NEW TIMES CALL FOR NEW TOOLS

4A's: AGENCIES ARE BENEFITING FROM UNDERSTANDING I.T.

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As ad agencies look at restructuring their operations, redesigning business processes, reducing head counts and reinforcing their client relationships, technology holds out fresh promise for new ways of doing business.

The stakes are huge: keeping accounts, satisfying clients, being effective in the marketplace, being profitable and, ultimately, survival.

Tomorrow's senior agency executive will need to be as familiar with the possibilities of technology as she or he is with P&Ls. That means having available the same first-hand knowledge and perspective about computers that you do about creative or strategy or finances.

The payoff from information technology in ad agencies is beginning to appear, according to results from a survey conducted among 17 of the largest agencies by the American Association of Advertising Agencies.

The 17 agencies surveyed spent more than $130 million a year in capital and operating costs for information technology. What are they getting for their money?

One big agency cited technology benefits on its high-volume print accounts: In-house ad creation saves traditional typesetting costs.

Electronic distribution of ads to newspapers via the AD/SAT service ensures the latest pricing availability. And computer-based media planning not only generates quick client information but also-using the same data without rekeying-produces insertion orders.

The media department in another big agency dropped its overtime costs dramatically, even though workload increased over the past three years. The reason: a complete shift from archaic word processing machines to desktop computers networked to allow sharing files, electronic messaging and collaborative planning.

The media department's experience carried over to the other agency departments. Computers aren't just for spreadsheets or word processing anymore. A majority of people in every department do their daily work using computers.

Perhaps the biggest surprise was the dramatic shift in linking computers in all agency departments. Computers connected to one another in a network allow work to be done in different ways. What one person keys in, another person can use-instantly. The agencies estimate 80% to 90% of all their computers will be linked next year.

What does that imply for doing business? Like any technology innovation, the utility of the new device increases with ubiquity.

Once the penetration of a new connecting technology in a work group reaches a critical mass, it suddenly becomes valuable. One telephone in an agency of 100 people makes a nice paperweight. But get 60 or 70 in place and people start calling one another.

The same thing is happening with computers.

The Four A's survey data show a new infrastructure emerging for agencies. The scope and scale of information technology in ad agencies dwarfs traditional notions of a computer's place in an agency.

Eighty-eight percent of the agencies surveyed link at least some of their branch offices with electronic mail, a number of them overseas.

One hundred percent of these agencies are connecting electronically with clients, mostly at the clients' instigation. They exchange electronic mail, send creative work, deliver media plans, pass on research data and use electronic data interchange to present bills and receive payment.

Said another way, computers don't just support operations in the advertising business anymore, they are the operations. Which means they can't go wrong and they can't go down. If they do, you're out of business until they're right again.

Richard K. Skews coordinates Technology News.

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Messrs. Gupta and Kuehne are members of the Information Technology Committee of the American Association of Advertising Agencies.

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