Just when it looked as if there wasn't much more to consolidate in the agency world, another round of purchases spilled over Madison Avenue. The largest holding companies continue to write big checks, as WPP Group bought Young & Rubicam; Interpublic Group of Cos. acquired longtime independent stalwart Deutsch; and the French bought just about everything else. Havas Advertising weighed in with its acquisition of Snyder Communications, and it kept on the lookout for shops to beef up its second creatively based network, Arnold Worldwide Partners. It also bought Abernathy Group financial communications company, while French rival Publicis Groupe ponied up for Saatchi & Saatchi, London, as well as Minneapolis-based Fallon, Chicago promotions shop Frankel and DeWitt Media, New York. True North Communications lost its largest account-Daimler-Chrysler-and observers speculated it was just a matter of time before True North was absorbed. The year even featured talk that Bcom3 Group, the year-old union of Leo Burnett Co. and MacManus Group, would sell to Interpublic before Bcom3 had a chance to be subject to the whims of the stock market in a hoped-for 2001 IPO.
Sure, the stock market reacted ultra-positively to the last big-Time merger, with Warner Communications. But then again, that one wasn't compared by Time Warner board member/loose cannon Ted Turner as the most fun he'd had since he first made love 43 years ago. But he did say that about the still-pending America Online/Time Warner deal, which upon completion will create a monolith with major holdings across the Web, cable and magazines. The new entity will create synergies sufficient to stiffen the spine of any rival. In an ad environment obsessing over cross-platform and cross-media packages, AOL/Time Warner will be watched by all.
economy slows down
At yearend, the question is how fast will the economy slow down? Following a delirious year for advertising, the forecasters predict a "soft landing." At this month's UBS Warburg media conference, Robert Coen, senior VP-director of forecasting for Universal McCann, New York, projected U.S. ad spending would increase 5.8% in 2001, a significant dip from his projection of a 9.8% spending increase this year. The bluntest sign of the times came from The Wall Street Journal, which saw its ad volume fall off so severely from last November and December that it prevented parent company Dow Jones & Co. from hitting its earnings estimates.
Bridgestone/Firestone's Firestone brand was celebrating its centennial year when the storm hit: Federal safety investigators were examining certain tires for alleged defects. In August, the marketer announced a voluntary recall of 6.5 million Firestones following reports of dozens of deaths and injuries. One of Firestone's biggest customers, Ford Motor Co., was brought into the fray since most of the tire problems involved rollover accidents involving the popular Ford Explorer sport-utility vehicle. Experts criticized Firestone's slow response; Ford got better grades for TV commercials with CEO Jac Nasser. The two marketers initially pointed fingers at each other, though they have more recently banded together to face a number of lawsuits. Experts wonder whether the Firestone brand can survive.
This was supposed to be a year in which the pure-play dot-coms were going to rule the world. At least 12 of the commercials that aired during Super Bowl XXXIV were from dot-coms, with companies such as Monster.com, Oxygen Media and E-Trade Securities spending an average of $2.2 million for 30-second spots that left most viewers wondering exactly what these companies were selling. By yearend, however, the number of dot-coms that suddenly discovered they had no customers, no brand and no money left to spend on advertising seemed to outnumber those that were eking out an existence. Through November, 383 companies went belly up, according to recruitment company Challenger, Gray & Christmas. The biggest bidding war, in fact, seemed to be over Pets.com's advertising icon, the Sock Puppet, which industry pundits claimed made more money in sales than the failed Web site ever did.
DaimlerChrysler sent shock waves through the ad community when it called for a shoot-out between its two Chrysler Group agencies-Omnicom Group and its BBDO Worldwide arm and True North Communications and its FCB Worldwide network. At stake was the automaker's $2.4 billion global Chrysler Group creative and media accounts. Just two days before DaimlerChrysler called the review, True North had turned down an acquisition offer from Omnicom. When the dust settled in early November, DaimlerChrysler had tapped the Omnicom organization. The review was only a shade under the world's biggest review, held earlier in the year by General Motors Corp.-for its consolidated U.S. media planning account, estimated at $2.9 billion. Bcom3 Group's Starcom MediaVest bested Interpublic Group of Cos. and Carat North America for the account.
VIOLENT content ads
Is Hollywood advertising to kids the violent movies, videogames and music rated for adults? The Federal Trade Commission answered that question with a clear "yes." A Sept. 11 FTC report prompted a very public whipping of Hollywood by members of the Senate Commerce Committee, not once but twice. FTC said the marketing plans it gathered clearly showed the accuracy of lawmakers' charges that content being rated for adults or those older than 17 was being advertised and promoted in media reaching youth, and it called on the three industries to stop. The industries generally denied they were targeting kids. Entertainment companies said the ratings were advisory anyway and it was perfectly legal for parents to buy products for their kids or grant permission to children to attend movies. The industries also characterized as unfair an FTC request that they cease advertising in programming where as much as 75% to 80% of an audience was adult but with substantial kids audiences. At the same time, the film industry announced several steps so movie owners would better enforce codes and trailers for R-rated movies wouldn't run before more family-oriented films. Some studios went further, agreeing to restrict advertising of more adult-rated violent films to programs with at least 65% adult audiences. The issue is far from over with Commerce Committee Chairman John McCain (R., Ariz.) promising additional hearings next year if the industries fail to act.
After years of barely a nod from Wall Street, the traditionally staid food marketers became the hot business story as they announced billion-dollar consolidations in the hopes of gaining clout at retail. The pairings began in early June with the proposed $24.3 billion merger of Unilever and Bestfoods, and have continued with subsequent announcements: Philip Morris Cos.' purchase of Nabisco Holdings for $14.9 billion, General Mills' plan to purchase Diageo's Pillsbury Co. for $10.5 billion, Kellogg Co.'s plan to purchase Keebler Foods Co. for $3.6 billion and PepsiCo's $13.4 billion offer for Quaker Oats Co.
After 20 years of big-time growth, TV companies, especially cable companies, were making too much money, thought the Screen Actors Guild and the American Federation of Television & Radio Artists. The unions' plan? Body slam the national advertisers that supported them. While past negotiations concerning TV commercial contracts came and went somewhat peacefully, new union membership decided to make like scary WWF wrestlers this time. The unions ran advertisers around the ring by demanding astounding increases that would have set back advertisers millions-knowing full well a long strike would ensue. The walkout lasted nearly six months. Actors did get some increases-7% to 9% during the course of a three-year contract. But virtually all that comes from commercials running on cable-and virtually none from the bigger advertising trove-broadcast TV.
With tides turning unfavorably against the tobacco companies Philip Morris Cos. decided in June to cave in to critics and yank cigarette advertising from 48 magazines with more than 15% of their readers under the age of 18, or more than 2 million underage readers. The move smarted at the magazines. The tobacco giant placed more than $125 million in ads across those titles in 1999, according to Competitive Media Reporting. The other tobacco companies remained steadfast in their decision to keep their ads where they were. That couldn't help one title, Emap USA's Sport, which cited the loss of cigarette ads as a key reason for its demise shortly after Philip Morris' move. Out-of-home advertising also said adios to tobacco this year as the last of the outdoor boards came down.