Small Is Big : Personal Touch, Innovative Ideas of Local Ad Agencies Are Luring Clients Away From New York

When Diamond Back wanted to peddle a new model, the bicycle manufacturer turned to the Westside, one of the advertising industry’s emerging hot spots.

With sales of its mountain bikes sluggish, partly because of a lackluster image, Diamond Back this summer hired Ground Zero, a 7-month-old Venice advertising agency with just 11 employees--and a reputation for hip, humorous ads.

Ground Zero developed a bold print ad for Diamond Back--a bike set against a bright yellow background and copy that called the product “the kind of bike Einstein would have created if he spent more time outside and less time on that silly relativity stuff nobody gets anyway.” The ad hit trade magazines last week, with consumer publications to follow soon.

It’s a brash move for Diamond Back, which makes about 15% of the mountain bikes sold by independent dealers and had previously used far milder, in-house advertising. But the company’s marketing manager, Imre Barsy, thinks the new campaign will spur sales.

“We’re getting into developing an attitude,” he said.

Ground Zero and a handful of other independent ad firms clustered in Santa Monica and Venice are developing attitudes for companies around the world, from small businesses to mega-corporations.

Experts say the rise of these Westside agencies are part of a broader trend. In recent years, clients have drifted away from New York’s traditional Madison Avenue powerhouses toward smaller, regional firms. Smaller firms have been credited with taking more creative risks and paying closer attention to clients.

The resulting power shift has broad implications for the finicky world of consumer advertising.

Kresser/Craig in Santa Monica handles widely seen advertising for Arco gasoline, Kinko’s copy centers and the State of California. Rubin Postaer & Associates, also in Santa Monica, is perhaps best known for the “Excuse me, are those Bugle Boy jeans you’re wearing?” television commercials and counts the American division of Honda among its clients.

Such agencies follow in the tracks of one of the most famous regional agencies ever, Venice-based Chiat/Day, which throughout the 1980s helped pioneer the move away from Madison Avenue. Chiat/Day became influential both for its aggressive consumer research and such innovative ads as the Energizer bunny.

“There is a move away from some of the larger agencies,” said David W. Stewart, a professor of marketing at USC and the author of numerous books on advertising. “For economies of scale, a lot of clients have moved toward smaller niche players that have very good creativity or a more specialized approach.”

Jim Smith, who at 41 is the oldest of three partners in Ground Zero, puts it more bluntly: “The most interesting stuff on the advertising scene is happening on a regional basis.”

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Some observers say that the concentration of prominent regional agencies on the Westside is merely coincidental. Yet many others point to the Westside’s affluence, proximity to media production facilities and an available pool of young, hungry talent at Chiat/Day and other large firms who have often been hired by or formed their own smaller firms.

There are also industry changes behind the trend. Blue-chip Madison Avenue agencies such as Ogilvy & Mather and McCann-Erickson are increasingly viewed as lumbering dinosaurs by both clients and analysts.

“The larger agencies are more cautious and have more layers of management,” Stewart said. “It creates a homogenizing effect to the advertising.”

Executives at large agencies say they have more resources available to their clients, and can often place advertisements on TV networks and in magazines, a task smaller agencies often must assign to outside specialists.

Yet even big agencies realize that some advertisers prefer the close attention they can receive at a regional agency--and the control they can exert because they often are responsible for a large chunk of the agency’s account.

“In a small agency, there’s greater attention by the senior people. You’re not lost in this maze of lots of clients,” said Joel Hochberg, general manager of the West Los Angeles office of Foote, Cone & Belding, a big nationwide agency that handles Mattel toys and Sunkist fruits, among other accounts.

But the biggest reason for the rise of regional agencies may be that companies are recognizing something consumer advocates have been saying for years: In general, one brand is as good as another. So the key to success is in the marketing.

Kresser/Craig was able to work that idea to its client’s advantage as it researched consumer attitudes for a new spot for Arco gasoline, which is relatively inexpensive. The resulting TV commercial shows a montage of everyday folks smiling, working and playing while Carly Simon sings and actor Keith Carradine, in voice-over, calls Arco “the West’s favorite gasoline.”

“Most people on the surface will tell you all major oil gas companies are about the same, there’s not much difference,” said Bob Kresser, Kresser/Craig chairman and chief executive officer. “But if you probe people a little more deeply, they do have doubts about a quality difference because the price is lower. The truth is, they are all about the same.

“Through our research, we were able to figure out that when we let people know that Arco sells a lot of gas and passes the savings along, the quality perception changes dramatically. They think, ‘If more people buy it, it must be OK.’ ”

Admitted Gerry Rubin, partner at Rubin Postaer: “There’s very little differentiation between brands or products anymore. The only difference is in image. So clients are in a more searching mode. The answers can come from any resource--big, small or unusual. Creativity has no license.”

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At Ground Zero that point is well illustrated.

An aggressive, youth-oriented agency, Ground Zero claims to have racked up at least $35 million in annual billings from prestigious clients ranging from Future Kids, a Los Angeles-based computer training firm, to Disney home video. (Executives at larger, rival agencies questioned the accuracy of Ground Zero’s figures.)

Ground Zero’s offices, in a funky walk-up atop a restaurant, just a block from the beach, pay homage to the pop culture often reflected in the group’s work. Electric guitars are mounted on the walls, a small pool table occupies a corridor between offices and 20-something staffers wearing baggy jeans and baseball caps creak about on hardwood floors.

In this environment, Smith and his partners--Kirk Souder, 32, and Court Crandall, 29--embark on their missions to, in their oft-quoted mantra, “find the soul of a brand.”

Souder and Crandall had been a hot creative team at Brentwood-based Stein Robaire Helm, doing award-winning work for Teva sports sandals and the Los Angeles Museum of Contemporary Art. The British-born Smith had managed the Los Angeles office of New York-based Lord, Dentsu & Partners, the kind of big, multinational agency he now sees as old hat.

The group’s strategy is to try to zero in on the most compelling reason consumers might want a product--as opposed to just ticking off some facts about the brand--and then convey that message in a wry or emotionally compelling way.

For the Disney home video campaign, the agency will avoid showing clips of animation and instead build a spot around a mother watching her child watch a video.

“It’s not about how great the animation is,” Souder said. “What it’s really about is the connection between mother and child. It gets to the essence of why we buy things, the emotional reason we go for one thing or another.”

Yet this approach does not always succeed. Bob Spivak, the founder of the Daily Grill, a Brentwood-based chain of six restaurants in Southern California, said he was disappointed with Ground Zero’s initial campaign billing his restaurants as “L.A.’s great American meal.”

Two cable TV spots showed chaotic street scenes of New York City or people screaming aboard a flight bound for the East Coast. The point was that patrons should not have to travel to New York for good American cuisine. But Spivak said some viewers were put off by the ads’ tone and message.

“I consider us a very humble restaurant chain,” Spivak said. “If we were offending people because of negative references to New York or planes dropping out of the sky, it bothered me.” He said he is much more pleased with a second phase done by Ground Zero and estimated sales are up by 8% to 10%.

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Regional agencies face other challenges as well. Executives disagree about the future of highly touted interactive advertising, in which computer users could interact with ad messages on their monitor, and “direct e-mail”--ad pitches sent via modem. Pressure to consolidate services and offer clients “one-stop shopping” has led to mergers. For instance, Stein Robaire Helm, plagued by both staff and client defections, is discussing merging with Kresser/Craig.

Yet industry insiders expect the trend toward regional agencies to, well, keep going and going and going . . .

“We are downsizing the largest corporations, initiating more and more small businesses,” said Bob Kresser. “The trend in the country is toward smaller and more regional. Why would the hiring of agencies be any different?”

Some Winning Pitches

* CLIENT: DIAMOND BACK BICYCLES * Agency: Ground Zero, Venice * Pitch: Bold, humorous appeal for bike “Einstein would have created” * Medium: Trade and consumer magazines

* CLIENT: ARCO GASOLINE * Pitch: “The West’s favorite gasoline” * Agency: Kresser/Craig, Santa Monica * Medium: Billboards

* CLIENT: HONDA * Agency: Rubin Postaer & Associates, Santa Monica * Pitch: New sports utility vehicle is shown on top of camouflaged competitor * Medium: Consumer magazines