AD INDUSTRY AWAITS FALLOUT AFTER NEW-MEDIA ALARM

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Early alarm about P&G boss Ed Artzt's call for marketers and their agencies to dive headlong into the "new media" revolution or be left behind has turned to tempered concern by industry realists.

They note that financially strapped agencies are unlikely engines to help marketers drive greater involvement in creating new forms of ad-friendly media, a trend Mr. Artzt claimed was imperative to agencies' survival in the face of the growing popularity of pay-per-view and subscription TV.

"The darts have been handed out, but I don't think anyone is throwing them," said Susan Berkowitz, director of entertainment services at J. Walter Thompson USA, New York."TV hasn't changed yet."

"It's not likely agencies are going to miss the boat if they didn't start getting into this the minute they got back from White Sulphur Springs," said Alan Gottesman, an analyst with PaineWebber, New York.

(The Procter & Gamble Co. chairman-CEO made his remarks this month in White Sulphur Springs, W.Va., at the conference of the American Association of Advertising Agencies.)

"The nature of the agency-client relationship is such that there's no incentive for agencies to take chances," Mr. Gottesman said. "They are reluctant, as institutions, to risk relationships."

Despite some significant new-media forays-Interpublic Group of Cos. has invested in an interactive start-up; Saatchi & Saatchi Advertising is creating cable programs for P&G; and DDB Needham Worldwide is setting up an interactive-information "mutual fund"-it's still "like painting a gorgeous picture on the wall of an unlit cave," Mr. Gottesman said.

"I don't buy it," one CEO of a midsize New York agency said of the new-media bandwagon. "Let's look at the facts: Where is all the programming that's going to fill this up? Viewers are still going to be attracted to quality mass programming, and that is going to continue to be the primary advertising vehicle for most major U.S. advertisers."

Arthur Anderson, managing partner of Morgan, Anderson & Co., an agency search and compensation consultancy, said clients, even technology companies, don't yet consider new media prowess a factor in their agency selection.

"It's hard enough to get media planning on that list," he said. "Media strategy, maybe, but CD-ROM technology? Clients have bigger problems right now."

Senior agency media executives believe Mr. Artzt's remarks primarily reflect concerns of big package-goods advertisers that are among the most vulnerable to the challenges of new media.

"All the focus on interactive is on how it will enable the consumer to ask for more information, but it's unlikely there is going to be anybody who's going to want to know the ingredients of Tide," said George Hayes, senior VP-media director at McCann-Erickson Worldwide, New York.

Still, other advertisers applauded Mr. Artzt's wake-up call.

Visa USA's Jan Soderstrom, senior VP-advertising and promotion, is spearheading a group that's "thinking through the kind of creative required to do [interactive advertising], the ultimate targeting."

"It's happening faster than anyone thinks," said Ms. Soderstrom, incoming chairman of the Association of National Advertisers. "We need to be smarter."

James Julow, Chrysler Corp. director of marketing operations, agreed "some kind of partnership with the programming people" will play an increasingly important role in the future of marketing. The real answer is to find the kind of programs that people want to see and then become a part of that."

Among magazine publishers, reaction was mixed.

Christopher Locke, general manager of the Internet Group at Westport, Conn.-based publisher Mecklermedia, said there's a "threat to traditional advertising coming from cyberspace" that will spark changes in traditional magazine publishing.

But James Guthrie, exec VP-marketing development for the Magazine Publishers of America said: "Magazines aren't alarmed because they are content providers, not the conduit."

Meanwhile, large commercial production companies and small technology-savvy agencies stand ready to capitalize on any big agency reticence.

Already, Propaganda Films' commercial division is looking to set up an ad hoc ad group to troubleshoot interactive projects for big clients and agencies. It will be organized around versatile, edgy "Alien 3" director David Fincher, who has shot spots for Nike, Levi Strauss & Co. and Coca-Cola Co.

Contributing to this story: Joe Mandese, Keith J. Kelly, Raymond Serafin, Riccardo A. Davis, Pat Sloan and Gary Levin.

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