Competition Forcing Ad Firms to Reinvent Themselves

Keith Reinhard’s whole life has been advertising. More than 20 years ago he penned the slogan, “You deserve a break today.” But today, the chairman and chief executive of the $4-billion advertising conglomerate DDB Needham Worldwide says that the ad business isn’t really his business anymore.

In fact, he is considering striking the word advertising from his agency’s letterhead, because he suspects that the word is cramping his agency’s ability to compete.

“Advertising agencies will have to reinvent themselves,” said Reinhard, whose agency creates ads for Volkswagen and Bud Light. “We have to stop thinking about advertising in traditional terms.”

Among other things, Reinhard suggests that a new breed of “communications generalist” will be needed at agencies--professionals who have expertise in everything from package design to PR to talent negotiation. In fact, Reinhard recently named a new head of his agency’s Melbourne office who had never worked for a conventional ad agency.

What Reinhard recognizes--along with a growing number of agency executives attending last week’s conference of the American Assn. of Advertising Executives in Naples, Fla.--is that unconventional rivals are suddenly stealing agency business. These outsiders range from Hollywood talent brokers to flashy design firms to commercial production companies. For years, ad agencies worked in tandem with these outfits. Today, they are being replaced by them.

The most visible example of this happened last fall, when soft drink giant Coca-Cola threw its longtime agency McCann-Erickson for a loop by announcing a marketing alliance with the Hollywood talent firm Creative Artists Agency. Since then, there have been several other signals of change.

This week, athletic footwear giant Reebok will release a flashy new print ad campaign created not by an ad agency but by a tiny Culver City design firm. Rival Nike also has a creative consulting contract with director Spike Lee.

“People are looking for ideas wherever they can find them,” said Robert L. James, chairman of McCann-Erickson. “You have to open doors to see what’s on the other side. Hollywood has some promise. So why close your eyes to it?”

But James declined to comment further on the relationship.

Exactly what role Creative Artists will ultimately play with Coke is still unclear. A Coke spokeswoman says the agency will be its “worldwide media and communications consultant.” Although Creative Artists will not actually create ads, CAA Chairman Michael Ovitz, who is viewed by many as the most powerful man in Hollywood, is expected to help Coke tap into the stars of the future.

Not to be left outside the Hollywood loop, McCann recently established its own West Coast marketing and consulting division to help clients Columbia Pictures and Tri-Star Pictures stay plugged in to popular culture.

American advertising agencies controlled the marketing world for decades, but they started to lose control in the 1980s when they began focusing on their own growth and paying less attention to their clients’ needs.

“Suddenly, the historic partnership between agencies and their clients began to fray,” said Alex Kroll, chairman and chief executive of Young & Rubicam, the New York agency that creates ads for Kraft General Foods and Johnson & Johnson.

So instead of seeking marketing guidance from big ad agencies, some clients have decided that it can be less expensive, faster and maybe even more enlightening to go other places for creative ideas.

In the last month, two major consumer products firms and one big electronics firm have approached the San Francisco-based corporate image firm Landor Associates for marketing help. In the past, such firms would only come to Landor for things like redesigning company logos. “But each one of them has said, ‘We want to talk to you about positioning our brand,’ ” said Edward Vick, president of the firm. “The lines between what we do and what agencies do are certainly blurring.”

The marketing world used to be this simple: Ad agencies created ads. But that is not always the case these days.

This week, Stoughton, Mass.-based Reebok will unleash a $7-million print advertising campaign for its so-called classic line of sneakers in magazines including People and Esquire. But the ads didn’t come from its high-paid ad agency, Chiat/Day/Mojo. Rather, they were created by a Culver City design company, the Mednick Group, which usually specializes in designing brochures and collateral materials.

What’s more, Reebok has even asked Mednick to create a TV spot for the “classics” line. Reebok has also hired a Boston design firm to create print ads for its line of casual shoes called Boks.

“This is the future of our business and of the advertising business,” said John Gillis, director of marketing communications at Reebok. “Any product with a mass consumer audience has to be looking at this kind of thing.”

Briefly . . .

Carpeteria has chosen Fotouhi Alonoso Inc. for its ad business, an account in excess of $3 million . . . The struggling Los Angeles agency Ayer Tuttle will be renamed and merged in the next week or two with an undisclosed Los Angeles agency, and Donna F. Tuttle will be replaced as chief executive . . . Just before his hip replacement surgery, baseball and football star Bo Jackson filmed his portion of a star-studded Nike TV spot to air during this summer’s All-Star Game . . . A Nike basketball shoe commercial is in development that will feature six basketball stars the athletic shoe maker has under contract who will play in the Summer Olympics . . . Advertising executives say Charlotte Beers, newly named chairman and chief executive of New York’s Ogilvy & Mather Worldwide, will focus on winning back the American Express business that the agency lost to Chiat/Day/Mojo . . . Britain’s WPP Group PLC remained the world’s biggest advertising organization in 1991, and Tokyo-based agencies collectively handled more business than New York agencies last year, according to Advertising Age.