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Agency chiefs may need to batten hatches at 4A’s By Andrew Jaff

Several years ago, this magazine made fun of agency chiefs running off to an expensive East Coast resort to chat about light topics and generally fid

This week I’d suggest a more charitable tack. Though there may be some golf and fun-in-the-sun in Laguna Niguel, when agency heads assemble for their annual 4A’s summit–the fact is there are real storm clouds on the horizon. It’s time industry leaders did some hard thinking about where the agency business is headed–and if they do it over a golf tee, under sail on the blue Pacific or in a stuffy hotel board room–who cares?
As Burt Manning, chairman of J. Waitor Thompson, put it, “I haven’t been (to a 4A’s meeting) in three or four years, but I feel this year I reaily must go. We’re under siege.”
Manning is right, but the underlying stresses that have created this sense of crisis are not new. Advertising has been undergoing structural change for at least a decade, going back to before the Big Bang of 1986. Changes in compensation, the unbundling of media, the growth of below-the-line services have all threatened profitability of agencies. Now advertising budgets are being cut back in favor of promotions and some clients are asking if advertising ‘wvorks” at all.
As if that weren’t enough, along came Coke and CAA, raising the specter of clients further cheapening the metal by hiring Hollywood agents to craft their advertising.
Donny Deutsch, one of the speakers at this week’s gathering–the organization’s 75th–thinks the CAA threat is overblown. “The collection of what they produced for Coke is a bunch of nonsense,” he says in his understated, New York way. “Who cares what happens with 24 little pieces of entertainment with no strategic underpinning?” But he hastens to add that big agencies today– larger and less maneuverable than an Ammirati & Puris or a Wieden & Kennedy–have a lot to worry about. “What the CAA-Coke thing did show is that tired agencies and tired clients need a little rejuvenation,” says Deutsch. And he doesn’t believe hiring a big director is the answer. “This is no time to be in the position of not being able to do a commercial for less than a million dollars,” he says. “What are (big agencies) going to say to clients when agencies like mine offer gutsy thinking and can do the work in a third of the time at a third of the price?”
Others are more concerned about growing client skepticism. Says Ed Wax, chairman of Saatchi & Saatchi Advertising Worldwide and the 4A’s incoming vice chairman, “Advertising is under attack in a lot of areas–taxation, curtailment of first amendment, compensation. But perhaps the most serious is effectiveness. One of the things I look forward to is getting the industry to do better at showing what advertising is able to do.”
Meanwhile, there appears to be a renewed intorest in Washington, according to Hai Shoup, the 4A’s Washington representative, to tax or affect the deductability of advertising in order to further a largely Democratic social agenda. The enemies of tobacco and alcohol are coalescing with all sorts of attacks. In the Senato, Sen. Tom Harkin (D-Iowa) is proposing to decrease the deductibility of cigaretto advertising from 100% to 50%; in the House, Rep. Jim Moran (D-Va.) wants to disallow advertising expenses for tobacco and alcohol altogether. “I’m really worried,” says Shoup. “This stuff is really going to come at us. This is a cruical period for advertising. The Clinton administration has a much more socially active agenda (than the ReaganBush administrations) and the (Clinton people) are not afraid to propose laws and regulations with social objectives, without regard to what the economic impact would be.”
With the seas getting rougher, the shapers of this year’s meeting have arranged a fairly tame list of speakers. None of advertising’s enemies from the Hill or the shapers of Clinton economic policy are on the program– nor is Michael Ovitz.
That’s fine. But under incoming 4A’s chairman Roy Bostock of D’Arcy Masius Benton & Bowles and president John O’Toole, the 4A’s are going to have to come up with a strategy to defend advertising’s essential magic. There can be many different ways for agencies to improve–but the industry needs some new heroes and a renewed commitment to great work.
Deutsch is right. With a good strategy, with sharp creative, with a reasonable production budget, agencies should be able to shoot a little excitement back into the business. You never heard a client complain about whether David Ogilvy lived too well. But it takes good work to paper over a lot of sins. Hey, to those taking the afternoon cruise on the schooner Kelpie, good sailing.
Copyright Adweek L.P. (1993)