Adweek's Top Ten Events

1. The End of InnocenceTerror struck our nation, and we sat endlessly in front of TVs and com puters, absorbing the violence and searching for answers. For seven days the networks and cable news channels provided unprecedented 24-hour, commercial-free coverage. When the selling resumed, advertisers and agencies scrambled to revamp messages that could be construed as inappropriate or tasteless. Marketers in categories such as aviation, finance and insurance took their spots off the air altogether. That was followed by a flag-waving commercial frenzy, as well as more nuanced efforts to appeal to the post-Sept. 11 consumer mind-set. The tragedy's cost, from a business viewpoint, was enormous—the networks suffered the most immediate hit, losing $300 million in ad revenue. Then the ad industry was hit harder as media budgets were slashed and corporate monies redirected toward relief efforts. And while the routine of business quickly kicked back in, it's still not business as usual. Holiday merry-making was subdued, and the year closed on a far less optimistic note than it opened on.2. Crashing the Party It wasn't pretty. In fact, it was downright ugly. Final 2001 numbers show a decline (1.7 percent) in worldwide ad dollars for the first time since World War II, according to Uni versal McCann. By mid year, scores of major marketers had sliced their budgets—some, like Enron's, just evaporated—and even agency behemoths were willing to pitch tiny accounts. The decline was fueled in part by the dot-com meltdown, which began in spring 2000 but gained unstoppable momentum in 2001. As of November, 516 dot-coms had perished in 2001, more than double the 225 casualties in 2000, according to Web mergers.com. To be sure, the Internet is alive and well—consumers now rely on it for transactions such as book or airline-ticket purchases—but there's little sign of any sector rebound. On the bright side, analysts predict an economic reversal of fortune beginning in mid-2002.3. Piles of Pink SlipsFew agencies, big or small, were immune from the layoffs that shook the industry. Agencies cut back quickly, leaving key jobs vacant, freezing staff salaries and cutting executive pay. More than 18,000 people lost their agency jobs, according to Atlanta-based executive search firm Talent Zoo. Compare that with the previous three years, when staffing levels increased by about 10 percent annually. "Advertising said goodbye to nearly 30 percent of its people," and many of them have left the field for good, says Talent Zoo's Rick Myers. Several smaller agencies, including Dweck! and Warwick Baker O'Neill in New York and Holland Mark in Boston, were unable to withstand the poor economy and closed. The phenomenon was not limited to the U.S.: Thousands of jobs were eliminated when regional offices of global networks closed or were consolidated. 4. Freshman Year Hazing IPG started off the year with a new CEO—John Dooner, who replaced the outgoing Phil Geier. Its share price hit its 52-week high of $47.19 in mid-January before plummeting to $18.25 in early October. Dooner had his hands full most of the year with troubles at Lowe Lintas, which ultimately led to the exit of Frank Lowe. In June, Dooner made the biggest acquisition in the business in 2001, acquiring True North Communications for $1.6 billion. That deal proved to be a challenge of mega proportions. Critics were quick to question IPG's ability to absorb TN smoothly and to reconcile several significant conflicts. After IPG tried to downplay the conflict between its Coca-Cola business and the newly inherited Quaker Oats account (which was being taken over by PepsiCo), Pepsi fired FCB in September and moved $350 million in business to Omnicom. Several lawsuits and an unusually public battle between IPG and Omnicom ensued. In December, IPG's McCann-Erickson was forced to give up its Reckitt-Benckiser business to appease S.C. Johnson at FCB. All in all, IPG lost more than $650 million in business as a result of its TN acquisition. Then IPG reported a loss of more than$477 million for the third quarter. Remarkably, in response, its stock jumped to $28 a share as investors expressed belief that IPG is on mend. 5. Survival of the BiggestThe frenetic accumulation of assets and consolidation of power showed no signs of waning this year. The media-agency business, says Carat USA's David Verklin, "has collapsed into six [holding-company] gorillas and two orangutans." According to RECMA, the three major media-agency mergers of 2001 involved a total of just over $50 billion in worldwide media billings. IPG's TN Media and FCB Media were absorbed by Initiative Media, creating a $21 billion global behemoth. Publicis combined its Zenith Media, co-owned by Cor diant, with Optimedia under the Zenith Optimedia Group, aggregating more than $15 billion in billings worldwide. WPP bought Tempus and merged the latter's CIA Media net work with The Media Edge, creating a $14.5 billion-plus worldwide network. To top it off, IPG launched Magna Global, the world's first negotiating company, commanding an astounding $40 billion in billings. Next up for acquisition? Industry players say none other than Verklin's Carat. On the review front, drug companies Pfizer, Bristol Myers Squibb, Glaxo-SmithKline and Novartis led last year's client consolidations, accounting for $1.5 billion of the $4.7 billion that advertisers collectively squeezed into a handful of global media agencies. By the end of the year, entertainment companies like Disney and Sony were conducting reviews for their $500 million accounts.6. Tempus' Twists and TurnsThis British tale, starring WPP chief Martin Sorrell, involved global egos, hundreds of billions of dollars, frustrated stockholders and bewildered financial analysts. Sorrell's initial grab for Chris Ingram's Tempus at first seemed like a foxhunt—just a matter of time before the prey was captured. The tables turned when, post-Sept. 11, original suitor Havas bowed out and Sor rell also tried to get out of the game, claiming Tempus' market value had dropped dramatically. But Sorrell, following a 15-week frenzy over Tempus, was forced by British regulators to complete the deal. The resulting merger of WPP's The Media Edge with Tempus' CIA Media net work created what may be the most geographically balanced media network in the world—at a cost of $629 million, probably twice what Tempus was worth by the time the deal was done.7. Open Bar"The peacock is now being replaced by the Wild Turkey," Jay Leno joked in a Dec. 17 monologue about NBC's decision to accept hard-liquor ads. The network will now be known as "Nothing But Cocktails," he said. The liquor industry ended its voluntary ban on airing television ads in 1996, but the major networks have refused to carry them until now. NBC's recent decision—which involves more than $300 million in hard-liquor ad dollars—is expected to prompt other networks to follow suit. But Congress is threatening to break up the party. Rep. Frank Wolf, R-Virginia, said in a letter to NBC that Congress will hold "extensive" hearings and may introduce legislation to block such moves. It may be too early for advertisers to toast their good fortune. 8. Postal PanicIt was a direct marketer's worst nightmare. For weeks, the news brought one report of anthrax-tainted letters after another, images of crews in hazmat gear swarming mail centers and no signs of reassurance from perplexed medical and law-enforcement investigators. Panic was just under the surface when direct marketers held their annual meeting in October and projected a $42 billion drop in revenue. But anthrax cases appeared to be limited, and most direct marketers kept their programs going, albeit with fewer gimmicks. Although the source of the anthrax remains a mystery, most consumers returned to old habits when dire scenarios failed to materialize. By year's end, the Direct Marketing Association said consumers were responding to junk mail at the same rate as before the biothreat surfaced. 9. Ogilvy & Mather vs. the Feds"All hope abandon, ye who enter here." Alan Levitt, director of the White House Office of National Drug Control Policy, quotes Dante when discussing what happens when inexperienced shops work on federal contracts. Ogilvy & Mather learned the hard way as the long-standing target of a Depart ment of Justice fraud probe. The New York shop had never worked on a federal contract before winning the ONDCP's $150 million account in 1998. Its billing system did not meet federal standards, but the government failed to question that fact early on. When time cards were scrutinized, questions surfaced about the billable hours Ogilvy was charging the government. A General Accounting Office investigation began in late 2000, resulting in allegations of fraud. As the justice probe continues, Ogilvy is fighting to keep the contract, which ONDCP rebid in August. A decision is expected in late January. 10. Hardworking HarryThe narrow and magical shoulders of Harry Potter carried the weight of AOL Time Warner's massive fall marketing machine. Warner Bros. hit the jackpot with Harry Potter and the Sorcerer's Stone—which enjoyed the most lucrative opening three days in movie history—and its sole promotional partner, Coca-Cola, went along for the ride. Coke had pledged $150 million in marketing support for the first Potter film (the next Harry adventure is slated for a November 2002 release). With 90 licensing partners doling out some 700 products, the Potter merchandising phenomenon is actually more restrained than most other blockbuster movie efforts. Remember the glut of unsold Star Wars: Episode 1 toys? While Coke had the largest stake in Harry, Chrysler, Elec tronic Arts, Kmart, Sears and Microsoft all made big investments, including running targeted ads in theaters before the movie. Overkill? Possibly. But Harry and Warner Bros. figure they have a spell for that too.

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Adweek's Top Ten Events

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