Beyond the recession By Greg Farrel

Did you hear it? It was louder than the sound of one hand clapping and seemed to pervade the industry in 1992. Itwas the deafening silence that echoed from Madison Avenue to Mic

The recession technically ended late in ’91, but it was a full year and one defeated incumbent President later that the hand-wringing that goes with reduced ad spending finally dissipated. And the agencies that reacted most quickly to a newer but less forgiving marketplace were the ones most amply rewarded in ’92.
The fastest-growing species, as usual, could be found among smaller, more agile shops that evolved by delivering for one or several key clients. Lotas Minard Patton McIver rode its success with Procter & Gamble and more than doubled in size, while Goodby, Berlin & Silverstein’s billings swelled with big spenders like Sega and Isuzu.
At the same time, some of the industry’s leviathans also posted impressive gains. Ayer, McCann-Erickson and J. Walter Thompson increased their billings at a double-digit percentage rate–no mean feat in any year, but even more notable when new ad spending had supposedly dried up because advertisers wanted to hold tight on budgets.
Messner, Vetere, Berger, McNamee, Schmetterer continued its astounding growth last year, growing its own business and digesting what was left over at Della Femina McNamee after parent Euro RSCG bought out principal Jerry Della Femina. In two years, the agency has shot up to $500 mfllion from a mere $77 million. At this dizzying rate, Messner should overtake Saatchi & Saatchi sometime in 1998.
More than in other years, 1992 presented some challenges to the industry that will, over time, determine the players with real staying power. Where some will only see Michael Ovitz and CAA as a threat to their livelihood, others will grasp the changes in the marketplace that created the opportunity for Ovitz to seize (however temporarily) control of Coca-Cola’s creative product.
Further, 1992 also showed that in a lean economy so saturated with top-quality automobiles at affordable prices that even the Japanese high-fliers stubbed their toes, no car account is safe. BMW and Mercedes found new agencies; Porsche is in the process of selecting one. Nissan decided to consolidate its Infiniti line with lead agency Chiat/ Day; Mazda aborted its Amati project. As evidence that business as usual will no longer be tolerated in Detroit,
Oldsmobile put into review. Yes, Olds ultimately did stick with Burnett, but the lesson was not lost on any agency doing business in Motown. A challenge to the status quo in Detroit can create openings for a shop like Hal Riney, which successfully brought Saturn into the market.
Finally, one of the biggest opportunities for ad agencies in 1992 came about when P&G instituted its everydaylow-pricing policy. It could be a while before ad agencies reap the benefits of P&G’s decision to build brand awareness through advertising rather than moving product through slotting fees. Check back with us in ’94 to find out.
Copyright Adweek L.P. (1993)