Recent Arrivals Young & Rubicam and Doner Join FCB to Dominate OC’s Ad Landscape
Move over LA, here comes Orange County.
That message is brought to you by the Orange County advertising community, whose profile has been boosted over the past year and a half as Southfield, Mich.-based Doner and New York City-based Young & Rubicam have opened ad shops here to serve auto clients Mazda and Lincoln Mercury, respectively. Meanwhile, True North Communications in September merged its FCB, Bozell Worldwide and McElroy units into one shop, FCB Southern California, to complete the creation of a new Big Three of OC ad shops.
With 1999 billings ranging from $325 million to more than a half-billion dollars each, Y & R;, FCB and Doner now are Nos. 1, 2 and 3 on the Business Journal list of ad agencies (see related story on page 34 and the list on page 50). Now trailing at No. 4, last year’s No. 3, Bates USA West, reported billings of about $200 million.
For the OC ad landscape, it’s as if three Mount McKinleys suddenly were thrust up next to Saddleback.
But they’re not big in OC terms only. The local billings of OC’s Big Three are comparable to those of the Nos. 2 through 5 agencies on last year’s LA Business Journal list, though still well behind LA’s No. 1, TBWA Chiat/Day Inc., which reported $1.2 billion in 1998 billings for the LA list.
But rather than worry about the new heavyweight competition for accounts, OC’s smaller ad shops are smiling.
“Everywhere I go I hear how the automotive industry is coming to Southern California, and Orange County especially,” said Jim Hughes, president of Tustin-based TH & M; Advertising. “This is going to be the new hub for cars, so big car agencies are only going to help bring recognition and jobs. We’ll all benefit from it, either directly or indirectly.”
That sentiment was echoed by other agencies, who have seen their collective billings increase almost 16% in the past year, despite the growing presence of Y & R; and Doner.
“They aren’t competing for the same piece of turf,” said Jim Worthen, president of J2Marketing in Brea. Worthen said the big agencies followed the auto designers, who came here for other economic reasons. But the customer profile in Orange County is more entrepreneurial, and tends to stick to smaller players in the market.
“Smaller companies use smaller resources,” he said. “The price tag is the key.”
Diana Marshall, president of Marshall Advertising and Design, said the big guns have brought more credibility to the OC ad community and should raise the level of creativity.
That, Hughes said, probably will intensify competition in the future.
“Whenever these people get centered someplace, it will raise the bar and force everyone to compete to a higher level,” he said.
But although the agencies for now are pooh-poohing the competition for accounts, they acknowledge that the arrivals of Doner and Y & R; have drained the labor pool and increased the competition for talent.
Since Y & R;’s arrival in OC in 1998 to handle the Lincoln Mercury account, it has grown its staff from the initial 55 to almost 300 as of last week.
Michael Hughes, president of the Impiric division of Y & R; (formerly Wunderman, Cato, Johnson) said that his agency is hiring five to 10 people a week, but they are having to use a variety of “creative methods” to find the talent.
And while Hughes said luring the LA crowd to Orange County is still challenging, he believes the county’s ad industry is growing faster than LA’s.
“We’re going to catch up,” he said.
A few agencies have also seen evidence that some locals are tiring of the commute to LA and beginning to look here as an alternative.
Meanwhile, Y & R;’s OC billings have grown from $30 million in 1998 to $567.9 million in 1999. And they’re not finished yet.
“We spent the first year getting organized,” said Hughes. “This is the first year we can begin looking at other companies.”
He said that the agency’s major focus will still be Lincoln Mercury and the sales promotion portion of the Taco Bell account it picked up since its arrival here, but Y & R; will also look at tech, healthcare, entertainment and telecommunications.
“We probably have a meeting a week with dot-coms,” he said. “(Right now) we pick and choose the ones we talk to.”
Hughes said the agency intends to stay on the fast track in hiring, too. In fact, they have hired recruiters to assist in that endeavor. Although it only just moved from its initial airport-area headquarters into the Irvine Spectrum last year, the company already is expanding its offices to accommodate growth.
Meanwhile, Doner,which came to OC after landing the approximately $200 million Mazda account in 1998,has been growing its base, too. It has been gaining business with Arby’s co-op accounts in the region, partly as a result of the home office’s creative account with Arby’s. It has also won the business of Mazda Australia’s estimated $20 million advertising account.
But most notably, it has been heavily mining the dot-com landscape. Stefan Kogler, who oversees the firm’s worldwide online and interactive business, splits his time between Michigan and OC.
In the fall, the local office landed the $12 million account of IntelliFutures in Aliso Viejo, an online futures and options brokerage. Last month, it picked up the estimated $30 million account of Fountain Valley-based PiNGPoNG.CoM, after that firm dropped FCB over creative differences. And this month, it landed San Diego-based RealAge.com, an account estimated to reach $20 million in ad spending this year.
Doner’s employee count hasn’t blossomed the way Y & R;’s has, but the Newport Beach office has grown its local billings to $325 million from about $250 million in 1998. And Y & R;’s dominant presence has dropped Doner to No. 3 on this year’s list of local ad shops from its No. 1 debut a year ago (see related story, page 34).
FCB Southern California has also become a giant in the OC market after its parent, True North Communications, merged its local Bozell Worldwide, FCB and McElroy Communications units into one agency. True North is looking for space to consolidate FCB’s three OC offices. The combined agency reported local billings to $403 million in 1999 and has a staff of around 200.
The agency recently won a global ad account with Internet 2000, a German company that facilitates business-to-business e-commerce and has offices in Laguna Hills. The account is valued at $12 million to $15 million.
Last week, the agency acquired the account of Oinke.com in Irvine, an online auction for commercial real estate loans. The account is valued at about $23 million.
“Everybody’s involved in dot-coms,” said Jim Harrington, president of FCB. But FCB went after the account because of its niche rather than because it’s a dot-com.
But while Taco Bell is the bread-and-butter account for FCB (it handles creative for national franchisees), the agency’s senior vice president, Bob Gale, told the Business Journal last year that the agency was pursuing business in the retail sector.
Herrington said the agency has just picked up a “pretty significant” retail account he declined to name, but one retail account they didn’t get was Anaheim-based Pacific Sunwear of California, which went with Bates USA West in the fall. n
