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Sanborn Is Latest County Ad Agency to Shut Its Doors

October 27, 1987|MARY ANN GALANTE | Times Staff Writer

The Sanborn Co., a veteran Orange County advertising agency, has closed its doors, the latest of several local shops affected by a severe financial squeeze over the past 12 months.

"Business has been bad," said Martin Sanborn, the company's president. "Wisdom says when your back's against the wall, you go."

Sanborn, 48, who founded the shop 23 years ago, formally filed for bankruptcy Oct. 12, listing assets of just $7,300 against debts of $224,138.

It was a quiet ending for shop best-known lately for keeping a low profile.

The Sanborn Co. had handled advertising for the Westin South Coast Plaza hotel until Sept. 1 when, Sanborn said, he recommended that the hotel pull its account. Sanborn also had a name for working on real estate development accounts, such as the Lantern Bay project in Dana Point. And the agency--officially a general shop--had represented such smaller financial institutions as Pacific National Bank and National Bank of Southern California.

When it closed last week, the agency had three employees--down from a high of 12 several years ago.

Sanborn said billings peaked about 15 years ago at nearly $6 million. The 1986 Adweek Agency Directory lists Sanborn as having 10 employees and $4 million in billings for 1985, but Sanborn on Monday described those figures as "meaningless." He declined to be more specific about financial revenue and billings.

Several competitors, however, said that even with $4 million in billings, an ad agency would have a tough time making ends meet. Ad agencies typically book about 15% of their billings as revenue. "That's not an awful lot of billing for 10 people--I can see how he'd go broke," said one competitor.

Sanborn blamed his firm's demise in part on on a glut of Orange County advertising agencies and on a lack of business from smaller banks, which, he said, are no longer "spending a lot of money on advertising."

Unlike several others in the business, Sanborn is not planning on immediately starting a new company but instead is "hoping to do some consulting work. I've got a few things lined up . . . but it's probably going to take a while to figure out what I really want to do."

Sanborn is "not the first one to have gone under this year," said an executive with one large local shop. "It's been one of the tougher years for the ad world down here, and I don't foresee it immediately getting all that much brighter,"

Perhaps the best-known name on the casualty list so far is Tustin's Guzman/Gerrie Advertising, a 4-year-old shop with 16 employees that went under in September.

The principals have since regrouped. Robert D. Guzman teamed up with a competitor, Louise Michaels, and formed Guzman Advertising & Associates, a full-service ad shop in Irvine. R. Dean Gerrie, another principal, has formed Dean Gerrie Advertising in Santa Ana.

"It's been a very emotional year," Guzman said Monday. "Clients are the ones that spend the money and . . . it's been a hard economy (for them) to gauge."

According to Guzman, three of his former firm's accounts went bankrupt late last year. And another "strung us out for $280,000 for a year and a half. I became a collection agency and bank instead of an ad agency, and it consumed me. . . . We finally basically had to thrown in the towel."

Still, he said that these days his new shop is doing well and has managed to hang onto at least one of the old Guzman/Gerrie's key accounts--ITT Canon, Worldwide. Another former client, Rusty Pelican Restaurants, still uses Dean Gerrie Advertising for design work.

Other shops that have been hurt in the yearlong economic crunch include Newport Beach-based Basso & Associates--which reportedly bills about $24.5 million annually. Basso recently lost two major accounts: Jet America Airlines and Central Savings.

Several observers and insiders, however, pointed out that neither loss seemed to be because of Basso's shortcomings. Instead, both clients were acquired by companies that use other ad agencies.

"It's always tough when you lose an account (so) the last couple months have been tough. But we've had a good year (overall)," said a Basso account executive who asked not to be named.

Probably the most publicized cutback has been at Cochrane Chase, Livingston & Co., which, with Basso, is one of the county's largest ad agencies.

The Newport Beach-based agency has lost more than $30 million in billings in the past two years, including the $1.5-million Seafood Broiler restaurants account this month. It recently trimmed its staff to about 90 by laying off 17 people following the February loss of the $12-million Lucky Stores account. That same month, Epson America also slipped away, canceling a $5-million account with Cochrane Chase.

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