Ray Baird, partner at Irvine-based RiechesBaird, sums it up: “The days of ‘Trust me on this one’ are over,” he said.
The advertising industry has gone through big changes since the economy tanked a few years ago. Now, as the economic rebound takes hold, executives said they have to be more agile to win and keep business.
The slow economy forced cash-strapped clients to slash budgets and overhaul business plans,and put more pressure on marketers to deliver.
Now that budgets and work activity has picked up, executives are operating in a new reality. The Business Journal asked executives at some of Orange County’s biggest ad shops about the advertising landscape, including their outlook on the remainder of 2005, the review process and their favorite campaign in 2004. Following is an edited version of their responses.
What’s your outlook for 2005?
Ray Baird
Partner
RiechesBaird Inc.
Irvine
Our outlook this year is very promising. Probably the best we’ve seen since the bubble burst. Clients are very optimistic and willing to invest in sound strategies. That being said, most clients are demanding return on investment.
The days of “Trust me on this one” are over. If you can’t prove it, you’re going to lose it. We’ve seen a major shift to clients investing in writing business plans and go-to-market strategies.
Senior management is being held more accountable, therefore they are leaning on us to prove business models, justify expenditures and not only think outside the box, but burn the box.
David Murphy
North American managing partner
Young & Rubicam Brands
Irvine
Our outlook for 2005 is mixed, yet optimistic. Our agency will benefit greatly from the full-year impact of big wins in late 2004.
Today’s marketplace is not for the faint of heart. Rapidly changing demographics, new technologies, increased consumer control, shorter product cycles and other market dynamics have created an environment of immense pressure on marketers.
Jim Harrington
President
O’Leary and Partners
Irvine
We’re feeling good about ’05. We expect to see more growth from a couple of key sectors, in particular retail and high tech.
Mike Weisman
President and partner
DGWB Advertising Inc.
Santa Ana
We’re very positive about the prospects for the balance of the year. We see an increase in billings coming from our new PR division, Hispanic division and a recently-formed new business team.
We see growth coming from the building and development sector as we have grown an urban revitalization practice within our strategic planning group.
Jon Tracosas
President
Foote, Cone & Belding Southern California
Irvine
Our outlook is positive.
With the economy improving, greater job creation and consumer confidence generally positive, there is a palpable uptick in activity from current clients and prospects. The sectors that seem more active of late are travel, healthcare and technology.
Dan Hoover
President
Estey-Hoover
Advertising & Public
Relations Inc.
Newport Beach
We definitely are seeing an upswing that began in the last quarter of 2004 and continues into this year. Our billings are expected to increase approximately 7%.
The specific sectors where we see growth are manufacturing, service and healthcare.
Jeff Morris
President
Heil-Brice Retail Advertising
Newport Beach
We’re bullish on business for the remainder of this year. Our clients are looking to tackle new challenges and build their business with smart, strategically sound approaches.
Billings should in-crease this year 5% to 15%.
Ingrid Otero Smart
President
Mendoza Dillon
Irvine
I expect that 2005 will be a very good year. It has started with several new business pitches already. Billings should increase, but I would not want to try to guess. We are seeing all sectors stepping up: automotive, financial services, retail, food.
How has advertising’s pitch and review process changed in the past few years?
Baird: The pitch process has moved from creative emphasis to business ideas. No longer do clients want to see just execution of their ideas, they want to see business ideas. We believe the old agency model is dead.
Agencies that have not reinvented themselves to deliver on business strategy are toast. Most clients have figured out the execution equation. They are looking to do what agencies once did in the past,provide value by coming up with sound business models, ideas and strategies.
Too many agencies became complacent with making money on execution. Those days are long gone. Don’t get me wrong, great creative is paramount but great creative on bad strategies does not help anyone.
Murphy: Partnership is the key attribute of successful client and agency relationships. We’re seeing more frequent reviews in our industry, and what’s typically missing in these occurrences is a partnership. Partnerships build brands. Big ideas and innovative solutions often come with risk, and trust and compatibility among both parties is critical to success in this competitive environment.
Harrington: The review process has changed dramatically because the advertising industry has allowed it to happen. The most valuable asset of an agency is intellectual capital, yet as an industry, we have no problem devaluing that asset by giving it away for free during the pitch process.
You don’t see this in law, accounting, architecture or consulting. Only advertising. The industry as a whole continues to reinforce the perception among clients that we’re a commodity industry.
Clients expect more “free ideas” during the review process because agencies will do it. It’s that simple.
Weisman: Every client whose name appears in the trade journals as part of a formal review is inundated by hungry agencies. Competition is fierce with larger agencies now chasing smaller pieces of business. In an effort on the part of many search consultants to “level the playing field,” much of the opportunity to stand out in the crowd is virtually eliminated. Agencies spend so much time obeying the rules of a review they run the risk of missing the primary desires of the clients. We prefer pursuit of new business opportunities where we’ve been able to establish a relationship with the prospective client.
Debbie Zimmerman
Group account director
Foote Cone
Clients today are working in a pressure-cooker environment,they’re operating in a more complex marketing world. Their jobs have been hampered by increased regulatory oversight and they’re tasked by management to deliver lofty short-term results.
Client prospects want “chemistry”,people they can partner with. (That’s something that really hasn’t changed at all.) They’re looking for the big idea that can be seamlessly executed across multiple communications platforms. They want agencies that deliver more than a 30-second TV spot,everything from advertising, direct, digital, database, to public relations, sales promotion and event marketing.
The review process has always been competitive, but the stakes are higher today for agencies to add value at each phase of the pitch. Clients want to know how an agency thinks,they want greater relevance for themselves and their brands. They want a process that reveals insights and provides solutions.
Unlike consultants who generally establish a retainer or fee with a client before they actually do the work, ad agencies always have done the work up-front via the pitch process. In effect, we often give our work away for free.
If an agency wins the pitch, then the time and money invested in the process is worth the effort. If, on the other hand, an agency comes up empty-handed, the requirements of today’s pitch process can be bruising and costly. Perhaps that’s why many agencies think carefully before throwing their hat into the ring with some pitches.
Hoover: For our agency, the review process has changed very little. Because our experience often speaks for itself, we see less speculative pitches and more general capabilities presentations.
Morris: While the process of pitching new business has changed in some ways, in many ways it’s the same: anxious agencies vying for single pieces of business and willing to give away their ideas with “spec” creative. The increase of reviews handled through third party consultants help manage the process and the expectations,that’s a good thing.
Smart: The review process has changed significantly in the last couple of years. Spec pitches were rare in the Hispanic market, and now they are the norm, even for small businesses. We look at a pitch individually, before deciding if we will do spec work or not.
Sometimes we may decide to do the work even if the client is small, because it is an interesting brand or a category we need to build expertise on. In the Hispanic market, the use of consultants in new business pitches also is starting to grow and I expect that trend to continue.
What are some of your favorite campaigns during the past year?
Baird: One of the most innovative creative pieces we are running today is for Toyota. This idea was to assimilate a Toyota lift truck to a superhero. We wanted to place it in a comic book type background. But of course, we needed it to look neat, clean and different.
We knew that in order to get the look we were going after, we would need the best. So we called upon Neal Adams, one of the original illustrators for the Batman comic and several other DC Comics. We are very happy with the outcome of the ad and it even won us recognition in AdWeek.
Murphy: Innovative marketing is about seizing entirely new business-building ideas and opportunities, and we did just that with Land Rover.
We began by challenging the way we defined the category in which Land Rover competed and then created an entirely new category. We collaborated with our Land Rover partner in creating an adventure quotient to measure one’s spirit of adventure. Our resulting viral and integrated campaign,using a mix of TV, digital and PR,was based on a more modern and relevant definition of adventure. This non-traditional campaign is being rolled out in global markets.
It’s also critical to divorce yourself from conceived notions of how your brand must be expressed, which is what we did with our Mattel partner for Scrabble. Instead of looking at Scrabble as a serious and high-minded game, we did radically different research and found out it could be even more relevant to a younger audience if we positioned it as a form of “mental sparring.”
Harrington: Our integrated campaign for DriveTime (TV, radio, outdoor, newspaper, point of sale, etc.) has been tremendously successful because it is respectful to an audience that typically gets spoken down to.
Weisman: Favorite work included sports marketing efforts on behalf of Argent Mortgage, a unit of Orange-based Ameriquest Mortgage Co., a Toshiba television campaign and Wienerschnitzel’s “Chili Dog Diet” campaign.
Erich Funke
Executive creative director
Foote Cone
The issue is how to intrigue, entertain, surprise and reward the reader or viewer so that the brand is elevated. And to do it consistently and constantly in everything you do. Our series of tray liners for Taco Bell’s sponsorship of Major league Baseball is an example of how one can “elevate” the brand in unexpected places and unexpected ways.
Hoover: Our recent campaigns for eMachines, “Promises Made, Promise Kept,” achieved the attention and results desired. It included photos and copy illustrations from historical events, such as promising to put a person on the moon, the Wright Brothers saying they would fly and even building the Pyramids. It was a solid positioning of the company, with images that typically are not seen in technology publications such as PC World and Laptop.
Morris: Successful agencies always have had to be creative,that’s not new. What is new is that fragmentation of the market has made it increasingly difficult to reach and motivate different targets. Clients’ dollars have to stretch across multiple formats now just to reach the same audience.
The movie promotions we’ve developed, which reward Ralphs Club members with free tickets to upcoming blockbusters, continue to provide our client with high profile cross-promotional opportunities and reward their best shoppers at the same time.
