Southland Ad Agencies Expect Little Relief in ’94

Ask Craig Campbell how things look for the ad industry for 1994, and he holds back a wince. That’s because there won’t be a 1994 for his Los Angeles ad firm.

Unable to pick up new business in the ultra-tough Southern California market--and after the loss of its biggest client, First Interstate Bank--his ad firm, Campbell & Wagman, is about to close for good. But the underlying problems, Campbell says, go well beyond his tiny agency, which recently sent 35 employees packing.

To a number of Southern California marketers that have cut back--or even eliminated--their ad budgets during the economic downturn, “we still haven’t been able to prove that advertising works,” said Campbell. “When things get tough, advertising is always the first thing to go.”

With few exceptions, most agency chiefs say the dismal Southern California market isn’t likely to be much better in 1994. Few local agencies plan to do much hiring next year--including those that are projecting their business to improve.

And while industry executives suggest ad revenues nationally could jump 6% or more in 1994, there is little optimism that Southern California agencies will see an increase of more than 3%. A number of executives are projecting no increase at all.

“There is a gloom in the L.A. market that I have never seen before,” said Rick Colby, president of Los Angeles-based Colby Agency. “There is so much fear out there.”

The Southern California ad market has been “very depressed” since about 1990, said Bob Wolf, chairman of Chiat/Day, the Venice agency that creates ads for Nissan and Eveready. “We’re looking at flesh and bone and asking: Do we need to cut that too?”

Added David Park, chairman of the Los Angeles office of DDB Needham, “This is the longest I’ve ever seen an ad community endure continuous bad times.” His agency saw its own business grow reasonably well in 1993. But as far as the Southern California ad market goes, he said, “most people say nothing is going to change in 1994--or maybe even through the following year.”

This pessimism is mostly grounded in recent economic reports projecting that the Southern California economy probably won’t begin to rebound until 1995--or beyond. Ad agency executives know what that means: Itchy-fingered advertisers will be tempted to cut spending or perhaps even try shifting their accounts elsewhere in order to save money.

Colby’s ad firm recently lost its biggest client, Homebase. As a result, it has cut the size of its agency staff in half, to 15 employees.

Things are also looking grim at Robert Elen & Associates, the Los Angeles agency that recently lost its key client, Southern California Honda Dealers. Although agency President Robert W. Elen insists that his shop has staying power despite the big loss, the firm badly needs to pick up new business--or a merger partner.

Few of the larger Los Angeles ad shops are planning to add any employees in 1994.

Even though Chiat/Day had a fairly strong 1993, it doesn’t plan to bolster its payroll in 1994. “We’re asking hard questions about how many people are required to create and place ads,” said Wolf. He expects 1994 staffing to remain about where it is now.

Similarly, while Grey Advertising says billings at its Los Angeles office could rise by 5% in 1994, it isn’t planning to add staff. “We want to make sure we have the billings to justify the people,” said Miles Turpin, president of the office.

At the Los Angeles office of Foote, Cone & Belding, executives are projecting a flat 1994 and no additions to staff. “There’s no question the trend is fewer people doing more of the work,” said Joel Hochberg, executive vice president and general manager.

McDonald’s cut back on some local and regional marketing last year, and, as a result, the Los Angeles ad agency Davis, Ball & Colombatto closed small branch offices in Tucson and Sacramento.

“It was an extremely difficult year for us,” said Brad Ball, president of the firm, which thinned its staff in 1993. The firm does not expect to add employees in 1994.

There is, however, at least one hiring bright spot.

Rubin Postaer & Partners, which already handles the national ad business for American Honda Motor Co., recently added the Honda dealers’ regional ad account. The agency is establishing a new division--RP Alpha Group--at a separate Santa Monica location to service the account. And it will hire 60 employees to handle the new business, said Gerrold Rubin, agency president.

The ad industry might begin to turn around in Southern California by mid-1994, predicted Gerald McGee, managing director of the Los Angeles office of Ogilvy & Mather. But McGee isn’t making any bets. He still sees the future of the local industry clouded in uncertainty. “It’s like when you’re snorkeling,” said McGee, “and your mask keeps getting clouded up.”

Briefly . . .

Pactel Cellular of Walnut Creek, Calif., is talking to several Los Angeles ad shops about its $10-million account. . . . Two Los Angeles ad shops--DDB Needham and DMB&B--are; vying with two San Francisco agencies for the $25-million First Interstate Bank account. . . . Los Angeles-based Select Resources International is overseeing an agency review for an undisclosed client with a $15-million annual ad budget, for which it has sent questionnaires to a number of West Coast agencies. . . . KFC is reviewing its $8-million Southern California regional account currently handled by Lord, Dentsu & Partners. . . . Chiat/Day is creating an “infomercial” division to be called Infomedia. . . . In a bid for public relations unity, local chapters of the Asian American Advertising & PR Alliance, the Black Public Relations Society and the Hispanic Public Relations Assn. will jointly host a holiday party at 6 p.m. Dec. 9 at Edgardo’s restaurant in Los Angeles.