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Ads and Subtraction

ADVERTISING & MARKETING

Advertising: The pluses of merger mania equal minuses at O.C. agencies that lose their biggest client. Foote Cone's major problem is replacing its $240-million Mazda account.

September 04, 1997|JAMES S. GRANELLI | TIMES STAFF WRITER

SANTA ANA — Welton Mansfield won't have an easy job for the next four months. He has to keep about 130 employees at the local office of Foote, Cone & Belding Advertising Inc. working on an account they all know they're losing at the end of the year.

The ad agency must resign Mazda Motor of America Inc.'s $240-million advertising account because of a potential conflict with Bozell Worldwide, which its parent company is acquiring.

"It's very sad to have to resign an account that we've had for 27 years," said Mansfield, managing director of Foote Cone's Santa Ana office, the second-largest ad agency in Orange County.

He said that he and other executives are trying to land another major client, a company big enough to keep the office open. But the likelihood of replacing the Mazda account is slim, said Brendan Ryan, Foote Cone's chairman in New York. "I can't say anything is imminent," he said.

Mansfield doubts employees would have much trouble finding new jobs. In fact, he expects most would hire on with other Orange County agencies.

While the advertising industry is thriving in the county, local ad executives aren't so sure it's vibrant enough to absorb many Foote Cone workers.

"Orange County is not a great place to be displaced if you're in the advertising industry," said Ryan Abbate, managing director of Pacific Communications in Costa Mesa.

That's especially true for large national agencies like Foote Cone that have general offices in Los Angeles and specialized offices in Orange County mainly to service one major client.

Mergers, acquisitions and relocations have reduced the number of major companies throughout Southern California. Gone are such well-known names as Alpha-Beta Co., National Education Corp. and FHP International.

"When I was a kid, the L.A. Times was filled with ads for stereo companies like Pacific Stereo and Federated," said Mark Weinfeld, senior vice president for Bates USA West in Irvine. "There were supermarkets and banks and record stores.

"Now we've got all these national chains based elsewhere, and that's taken away a lot of local accounts," he said. "All the consolidations have ultimately hurt the advertising industry because there are fewer brands out there."

In an otherwise resurgent local economy, "the one negative--a stigma--is that we're losing headquarters of big firms," said economist Esmael Adibi, director of Chapman University's Center for Economic Research in Orange. "We don't have any big bank in Southern California, for instance. And [medical products distributor] Bergen Brunswig isn't going to be based here after it's sold."

Even if jobs aren't lost and the local economy isn't rattled, the decision-making process is in fewer hands--and those hands are increasingly based out of the region or out of state. Future decisions made elsewhere could wreak havoc in the area if plants are shut down or consolidated elsewhere.

"Any major loss of business in the area is not good," said Dan Hoover, president of Estey-Hoover Advertising and Public Relations in Newport Beach. "Losing business has a ripple effect in the economic structure of the area."

Ad agencies are among the first to feel the effects, and the bigger firms with offices in Los Angeles are quick to pull out of Orange County, leaving it to scores of small, independent agencies that have been the mainstay.

"Orange County is not a place that major national agencies have found hospitable," said Todd Cooley, who owns a Newport Beach public relations company.

Industry giants like N.W. Ayer gobbled up local agencies in the buying binge of the 1980s, but they eventually couldn't justify the expense of Orange County offices.

Many in the trade press and the industry thought of the county as an isolated market, but some believe that view is fading.

"We have fought this Orange Curtain philosophy and, for the most part, dispelled that perception," said Dan Pittman, senior managing director of Bozell's public relations arm.

In fact, Bozell, which entered Orange County in the 1980s and again in 1994 when it bought Salvati Montgomery Sakoda in 1994, has established its Costa Mesa office as its regional headquarters.

Bates, another national firm, has put its West Coast headquarters in Irvine, though the 50 employees there handle mainly the Hyundai Motor America and Hyundai Dealer Assns. accounts.

"We think the area is still solid," Weinfeld said. "Orange County is not as rich as the Westside of L.A., but there are opportunities for growth."

Although the auto companies in Orange County like having ad agencies close by, other clients aren't as worried about proximity.

With e-mail, fax machines and even video conferencing, trips to the clients' headquarters are greatly reduced.

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