San Francisco Agencies Say Dot-Com Hangover Is Lifting

The condition of San Francisco’s advertising industry has often been likened to a hangover. But the headache that followed the city’s dot-com bust is finally starting to ease.

San Francisco has long been a creative mecca, peopled with ad-industry icons such as Howard Gossage in the 1960s, Hal Riney in the 1980s and Jeff Goodby today. When Silicon Valley started pouring money into advertising startup tech ventures in the late ’90s, the city’s ad agencies found themselves in the right place at the right time. The creative rules were that there were no rules.

“The biggest dilemma of the day was which party to go to,” recalled Will Travis, president of British agency Attik’s San Francisco outpost.

“It was a weird, artificial world,” said Jeff Goodby, co-chairman of the city’s biggest agency, Goodby, Silverstein & Partners. “It was buoyed up on optimism and the economy. It was like a big circus came through town and left us.”

Billings among the city’s top 10 agencies dropped from a high of $4.6 billion in 2000 to $3.4 billion the following year, according to Adweek reports (see chart). Now, San Francisco is detecting hints of a recovery—but far fewer than the rest of the country has seen. Last year, Adweek reports show, billings for the city’s top 10 agencies were up for the first time since 2000, the last full year of the boom.

But at $3.6 million, that billings figure is still about $100 million less than it was at the peak of the boom. And the 4 percent growth rate is well below last year’s average of 9 percent for the top 100 U.S. agencies, Adweek estimates show.

“I’m getting a sense of an uptick in business in general,” said Jim Magill, a 25-year veteran of San Francisco advertising and now an evp, group management supervisor at Collaborate. “I am seeing that and hearing that from everyone I’m talking to.”

Brian Hurley, general manager of Grant, Scott & Hurley, has overseen the shop’s new- business efforts for six years and agreed that business looks better than it did two years ago—and at least it’s coming from “real companies,” he said.

“By no means is this a ghost town,” he observed. “Those of us who made it this far are better off.” While the shop was pitching one new account a week in 1999, the action now is “downright sensible,” Hurley said, noting that, “We could be doing a pitch a month if we wanted to.”

But business is still a far cry from where it was. Millie Olson, who launched Amazon Advertising in 1996, said she recently came across a folder in her files labeled “New business turned down.” She noted, “Needless to say, I don’t have a folder like that now.”

Olson described the local scene as “settled” and said she’s not optimistic that it’s going to pick up the pace anytime soon. “I am concerned there is a permanent retraction,” she said.

Goodby said the agencies that will succeed in the city are those that can do a lot with a little, using the same creative thinking that made San Francisco’s advertising famous in past decades. In 2000, it was Goodby’s Super Bowl commercial for E*Trade, starring a dancing chimpanzee, that both poked fun at and reveled in the frivolous, attention- grabbing advertising that marked the dot-com era.

Now, Goodby said, “people are asking, ‘How much can I get for my money? How can I get my money’s worth?’ ”

Harold Mann, a consultant and former board member of the San Francisco Ad Club, noted that these days, “you have to be much more agile.” In this business climate, he said, “the rules have changed: Big agencies have to work like small agencies.”

Travis also agreed that the downturn has forced sharper thinking. Attik adjusted its business model, becoming a more full-service shop instead of concentrating on design. “[The crash] was one of the best things that happened to our business,” Travis said. “We’ve grown since … business-wise, in maturity. Our depth of understanding is far richer than it would have been. We have all been through the battle.”

Many, of course, did not survive that struggle. The San Francisco Advertising Club shut down in 2002 after nearly 100 years. Several offices of national shops closed, including Publicis Groupe’s Saatchi & Saatchi, Leo Burnett Technology Group and Highway One; Interpublic Group’s Lowe and The Martin Agency; and Havas’ Arnold Ingalls Moranville.

But the city will remain a hub for creative activity, said Jordan Warren of Eleven, a creative boutique founded in 1999 by a group of Goodby expatriates. “The uniqueness of the place that we live, the creative mind-set, attracts a progressive, open-minded workforce,” he said.

“San Francisco didn’t suddenly become a desert,” added Mann. “It’s always been an oasis.”