Advertising, Under Review

Unit of One

Never mind the blank TV — someone unplugged the entire ad business! When it comes to spending — whether the medium is television, print, or the Internet — the boom times are over. Clients wonder if agencies understand their problems, and consumers wonder why they should pay attention to what Madison Avenue produces. Six advertising insiders take the industry to account.

John Dooner
Job: Chairman and CEO
Org: The Interpublic Group of Companies
Place: New York, New York

Three words come up in this industry: brand, global, and integration. Building a relationship between a brand and the consumer requires more and different touch points. Advertising is not less important; it's just that other communications tools are becoming more important. That said, advertising will probably remain the primary tool in the future.

Integration is the single biggest challenge facing the industry. We need to find ways to collaborate so that people are selfless in their desire to solve brand problems rather than their own individual sector needs. The challenge is at the operating level, not the holding company — which is just a bunch of lawyers and bean counters. Several questions frame that challenge: Do you have the capabilities at the highest level for other kinds of marketing communications tools? Do you have a way to evaluate their relative importance? Do you have a way to integrate them to create the optimal mix? Then there is the other side of the equation: Are clients organized so that they can receive an integrated marketing solution?

This is an exciting time — a time of rigorous experimentation. The only way we're going to lose our relevance is if we stop learning and start thinking, Hey, the only way to do it is the way we always did it.

John Dooner (jdooner@interpublic.com) is the chairman and CEO of the world's largest advertising conglomerate. Dooner, who has held the title for about one year, completely reorganized the holding company to better deliver integrated communications beyond traditional advertising. Prior to joining the executive ranks of Interpublic, he was chairman and CEO of one of its global ad networks, McCann-Erickson WorldGroup.

CJ Fraleigh
Job: Executive director, advertising and corporate marketing
Org: General Motors
Place: Detroit, Michigan

Media dollars may be down in general, but the role of advertising is just as critical as ever. The world continues to get more competitive and more cluttered. To succeed in that kind of Darwinian environment, companies constantly have to find new ways to stand above the crowd and connect with the consumer. For that reason, we haven't made any significant cutbacks in media spending.

In fact, we recently launched a brand-new Cadillac campaign. Traditionally, Cadillac has not been the coolest or the most relevant brand to people in their twenties, thirties, and forties. But we have just spent billions of dollars producing some of the most innovative vehicles in the world, so now is the time to come out with an entirely new ad campaign. More than anything else, we need advertising to make an emotional connection with consumers. Emotion grabs attention — and ultimately sells products.

Last year, U.S. market share went up for General Motors, and the company made money. We're the only domestic automotive manufacturer that can make that claim. We started to make products that people need to have as opposed to products that people want to have. Advertising has a critical role: It tells a story in such a way that a product becomes totally relevant to people's lives. When advertising does not work, the client usually wasn't clear on the strategy that he wanted the agency to deliver.

CJ Fraleigh, who became General Motors' new ad chief last year, is in charge of the largest corporate-advertising budget in the United States. In 2000, General Motors spent nearly $3 billion on television, print, and outdoor advertising in the United States.

Bob Schmetterer
Job: Chairman and CEO
Org: Euro RSCG Worldwide
Place: New York, New York

Advertising is at an inflection point not only because of last year alone, but also because of the past five years — and the next five years. From smarter consumers to the advent of digital technology and the structural change of advertising on a global scale, the convergence of big changes has created a period of reinvention. The ad industry has got to understand that it's no longer in the ad business.

For those who understand our core competency, this is a time of tremendous opportunity. Our value lies in the ability to leverage creative firepower in the most expansive ways possible. In many ways, the business is the brand. People tell me that there are only two or three acquisitions left to make because there are only two or three independent agencies. That's true if you're in the advertising business. But entertainment, for example, will play a major role in the future of brands.

But the challenge remains: The key selling proposition for our industry is the talent and attitude of our people. During a time of great change and uncertainty, how do you keep those people feeling good about their work? It's easy to believe that the business is working because you made some deals and acquired a few companies. But that's not why it's working. The only reason it ever works is because talented individuals are hard at work. And the best managers in these turbulent times have a good memory of what life was like before and a good vision of what life will be like after.

Bob Schmetterer (bob.schmetterer@eurorscg.com) runs the fifth-largest advertising agency in the world. Euro RSCG has billings of $13 billion and clients that include Intel, Volvo, and WorldCom. Schmetterer, who became the agency's chairman and CEO in 1997, has been called a "creative visionary" by Advertising Age.

Shelly Lazarus
Job: Chairman and CEO
Org: Ogilvy & Mather Worldwide
Place: New York, New York

The ad industry isn't struggling for a new set of principles or abandoning the ones that made it great from the start. It's simply in the midst of a business cycle. I don't think it's more profound than that. And despite the economic downturn, I'm having more fun today than at any other moment in my 30-year advertising career. The game is more interesting and more relevant than ever.

Consider the value that an ad agency brings. We help build brands, and a brand is the most critical asset a company has today. Sure, we're under more scrutiny from clients, but accountability means credibility. Accountability within an economic model brings us into the client's boardroom and makes us more significant business partners.

That said, I'm not convinced that agencies are paid in a way that is consistent with the value we bring. I also think that the industry is held to standards that no other set of professional-services companies are held to: That is, we usually can't work for competing companies. If I work for a company that produces coffee, but I happen to sell its breakfast cereal, is it fair for my client to insist that I not work on a competitor's coffee brand? In this age of consolidation, such conflict increasingly limits business opportunities.

Shelly Lazarus, who became the CEO of one of the world's largest ad agencies in 1996, has spent almost her entire career at Ogilvy & Mather. During her tenure at the agency, she has worked for several blue-chip clients, including American Express, IBM, and Kraft. Lazarus is a former chairman of the American Association of Advertising Agencies.

Lee Clow
Job: Chairman and worldwide creative director, TBWA Worldwide
Org: TBWA\Chiat\Day
Place: Playa del Rey, California

One of the realities of the advertising business is that 90% of the work has always been terrible. There are only a handful of creative agencies that have maintained the integrity of the business so we can all go home at night and feel good about ourselves. But even the most creative agencies are losing accounts and feeling the squeeze of financial pressures. The industry is in a deep creative slump. It's tougher to say, "Damn it, we're coming in today to work on the huge idea!" If we want to see the next creative revolution, we need to return to that.

There will be another revolution. But it won't come about just because the ad industry finally gets its shit together. The stronger force behind it will be an increasingly sophisticated media audience that demands more innovative messaging to grab its attention. In the past few years, the ad industry may have become more of a numbers-and-money game than a purveyor of creative thinking, and it may have been characterized more by confusion and self-doubt than by clarity and confidence. But we can head in the right direction if we return to the basic tenets of media art.

Ultimately, the intellect and the creativity of this industry are very powerful forces, and if we can return to dedicating ourselves to that intellect and creativity, then we can figure out our role in the future.

Lee Clow, whose career spans more than 30 years at TBWA\Chiat\Day, blew the doors off of the media world with a commercial called "1984" for the Apple Macintosh and later with the "Think Different" campaign for Apple Computer's comeback. He holds a spot on Advertising Age's "Top 100 People of the Century" list.

Dawn Hudson
Job: Senior vice president, strategy and marketing
Org: Pepsi-Cola North America
Place: Purchase, New York

What's wrong with advertising? As a client, I need to hear more of, "Hey, here's an idea!" If ad agencies are truly in the idea business, then they need to shed completely the old mentality of simply making ads. They're beginning to turn in that direction, which is actually a return to what the industry has always been about: creativity.

I want an agency that is creative enough to help me reinvent my total business. Lots of agencies understand brands and how to reinvent them, but I'm not seeing the kind of big-picture thinking that will help clients take advantage of the multiple ways in which people experience brands. Beyond that, the other challenge that keeps me up at night is keeping a really big brand vibrant. We're pretty good at coming up with new products and reaching out to new consumer groups. But how do I grow a big kahuna like Pepsi?

Today, the average American receives more than 3,000 marketing messages a day, and I would argue that advertising has never been more relevant. As people's attention spans shorten, there's an even greater need for an enduring brand. Of course, the challenge is creating campaigns that will last a decade. The future of advertising lies with passionate brand advocates who not only bring ideas to their clients but also help them figure out how to communicate those ideas in a truly integrated way.

Dawn Hudson has been overseeing Pepsi-Cola's brand strategy and marketing for its North America division for the past four years. She is also chairman of the Association of National Advertisers Inc. and has been named to Advertising Age's "Power 50" list twice.

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