Is the “Ad Agency of the Decade” flinching? Is it in trouble? Or is it just being its ornery self?
Chiat/Day, the Venice ad firm Advertising Age called the “Agency of the Decade” three years ago, ran national newspaper ads Monday that tried to put the best light on some very bad news: It was fired last week by client Reebok for the second time in five years.
The headline to its unusual newspaper ad said, “Now we know how Dan felt.” The reference is to Dan O’Brien, the decathlete who embarrassed himself and sponsor Reebok during the 1992 Summer Olympics when he failed to qualify for the American Olympic team. Chiat/Day had coaxed Reebok into spending upward of $30 million on a TV campaign that pitted O’Brien against teammate Dave Johnson in a battle for the title of “world’s greatest athlete.”
At first blush, the largest ad agency in the Los Angeles market--best known for setting the Eveready Energizer rabbit in motion--might seem to have a rocky future. After all, advertising dollars continue to disappear at an alarming rate from the Southern California market, where the 25-year-old agency has always looked for growth. The privately held agency is said to be struggling financially--and may even be on the sales block.
But like the ever-moving Energizer rabbit, Chiat/Day keeps on going and going.
“There is still plenty of spirit at Chiat/Day,” said Chairman Jay Chiat in a telephone interview from his New York office. “We’re not just going to survive, we’re going to thrive.”
But it may not be easy. After spending millions to establish an international presence, Chiat/Day threw in the towel last year when it sold off its costly operations in Australia and New Zealand. Yet the upstart ad firm was given the hook by Reebok last week because it wasn’t considered “global” enough for the sneaker maker.
Chiat/Day is also saddled with a reputation as being a revolving door for clients. Reebok aside, over the last two years the agency has lost such familiar advertisers as American Express, Shearson Lehman Bros. and Royal Caribbean Cruise Lines.
But Chiat/Day is an enigma. Advertising analysts, agency rivals and current clients insist that, ironically, it is because Chiat/Day is such an outstanding creative agency--and not a mega-agency singularly focused on growth--that its relationship with clients is so often on the very edge. That may also be why its advertising is often so good. And no matter how bad the economy, they say, there will always be a market for agencies that create trend-setting ads.
“Chiat/Day never completely left the ad-making craft for the empire-building craft,” said Alan Gottesman, an analyst at the New York investment firm PaineWebber. “They do have a reputation as being a revolving door for accounts, but there will always be business for them from upstart companies looking for breakthrough ads--and other companies that feel they have nothing to lose.”
Rival agency executives say they regard Chiat/Day as a creative yardstick. “Chiat/Day has set the standard by which agencies measure themselves for the past 10 to 15 years,” said Bob Kresser, chairman of the Santa Monica agency Kresser/Craig. “Jay’s not always right. But I greatly admire his standards.”
Executives at “Advertising Age” still stand by their decision three years ago to name Chiat/Day the Agency of the Decade. “Jay Chiat is one of the best in the business,” said Fred Danzig, editor of Advertising Age. “He might be taking his lumps right now, but he will rally the troops and come back on top. He always does.”
Reebok officials insist they were very pleased with the ads that Chiat/Day created--including the catchy “Planet Reebok” campaign that will continue into 1994. But Reebok badly wants to expand into international markets--especially the Far East--where Chiat/Day has no presence, said David Ropes, vice president of marketing at Reebok.
Client Nissan has also declined to consider Chiat/Day to handle any of its advertising outside of North America. But at the same time, the Japanese car maker is so enthralled with Chiat/Day that last year it also handed the agency all of the ad business for its Infiniti division.
Nissan credits Chiat/Day for effective marketing of the Altima, a mid-sized car that, in its first year, has doubled sales of the Stanza model that it replaced.
“This is the success story of the year,” said John Rinek, ad manager of Nissan’s Infiniti division. “Chiat/Day has played a huge role.”
Meanwhile, client Eveready has reported record sales every year since Chiat Day set its Energizer Bunny on the roll.
Struggling IBM is seriously considering hiring Chiat/Day to handle a big chunk of its personal computer business. And the renegade software maker Sega of America is also talking to Chiat/Day about new products that it wants to aim at youngsters under age 10.
“We’re not an agency that takes adversity lightly,” Chiat said. “We’re going to be back in the sports equipment business--soon.”