Ads and Subtraction
Welton Mansfield won’t have an easy job for the next four months. He has to keep about 130 employees at the local office of Foote, Cone & Belding Advertising Inc. working on an account they all know they’re losing at the end of the year.
The ad agency must resign Mazda Motor of America Inc.’s $240-million advertising account because of a potential conflict with Bozell Worldwide, which its parent company is acquiring.
“It’s very sad to have to resign an account that we’ve had for 27 years,” said Mansfield, managing director of Foote Cone’s Santa Ana office, the second-largest ad agency in Orange County.
He said that he and other executives are trying to land another major client, a company big enough to keep the office open. But the likelihood of replacing the Mazda account is slim, said Brendan Ryan, Foote Cone’s chairman in New York. “I can’t say anything is imminent,” he said.
Mansfield doubts employees would have much trouble finding new jobs. In fact, he expects most would hire on with other Orange County agencies.
While the advertising industry is thriving in the county, local ad executives aren’t so sure it’s vibrant enough to absorb many Foote Cone workers.
“Orange County is not a great place to be displaced if you’re in the advertising industry,” said Ryan Abbate, managing director of Pacific Communications in Costa Mesa.
That’s especially true for large national agencies like Foote Cone that have general offices in Los Angeles and specialized offices in Orange County mainly to service one major client.
Mergers, acquisitions and relocations have reduced the number of major companies throughout Southern California. Gone are such well-known names as Alpha-Beta Co., National Education Corp. and FHP International.
“When I was a kid, the L.A. Times was filled with ads for stereo companies like Pacific Stereo and Federated,” said Mark Weinfeld, senior vice president for Bates USA West in Irvine. “There were supermarkets and banks and record stores.
“Now we’ve got all these national chains based elsewhere, and that’s taken away a lot of local accounts,” he said. “All the consolidations have ultimately hurt the advertising industry because there are fewer brands out there.”
In an otherwise resurgent local economy, “the one negative--a stigma--is that we’re losing headquarters of big firms,” said economist Esmael Adibi, director of Chapman University’s Center for Economic Research in Orange. “We don’t have any big bank in Southern California, for instance. And [medical products distributor] Bergen Brunswig isn’t going to be based here after it’s sold.”
Even if jobs aren’t lost and the local economy isn’t rattled, the decision-making process is in fewer hands--and those hands are increasingly based out of the region or out of state. Future decisions made elsewhere could wreak havoc in the area if plants are shut down or consolidated elsewhere.
“Any major loss of business in the area is not good,” said Dan Hoover, president of Estey-Hoover Advertising and Public Relations in Newport Beach. “Losing business has a ripple effect in the economic structure of the area.”
Ad agencies are among the first to feel the effects, and the bigger firms with offices in Los Angeles are quick to pull out of Orange County, leaving it to scores of small, independent agencies that have been the mainstay.
“Orange County is not a place that major national agencies have found hospitable,” said Todd Cooley, who owns a Newport Beach public relations company.
Industry giants like N.W. Ayer gobbled up local agencies in the buying binge of the 1980s, but they eventually couldn’t justify the expense of Orange County offices.
Many in the trade press and the industry thought of the county as an isolated market, but some believe that view is fading.
“We have fought this Orange Curtain philosophy and, for the most part, dispelled that perception,” said Dan Pittman, senior managing director of Bozell’s public relations arm.
In fact, Bozell, which entered Orange County in the 1980s and again in 1994 when it bought Salvati Montgomery Sakoda in 1994, has established its Costa Mesa office as its regional headquarters.
Bates, another national firm, has put its West Coast headquarters in Irvine, though the 50 employees there handle mainly the Hyundai Motor America and Hyundai Dealer Assns. accounts.
“We think the area is still solid,” Weinfeld said. “Orange County is not as rich as the Westside of L.A., but there are opportunities for growth.”
Although the auto companies in Orange County like having ad agencies close by, other clients aren’t as worried about proximity.
With e-mail, fax machines and even video conferencing, trips to the clients’ headquarters are greatly reduced.
Moreover, said Foote Cone business strategist Steve MacDonald, customers are more concerned about getting the best talent. “There’s been an incredible shake-up among clients in the last few years,” he said. “There’s a scramble to find an advertising agency to help clients find their niche.”
Chip Shafer said his Shafer Advertising in Irvine has more high-technology clients in Silicon Valley than in Orange County, and the agency has serviced customers in Colorado in the past.
“We’re not an Orange County agency,” Shafer said. “We’re a high-tech agency that happens to have its main office in Orange County.”
Nevertheless, beyond Bozell, with 225 employees, and Foote Cone, no agency has more than about 60 employees in Orange County. So most of the ad work goes to smaller independents that are better able to handle accounts of young, growing companies that proliferate throughout the area.
Some industry leaders say that if Asian car companies hadn’t chosen Southern California for their U.S. headquarters, big ad agencies wouldn’t have offices in Orange County.
Mazda, they said, will likely require its new ad agency to open shop nearby.
Mansfield said such accounts require close, intensive work with the clients. Foote Cone employees make daily trips--sometimes two or three a day--to the car company’s Irvine headquarters. Foote Cone is involved in every aspect of Mazda’s business, from national advertising to brochures and catalogs.
“The number of people you have to maintain contact with is amazing,” he said.
The auto accounts are fueling the thriving ad industry business, Weinfeld said. Though some ad agency clients may be selling out, closing down or moving out, he said, auto makers have tripled their advertising budget over eight years.
Those working on auto accounts tend to focus solely in that area, which could make it more difficult for Foote Cone employees to find jobs elsewhere. But Mansfield said many of his employees have more varied backgrounds that should help them find jobs elsewhere.
He expects that some employees will find work in Foote Cone offices in Los Angeles, San Francisco, Chicago and New York, and that others will join whatever agency Mazda selects to replace Foote Cone.
Some agencies say they’ll consider hiring a few Foote Cone workers. But the talent pool in Southern California is rich and deep, and schools like Cal State Fullerton are pumping new prospects into the market every year. Resumes are pouring into agency offices.
“I see 10 resumes a week, and that’s not all that we get,” Hoover said. “If you put out an ad--even if you need just one person--you’ll get 10 to 20 resumes a day.”
