Buy This Ad Agency!

April 3 1998 3:30 AM

Buy This Ad Agency!

The one thing today's advertising execs can't seem to brand is themselves.

Nike announces it's slashing $100 million from its marketing budget and plans to re-evaluate all its ad campaigns over the next six months. Ad agency Wells BDDP, which came up with the legendary "I Can't Believe I Ate the Whole Thing" campaign for Alka-Seltzer and convinced Braniff Airways to paint its planes a fluorescent fuchsia, goes out of business after losing $100 million accounts at Bristol-Myers and Procter & Gamble. Levi's puts its account up for review after a year of declining sales, even though its current award-winning ad campaign is simply some of the best television on television. And Budweiser announces that real people are going to start appearing in its ads again, though thankfully, the lizards and frogs will not disappear entirely.

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In other words, it's been a typical couple of weeks in the advertising industry of the 1990s.

Actually, it's tempting to say that the state of perpetual turmoil that characterizes advertising today has characterized the industry since the modern era of advertising began sometime in the early 1920s. After all, the underlying theme of just about everything honest written about the ad game is fear--fear that your creative powers are going to dry up all of a sudden, fear that you'll be stuck doing hand-cream ads the rest of your life, and fear that the client will pull the account. In Frederic Wakeman's 1946 novel, The Hucksters, the hero, played by Clark Gable in the film version, is a tough-guy creative whiz who gives up on advertising as soon as he realizes that he's genuinely afraid of losing the big soap account. And in the 1970s, legendary '60s adman Jerry Della Femina wrote simply, "Most account guys live with fear in their hearts." So it may be a mistake to think that advertising in the 1990s is more chaotic and stressful than it's ever been.

On the other hand, it may not be a mistake. For while the peculiar way advertising agencies do business--any client is allowed to fire an agency with just 90 days' notice--has not changed in the last 50 years, the willingness of clients to take their business elsewhere has. Even in the late 1960s, the average business stuck with its ad agency for nine years. Today, the length of tenure has shrunk dramatically, and even long-term clients feel free to put their accounts into review, which essentially requires their current ad agency to compete against a host of newcomers. It's like an actor being forced to audition over and over again in order to keep a part.

In just the last two years, Kodak, Miller Lite, United Airlines, McDonald's, Apple Computer, Bristol-Myers, P&G, Hertz, and Toys "R" Us (as well as a host of others) have switched agencies. At the same time, companies have started dividing up their advertising budgets. Instead of a single agency offering soup-to-nuts services, one will do the media buying and another will do the creative. The creative budget is often parceled out as well. Wieden & Kennedy, for instance, handles Nike's shoe advertising and has given us the genuinely terrific "I Can" campaign that Nike is now thinking of killing. But Goodby, Silverstein & Partners handles Nike's apparel and women's sports advertising, and has given us the F.I.T. campaign, with endless shots of the skin of athletes such as Michael Johnson and Gabrielle Reece. Big clients, in other words, are not necessarily as big as they once were.

In some ways, this probably isn't a bad thing, though you'd have a hard time convincing most ad execs of that. The reason advertising is governed by fear, after all, is that most agencies rely on just a few clients to bring in the lion's share of their revenues. If General Motors knew that one-tenth of its sales and one-eighth of its profits came from two companies, you can bet GM would be constantly worried about keeping those two companies happy. Insofar as fragmented budgets make each individual client less important to an agency's overall financial health, then, it's better for the agency, though it does mean that more energy has to go into finding new business.

That search is, needless to say, a difficult one at a time when there are literally thousands of ad agencies in the United States alone and, more importantly, when the creative differences between agencies have narrowed considerably. Perhaps the most curious thing about advertising today, in fact, is that agencies that spend all their time helping companies build strong brand names and distinct corporate identities have a very difficult time building brand names for themselves.

This wasn't always the case. To take only the most famous example, when Doyle Dane Bernbach came up with its brilliant ads for Volkswagen in the early 1960s, no other agency would have made those ads. An Ogilvy & Mather ad looked one way (usually a very boring and uptight way), and a DDB or a Mary Wells ad looked another. And this was arguably true even through the 1980s. TBWA Chiat/Day and Wieden & Kennedy certainly exaggerated their radicalism, as advertising people are wont to do, but the 1984 Apple ad and the original "Just Do It" ads for Nike did look qualitatively different from what had come before.

Today it's far harder to tell agencies apart. Look at the "I Can" campaign, the Reebok ads for Kobe Bryant, and the Surrealistic Levi's ads. The same people could have made them. More troubling, from the perspective of the advertisers themselves: Watch a sneaker ad with the sound off. It will be next to impossible to discern which company's shoes are being pushed. Advertising, in that sense, is feeling the impact of commoditization just as other industries are. But where companies in other industries can resist commoditization through technological breakthroughs, better assembly lines, and--ironically--powerful branding, ad agencies seem at a bit of a loss.

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W hat we'd all like to believe, of course, is that an advertising agency is ideally placed to resist commoditization, because its main asset is the imagination of its staff, something that cannot be duplicated. As one hopeful exec told Advertising Age recently, "Creativity is the anti-commodity." But while creativity may exist, it doesn't necessarily exist over and over again. And at a time when ad people all seem to be drawing from the same palette of colors and styles, creativity and distinctiveness are, oddly enough, not synonymous.

In a sense, the advertising industry is reluctantly moving toward a business model much closer to the so-called free-agent economy than to the traditional idea of a corporation. As advertising budgets become more fragmented, it's easy to imagine a situation in which ad agencies serve primarily to orchestrate production teams, bringing in art directors and copywriters for specific ad campaigns rather than keeping a whole staff on hand. When agencies lose major accounts, they often fire nearly everyone involved with the account. How much longer can it be before agencies decide that operating on a free-lance basis is simply more efficient?

What keeps the older model intact, in part, is the importance of relationships to the business. Advertising is still a world where glad-handing and drinking with clients is important to keeping their accounts. But the studio system in Hollywood disappeared while studio execs remained important as deal makers, and the same could happen in advertising. As clients grow increasingly less committed to their ad agencies, the economics of the business will have to change. In his immensely tiresome memoir, Confessions of an Advertising Man, David Ogilvy wrote, "If you can make yourself indispensable to a client, you will never be fired." No doubt. But for the ad agencies, indispensability turned out to be a hard sell.

James Surowiecki writes for the Motley Fool. He can be e-mailed at surowiecki@aol.com.

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