Admarketing, Kresser/Craig and Cohen/Johnson are posting record growth. Chiat/Day/Mojo won a lot of new business, yet its annual billings didn’t rise because of cutbacks by key clients.
“I think it’s feast or famine for a lot of Los Angeles agencies,” said Bruce Silverman, president of Asher/Gould, which added six employees this year.
A number of local agencies are barely keeping their heads above water. Della Femina McNamee and J. Walter Thompson each lost nearly half their business this year. Thompson was hit so hard that it fired more than half the employees in its once-bustling Los Angeles branch.
Della Femina, which lost $100 million in billings in 1991, laid off 60. “People here are no longer bothering with scenarios that say, ‘Well, we’ll be out of it in 1992,’ ” President Peter Stranger said. “Let’s assume it will be a bad year, and act accordingly.”
The Los Angeles office of Bozell also saw its business decline in 1991--and as a way to cut costs, it even fired its general manager without replacing her. In the past, when people lost advertising jobs, “there was always room for them” at other agencies, said Sid Marshall, who oversees the Los Angeles office. But not any more, executives say.
The top executive at Foote, Cone & Belding’s Los Angeles office left the agency in 1991--as did its big supermarket client, Albertson’s. The new boss is not optimistic about the new year. “It will be an extremely difficult year,” said Rich Edler, managing director. “It will be the end of 1992 before we come out of this.”
Nevertheless, several big Los Angeles agencies enjoyed their best years ever in 1991.
Admarketing saw its ’91 annual billings jump 30% to above $300 million. “One agency’s misfortune is another agency’s good fortune,” said President Jack Roth.
Similarly, Kresser/Craig snatched new clients such as Albertson’s and Clothestime, which gave it $40 million in new billings and 30 new employees. “We’re either lucky or good or a little bit of both,” Chairman Bob Kresser said.
Cohen/Johnson, which picked up Bally’s Health & Tennis and Dep Corp. in 1991, saw its annual billings rise about 25%, while adding 15 employees. Even with these wins, President Howard Cohen lamented that “the ad industry has been in terrible shape for a couple of years, and it will remain that way for the next few years.”
While Chiat/Day’s Venice office won a batch of new business in 1991, including Nutrasweet, its annual billings stayed flat at $425 million because current clients cut way back on spending. “I can’t imagine what it’s like for those agencies that didn’t take in new business in 1991,” said Bob Wolf, chairman of North American operations.
Like Chiat/Day, only new business wins saved Dailey & Associates from taking a big hit this year. “This is one of the toughest years the industry has ever had,” said Phillip Joanou, chairman of the Los Angeles agency. One of its big clients, the California State Lottery, cut its ad spending in half, but Dailey won new client Neutrogena.
Not so fortunate was BBDO/Los Angeles, which cut about 20 jobs this year. But Gene Cameron, the agency’s president, is philosophical. “We’re not hurting more than any other American industry,” he said. “And we’re certainly better off than Detroit.”
Briefly
Miller’s Outpost handed its estimated $7-million media buying account to the Los Angeles agency Rubin Postaer, which already creates ads for the Ontario-based clothing chain. . . . DDB Needham/Los Angeles has won the $3-million advertising account for City of Industry-based Lynx Golf Inc.. . . . BBDO/Los Angeles has won the $3-million ad business for City of Industry-based Presto Foods. . . . The winner of the $16-million anti-smoking ad campaign for the California State Department of Health Services is expected to be announced Wednesday. . . . The Advertising Club of Los Angeles is accepting entries for the 1992 Belding Awards Competition.
