IT WASN’T A VERY GOOD YEAR
But 2001 Wasn’t the Debacle for All That It Was for Some; Y & R; Tightens Its Grip on No. 1
By JENNIFER BELLANTONIO
A tough economy throttled the national advertising industry in 2001. But as a group, Orange County’s ad shops,despite some local executives’ stories of doom and gloom,fared better than most.
The county’s largest advertising agencies showed a 4% jump in capitalized billings generated here last year, to $2.8 billion, according to this week’s Business Journal list. The list ranks the 50 largest shops by OC capitalized billings.
The increase is attributable to the 20% rise in capitalized billings at the Irvine office of Y & R; Cos., which repeats at No. 1. Boosted by the Jaguar automotive account it won early in the year, Y & R; came in with $667 million billings in 2001, nearly a quarter of the total on the list.
Forty-seven other shops on the list reported their 2001 billings (the list includes two Business Journal estimates). Their total was flat vs. a year ago. Twenty-two shops showed decreases, 18 showed increases and seven were flat.
It was a case of the rich getting richer in a lean time, as 13 of the shops that increased their billings were in the top half of the list. Conversely, the shops that lost business tended to be in the bottom half.
The gainers also were paced by shops,notably Y & R;,that have a lot of billings in the automotive sector, which maintained its ad spending last year, and Hispanic shops, which benefited from continuing attention to segment in the wake of the 2000 Census.
The losers, predictably, were the shops heavily reliant on technology accounts, which imploded early in the year, and retail and consumer-goods accounts, which suffered in the wake of Sept. 11.
Meanwhile, total employment on the list mirrored the national trend, falling 5% at the 49 agencies that reported figures. Excluding the 20 positions added at Y & R; during the year, the aggregate job loss was 7%.
Twenty-four shops cut employment in 2001, 17 added workers and eight reported no change. No. 3 W.B. Doner & Co.’s Newport Beach office did not give employment numbers.
Still, talking to OC executives, you’d think last year was worse. And for some,especially those specializing in tech,it was.
“2001 was a bloodbath,” said Craig Holland, founder of Irvine-based Thumbworks and former vice president at Nine Dots Corp. in Irvine, which dropped from this year’s list (see the Marketing & Media column on page 45).”It was horrible.”
A handful of shops lost 40% or more of their business, including Newport Beach-based Greenlight Communications Inc., an agency specializing in technology and manufacturing that dropped from the list. No.16 neoBrands Inc. of Costa Mesa, which was down 65%, fell from No. 9 last year. NeoBrands lost one of its biggest clients, J.D. Edwards & Co. last year.
No. 9 DGWB Advertising of Santa Ana saw its billings dip 20% to $80 million and its employee count drop 25% to 80, largely from the loss of Irvine-based Toshiba America Information System Inc.’s computer notebook division, which restructured to deal with a computer slowdown. It slid from No. 7 last year.
Talk of a dismal 2001 has been replaced of late with cautious optimism about 2002.
DGWB partner Jon Gothold said clients who were stalling in 2001 are ready “to get on with business.”
“The good news is there’s a lot more calls and a lot more interest” since Jan. 1, Gothold said. “But the budgets are small and you have to work very hard to get business. It’s very competitive.”
The top five slots on the list remained in the same hands as last year.
No. 2 Foote, Cone & Belding Southern California of Irvine repeated in that slot with 2% increase in billings to $410 million in 2001. The shop’s advertising employees jumped 11% to 200.
Doner held on to No. 3 with an estimated $325 million in billings in 2001. The agency got a $20 million boost in early January when it walked away with Santa Ana-based PacifiCare Health Systems Inc.’s national advertising account,one of the biggest chunks of work to move in the past few months.
Speaking of shuffles, No. 4 Bates USA West of Irvine saw billings jump 10% to $275 million. Bates is busy defending its biggest client, Hyundai Motor America. The automaker recently put its creative account up for review and pulled its media buying duties from Bates earlier this year,moves that blindsided the agency and started a feeding frenzy among ad agencies.
Mark Weinfeld, Bates’ former senior vice president of strategic planning (who recently took a position at Doner, starting this week), had told the Business Journal the agency will keep staffing as is while defending the creative account. And, Bates will continue handling the media portion for another month or so.
But the shop, which saw advertising employees jump 14% to 143 last year, is expected to have some downsizing once media duties shift to Aegis Group’s Carat North America, which won that work. It also could see some tightening if it loses Hyundai’s creative account.
Regardless of the outcome, Bates will continue to handle advertising for Hyundai’s National Dealer Association, which is worth $100 million-plus. The agency also won a chunk of business last year from Burbank-based Aramark Uniform Services, part of Aramark Corp.
No. 5 Pacific Communications posted a 22% gain in billings to $143 million, and an 11% jump in employees. The agency had some good news early this year when it was named the agency of record for Johnson & Johnson’s Irvine-based Advanced Sterilization Products unit and for Allergan Inc.’s Tazorac product, a skin medication used to treat acne and psoriasis.
Agencies hardest hit include No. 36 Single Source Marketing Inc. and No. 45 Strategies, both of Costa Mesa, which were respectively down 44% and 50% in billings.
Six agencies dropped off the list, including Shafer Advertising & Public Relations in Irvine, which is closed, Greenlight Communications Inc. of Newport Beach, which was down 82% in billings, and Advantage Plus Marketing Group Inc. in Laguna Hills, which posted a 40% loss in billings.
But there were bright spots.
Two agencies reported triple-digit gains in billings: No. 23 Irvine-based Open Minds, which went from $6 million to $15 million, and No. 41 Aliso Viejo-based Thinkbig Marketing Group, both new to the list on the strength of those gains.
Four other agencies joined the list this year: No. 20 MossWarner Communications Inc. in Mission Viejo; No. 47 L & A; Marketing and Advertising Inc. in Newport Beach; No. 49 Hobbs/Herder Advertising in Newport Beach; and No. 50 Young Co. of Laguna Beach.
Dropping off the list, in addition to GreenLight, Shafer Advertising and Advantage Plus, were: Wirestone, Costa Mesa; Buckley/Friedman Marketing Communication, Costa Mesa, and Nine Dots, Irvine.
Shafer closed after spinning off neoBrands. Wirestone, Buckley Friedman and Nine Dots closed their OC operations. Advantage Plus did not have enough billings in 2001 to make the list this year.
