As The World Turns

No one expected the fast-flying dot-com industry to soar ever upward, but few expected its plunge last year to be so sudden or its pull on the economy so severe. Agencies with exposure to free-spending dot-coms had to retrench. So did those whose brick-and-mortar clients were hammered by Web failures. With marketers facing lower profits, layoffs and deflated stock prices, ad spending came under fire. Agencies used to seeing client budgets be among the first casualties in cyclical swings have seen it all before.

What’s different this time is the widely held sense that the downturn may represent more of a technology-driven market correction than a full-blown recession. While shops scaled back Internet-related investments, the industry continued its fevered pace to bolster traditional resources. Publicis, for instance, bought Minneapolis-based Fallon, pledging to help the agency create a global network. It also acquired Saatchi & Saatchi, which enabled the French holding company to be listed on the NYSE. Paris rival Havas also listed its ADRs on the Nasdaq after scooping up Snyder Communications, parent company of Arnold. Deutsch sold to the Interpublic Group of Cos. in an all-stock deal that crowned Donny Deutsch as Madison Avenue’s $200 million man. WPP rose to the top of the holding-company food chain with its acquisition of Young & Rubicam, only to lose its perch to IPG, which has since agreed to buy True North.

Consolidation wasn’t just the province of holding companies. Once-hot regional creative shops, losing firepower, were married. After a tough year that led to merger rumors, Long Haymes Carr in Winston-Salem, N.C., was combined with New England’s Mullen, a fellow IPG shop; Goldberg Moser O’Neill, San Francisco, was paired with Boston IPG sibling Hill, Holliday, Connors, Cosmopulos.

It was a challenging time for regional agencies. In Northern California, the market surged last spring only to crash by winter. By early 2001, nearly every major San Francisco shop suffered dot-com-fueled layoffs. One bright moment in the tech sector came for J. Walter Thompson with the win of Sun Microsystems’ $100 million account reuniting JWT New York head Bob Jeffrey with his former Lowe client. The agency pitched the business with Sun interactive shop Tonic 360, which it acquired as a result.

While not hit as hard as their counterparts up north, Southern California agencies also faced fallout from defunct Internet clients. Still, Deutsch’s young Los Angeles outpost hit its stride, becoming one of the region’s hottest shops, adding $200 million in new business from the likes of DirecTV and the California Milk Advisory Board.

New England agencies faced the same woes as the West Coast. With the exception of Arnold, cutbacks hit most agencies. But no company was slammed as hard as Leo Burnett Technology Group. It grew from no business six years ago to $75 million in Boston office billings alone. By year’s end, it was a shadow of its former self.

Most shocking in the Southwest was the shutdown of 23-year-old Berry-Brown Advertising in Dallas following the suicide of its chief financial officer and revelations of embezzlement. In the wake of client defections, Ogilvy & Mather’s Dallas office began to wind down eventually closing early this year. Temerlin McClain in Irving, Texas, lost flagship client J.C. Penney. The good news seemed to be in Austin, Texas, where SicolaMartin landed its first big national account reeled in high-profile clients like the U.S. Air Force and Land Rover.

Southeast agencies continued to chafe as locally headquartered global marketers looked elsewhere for ad counsel. Last year, though, a few shops made progress in carving out a national reputation. Miami’s Crispin Porter Bogusky, after being considered in high-profile pitches for clients such as Ikea, won BMW’s Mini earlier this year. McKinney Silver in Raleigh, N.C., created critically acclaimed work for clients such as Audi. BBDO South was involved in the biggest and perhaps most controversial win ever for a shop in the region. Cingular Wireless, a $250-300 million business shared with BBDO New York, came to the agency after the company’s CEO overruled its marketing execs. Other shops weren’t so lucky. The Martin Agency in Richmond, Va., caught dot-com fever and by year’s end weathered layoffs and merger speculation.

The year’s most riveting story in the Midwest came in September with DaimlerChrysler’s shootout for its consolidated $1.9 billion account. The outcome, benefiting Omnicom’s BBDO, foreshadowed True North’s eventual sale.

In the East, there were the first signs of succession plans for two of advertising’s venerable network heads. Grey chief Ed Meyer stepped back to run a newly formed holding company, ceding day-to-day control to Steve Blamer, head of Grey’s London operations. At BBDO, plans were in place to bring Andrew Robertson, the young chief of Abbott Mead Vickers BBDO, over from London to run its North American operations. Some of New York’s biggest agencies grappled with the aftermath of mergers and acquisitions. Post-WPP, Y&R struggled with a flurry of client defections, including Citibank, KFC, Jell-O, Ericsson, the U.S. Army and United Airlines. Lowe Lintas & Partners, in the first full year after its absorption of Ammirati Puris Lintas, wrestled with placating clients, subsequent defections and distractions from Mercedes-Benz litigation with former top executive Marvin Sloves.

Unlike dot-coms and the stock market, the media side of advertising remained nova-hot in 2000. More than $6 billion in media billings went into review. Agencies took another evolutionary step forward and hatched local versions of themselves in Los Angeles, Chicago, Atlanta and elswhere. Havas and Publicis got serious about establishing global media brands in North America, with the former consolidating its hold on SFM/Media Planning and the latter buying DeWitt Media and half of Zenith.

It was the year, in fact, in which unbundling ceased to be a trend and became business as usual. The list of winners included Starcom, which won General Motors’ $2.9 billion planning bonanza, and MediaVest, which snared Kraft. Zenith Media laid claim to top-tier status with victories in the ExxonMobil and Verizon reviews, while MindShare triumphed with Unilever’s $800 million account.

Meanwhile, Western International Media sought to distance itself from its media-buyer roots and was renamed Initiative, making sweeping changes in operations but proving unlucky in new business. OMD was born in the U.S., but sister Omnicom agencies continued to exert their power.

Some of the industry’s most high-profile creative jobs were up for grabs in 2000. In New York, top posts were open at Bartle Bogle Hegarty, J. Walter Thompson and DDB. And some of the best-known creative leaders began stepping back. TBWA\Chiat\Day North American creative chief Chuck McBride was anointed Lee Clow’s heir apparent, while Jeff Goodby and Rich Silverstein gave Paul Venables and Steve Simpson day-to-day creative responsibility at Goodby, Silverstein & Partners in San Francisco.

There was growing evidence that some of America’s most staid marketers were willing to take more creative risks. In two of the year’s major pitches, Kmart opted for TBWA\Chiat\Day in New York, while Citibank chose Fallon. The campaign that had the country talking was Budweiser’s “Whassup?” effort from DDB. Its phenomenon transcended Madison Avenue, crossing cultural and racial lines to become a part of pop vocabulary. Other award-winning work came from E*Trade, Volkswagen and the American Legacy Foundation. By midyear, the dot-com Super Bowl frenzy seemed like a surreal memory as those ads went dark.

The presidential election and recount provided great creative fodder. Spots, such as one from BBDO for Snickers, poked fun at Al Gore and George W. Bush, playing off their best-known claims and penchant for exaggeration. The November debacle in Florida inspired sarcastic ad commentary on “chads” and the like.

No laughing matter was the six-month strike by actors unions SAG and AFTRA. Agencies scrambled to find nonunion talent and went abroad to shoot. Many that relied on celebrities spliced together footage from earlier ads to bide some time making for some strange executions.

A final irony: More Hollywood stars than ever were drawn to Madison Avenue by the appeal of possible stock-option windfalls from Internet clients. Despite big-budget efforts by general agencies, Web concerns went bust along with the promise of easy money.

Oh well. There’s always next year.