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Ad Agency Blues

March 20, 1988

I read with interest your run-down on the woes of trying to maintain a Los Angeles ad agency office ("The Big Squeeze: Bitter Competition for Few L.A. Accounts Sends Ad Firms Packing," Feb. 16).

May I suggest that the blues singers you quoted are, for the most part, either naive or misinformed? And that the reason they've tended to self-destruct is that they simply don't understand what's required to make a go of it?

Here are a few simple tips that would help them:

First, an agency office in Los Angeles can't be viewed as a way to service the local market. Rather, if an office is to grow and prosper, it must serve as a base from which to service multiple markets.

Second, while it's true that Los Angeles branch offices of major agencies seem willing to chase anything that can mist a mirror, whose fault is that? The actual expense, in staff hours and out-of-pocket expenses, of making a full-scale new-business presentation these days runs $100,000 or more (often, lots more), with, at best, a 50-50 chance of winning the account. If the account bills $1 million, the highest profit projection that can be reasonably hoped for is, say, $25,000. So of course they lose money on any account that bills less than multimillions--and the more they pitch, the more they lose.

Third, the typical national agency approach to invading Los Angeles is to hire a manager with a major-agency background and then recruit an award-winning working creative person as creative director. The problem with this is that, as skills, big-agency management and entrepreneurial leadership are seldom one and the same.

By the same token, an award-winning art director or copywriter is not necessarily a bona fide creative director. Hatching a successful agency operation, anywhere, is less a matter of managing or directing than of leadership. Particularly so in the West, where clients tend to be less bureaucratic and more entrepreneurial than those in the East.

Additionally, there's the matter of proprietorship. Historically the most successful western ad agencies, be they national or regional, have had at the start at least one resident, buck-stops-here leader.

Finally, it seemed particularly ironic that the local closing of Scali, McCabe, Sloves served as the keynote for your article because the firm has so wisely extended its economic reach elsewhere. Instead of not "doing enough thinking before opening a Los Angeles office," perhaps Marvin Sloves simply selected the least promising approach.


Westlake Village

The writer is a co-founder of the Chiat/Day ad firm in Los Angeles.

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