THE ADVERTISING CENTURY (2/2)

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But because they shared richly in the spoils of the postwar consumer economy they were shaping, ad agencies willingly suffered such indignities. Did a client need to know the time? "What time," an agency was supposed to answer, "would you like it to be?"

This obsequious devotion to accommodation provided advertising much of its public image during the decade-and-a-half following the end of the war. The ulcerous ad man was ridiculed in film, on Broadway, on TV, in Mad magazine. His zeal for approval -- particularly from clients, but from a presumably somnambulant public as well -- fashioned an industry whose deepest desire was not to offend.

The fact was, for all its pretensions to science, advertising was still a service business. It had always been that way -- the industry hadn't changed in 25 years, fabled copywriter James Webb Young told Martin Mayer in the mid-50s -- and would always be that way.

"The establishment can't change, it can't give people anything different, it can't make the turn," a young copywriter named Jerry Della Femina wrote in the late 1960s of agencies like Thompson, Bates and FCB. "The establishment doesn't know what makes people think; they don't know what makes people go any more."

Until, that is, they started going by Volkswagen.

More than any single phenomenon, the Volkswagen campaign that debuted in 1959 transformed the agency business. Its modest, b&w photography stood in stark contrast to the exaggerated iridescence of Detroit's advertising offerings. The understated irony of the copy touting the odd little German automobile was equivalently contrarian. By positioning Volkswagen as an "honest car," the ads allowed the advertising community to shuck its self-loathing. A decade after being branded "hucksters," ad people could feel honorably about themselves and their profession.

The work was the product of Doyle Dane Bernbach, a New York shop built on the back of a quintessential New York piece of business, the Ohrbach's retail account. Its creative chief, Bill Bernbach, was a frail, mannered Brooklynite who favored Nat Sherman suits and Turnbull & Asser shirts; "soft spoken," as one former client once told me, "but with a diamond-hard edge." He needed it. For although he paid obeisance to advertising's basis in client service, at heart, Bernbach didn't really believe it.

"Advertising," he wrote, "is fundamentally persuasion." And persuasion is "an art."

Although Volkswagen sales had been swelling steadily before Doyle Dane's campaign began in 1959, their continued growth validated the advertising, the agency, and its philosophy -- which was, in a word, revolutionary. Bernbach denigrated market research; he said that all the money spent on measurement was causing "boredom like we've never achieved before." Where Rosser Reeves affirmed "the immutable principles of copy," Bernbach spoke the language of "provocativeness" and "imagination."

"If breaking every rule in the world is going to achieve that," he said, "I want those rules broken." He eschewed the kowtowing that had given Madison Avenue the nickname "Ulcer Gulch"; he even had a presentation he gave to prospective clients that showed how compromise had destroyed various advertising campaigns.

With network TV entering its second decade, with the "Pepsi Generation" questioning authority and rules, with the G.I. Bill's beneficiaries integrating corporate America, with the nation convulsively transitioning from the conformist '50s to the searching '60s, Doyle Dane's no-rules, no-compromise, no-insult advertising struck a chord with consumers and clients alike. The ultimate confirmation came in 1966, when Mobil Oil fired Rosser Reeves' Bates agency and hired Doyle Dane for its $8.5 million account.

The rise of the '60s counterculture helped power this change in the texture of advertising. Although they'd decided against lives in music or literature or film, preferring instead the security of a corporate existence, advertising men -- and now, increasingly, women -- began to demand the same rights to self-expression artists had. Some did it loudly: enfant terrible art director George Lois threatened to jump out a window unless a matzoh maker approved his campaign. Others did it more subtly; in one of their first Pepsi commercials utilizing TV's new color capabilities, a group of creatives from BBDO consciously modelled the first shot of the opening scene of the Fellini film "8 1/2."

The texture and composition of the ad industry were transformed. Embarrassing ethnics were invited in from the boiler rooms; in 1964, Wide World Photos ran ads in Advertising Age trumpeting the creative prowess of Italian and Jewish art directors. Art directors were empowered, and teamed with copywriters at the heart of the advertising development process, an embodiment of Bernbach's belief that, in the world of modern communications, "execution can become content." Many of these teams left Doyle Dane and other agencies to enshrine their partnerships on the lintels of new agencies, which in turn disgorged even newer agencies, often after bloodying internal warfare. In the first seven months of 1969 alone, more than 100 new shops were formed, a burst of entrepreneurial productivity that became known as the Creative Revolution.

The advertising industry began to seem like the Book of Genesis: Doyle Dane begat Papert Koenig Lois, which begat Carl Ally, which begat Scali McCabe Sloves, on and on. "In New York, agencies just breed each other," George Lois said. Wherever they came from, these and the other agencies shared a common belief: they were not serving a client, but making a product. "We didn't want to handle clients or be handled by them," Carl Ally recalled a quarter century after starting his shop. "We wanted to do the best work for the client, which was society as a whole."

To the old joke about the client who needed to know the time, there was now a new answer: "To hell with the time. Read the copy."

Some giant agencies tried hard to learn the lessons of the Creative Revolution. A few failed. Some succeeded: Young & Rubicam established itself as the most creative force in TV after elevating an enthusiastic young art director named Steve Frankfurt to reform its creative department. That move gave the world some of the most memorable images of the '60s, from Johnson & Johnson's heartwarming evocations of mother love to the National Urban League's searing warning that the U.S. had better "give a damn" about its black underclass.

But other advertising giants never lost sight of their mission to serve their clients -- in as many ways and as many places as possible. U.S. agencies had been establishing beachheads around the world beginning in the late 19th century, primarily to support U.S. clients as they expanded overseas. But as communications with different people in different places grew more varied and complex, new methods beyond mainstream advertising were needed to reach them. Increasingly, marketers were employing specialists to help them in such ancillary disciplines as public relations and sales promotion. It stood to reason that advertising companies themselves should learn those specialties -- and capture those budgets.

Marion Harper Jr., a brash Yalie who rose from the mailroom to the presidency of McCann-Erickson by the age of 32, began beating the drum for an "agency of the future," one that could develop "total-marketing communications," shortly after taking McCann's helm in 1948. Four years later, he began to refine his vision, first with the acquisition of Marschalk & Pratt -- and his controversial decision to maintain it as a separate agency brand -- and then with his purchases of a PR agency, a sales promotion company and a TV production studio. Finally, in 1960, he reorganized his properties into an entirely new corporate structure, placing his affiliates, as he called them, under the umbrella of a holding company, which he named the Interpublic Group of Cos. For his boldness, Time named him "the most cussed and discussed man in advertising."

Harper's concept of "integrated marketing" served as a quiet counterpoint to the Creative Revolution, growing in attractiveness to the international advertising giants, even as Harper's acquisitions spree and personal profligacy were driving Interpublic, its prototype, to the brink of bankruptcy.

As the Revolution faded -- reasons include the shrinkage of ad budgets during the '70s recession, the public stock offerings of rebel shops like PKL, and the procurement of conservative package-goods accounts by several "swinging agencies" -- global integration replaced creativity as advertising's new mantra. The industry was abetted in its transnational, interdisciplinary drive by a theory espoused by Harvard Business School Professor Theodore Levitt. Modern communications technologies, he said, were "homogenizing markets everywhere," leading to the creation of the "global corporation" which "does and sells the same things in the same single way everywhere."

No company exploited this theory more aggressively than London's Saatchi & Saatchi. Founded in London in 1970 by two young Iraqi immigrants, the agency had won acclaim for advertising that helped Margaret Thatcher's Conservative Party ascend to power. But from early in their rise, Charles Saatchi, the creative force, and his brother Maurice, the smooth account man, were plotting to expand their reach internationally.

It proved surprisingly easy. After a quarter-century of extraordinary advertising growth, a generation of U.S. agency leaders was looking to retire. Favorable conditions in the London stock market, where the Saatchis listed their company in 1975, gave the brothers ready access to the cash needed to buy out these executives. Saatchi & Saatchi's increased cash flow then fueled growth in the company's share price, which helped finance more acquisitions. By 1986, Charles (a reclusive collector of modern art) and Maurice had turned their original $40,000 stake into a global confederation of 80 companies with capitalized billings of $3.2 billion. Among their prizes were the U.S. agencies Dancer Fitzgerald Sample ("Where's the beef?") and Backer & Spielvogel ("Tastes great/Less filling").

The Saatchis' rise wasn't lost on the great U.S. agencies. Some began to aggressively spout the lingo of globalism and the argot of integration. Young & Rubicam promoted its "whole egg" approach to coordinated communications; Ogilvy & Mather advanced "Ogilvy orchestration."

But other advertising groups saw that serving clients and -- importantly -- placating shareholders required matching scale with scale. In late April 1986, three of the most prominent U.S. agencies -- BBDO, Needham Harper & Steers and Doyle Dane -- briefly trumped the Saatchis' grasp for global dominance by announcing their own three-way merger under the umbrella of a company they called the Omnicom Group. By mid-May, Saatchi & Saatchi announced it would buy the world's third-largest agency, Ted Bates Worldwide. The price, $450 million, was nearly five times more than anyone had ever paid for an advertising agency.

There were, of course, other forces propelling these megamergers. One was a drive for shareholder value in a marketplace increasingly dominated by fickle Americans whose retirements depended on the quarterly performance of their mutual funds. Thrust into competition with the entire stock market, advertisers and their agencies had to grow or die, seeking efficiencies, paring staffs and acquiring their way to earnings growth.

Another looming factor was avarice. In the Wall Street culture of the 1980s, greed was good. And numerous advertising executives were sitting on assets that could make them, if not rivals to Boesky and Milken, at least their neighbors in Pound Ridge and St. Bart's.

The Ted Bates deal netted the company's Napoleonic chairman, Robert E. Jacoby, a personal profit of $111 million and turned another 100 Bates employees into instant millionaires. But unlike Wall Street, where greed was not only good but expected, the agency business was shaken by the Bates acquisition, more profoundly, perhaps, than by any other single event ever. The deal confronted marketers with an uncomfortable reality they'd been ignoring since advertising's misty origins -- agencies were getting rich, rich, rich off their commissions -- and triggered what Leonard S. Matthews, then president of the Four A's, called "chaos in the agency business" that was cutting a "schism in the traditional partnership between clients and agencies."

Clients who had looked the other way as their senior "marketing partners" played Wall Street's M&A game now suddenly grew attuned to the conflicts of interest these megamergers were engendering. More significantly, they began to question whether they were paying their agencies too much. Some former agency executives leapt into the breach, offering clients their services as compensation consultants; Matthews publicly branded one such consultant a "quisling."

A little more than a year after the Bates buyout, Martin Sorrell, who as finance director of Saatchi & Saatchi had engineered its spectacular expansion, struck another blow against the comfortable, insular culture of Madison Avenue. Using a publicly traded British shell company he'd bought for a mere 50 pence a share, Sorrell made a hostile offer for the venerable J. Walter Thompson. Thompson was the first agency to put photography into advertising; it was where James Webb Young had concocted the concept of "body odor"; it was the inventor of the testimonial ad. But in yet another acknowledgement of The Contradiction that drives advertising, Sorrell said creativity had nothing to do with his interest in the company. "We are looking for ways to serve our clients needs and desires," he said.

His successful $566 million bid for Thompson and his hostile acquisition of the Ogilvy Group two years later for an even more astonishing $864 million turned Sorrell's WPP Group into the world's largest marketing communications conglomerate -- the owner not only of two of advertising's grandest brands, but of the world's largest public relations agency, its largest direct-marketing specialist and about three dozen other subsidiaries. By the end of the '80s, Sorrell and his former employers, the Saatchis, were responsible for more than 8% of the $350 billion spent around the world on marketing.

But even as a new generation of giants was dominating the agency business, a counterrevolution was swirling from above and below.

The megamergers began to provoke overt rebellion. A few months after the June 1987 Thompson takeover, several senior executives at a small agency included in the acquisition left to form a competing shop, laying claim to the IBM account on which they had toiled for years. A subsequent, ugly court battle between Sorrell and the renegades ended with both shops being fired by the computer company.

Meanwhile, a worldwide recession was cutting into advertising budgets, putting financial pressure on the acquisitive conglomerates and sending both the Saatchis and Sorrell into a tailspin which ultimately forced the breakup of Saatchi & Saatchi and the ouster of its founding brothers.

Worse yet, the new technologies that were requiring agencies to achieve global scale were rendering their communications efforts less effective. A glut of new, undifferentiated products in category after category was taxing the limits of the advertising imagination. Network TV, the agencies' most profitable venue, lost 27% of its prime-time audience during the '80s as viewers fled to other media. New research tools and a quest for accountability were inducing marketers to abandon media advertising in favor of "below-the-line" disciplines, such as sales promotion and direct marketing.

The result: by the end of the decade, an industry accustomed to 15.7% growth even during previous recessionary periods was now growing by less than 8% a year. Madison Avenue began ejecting personnel, with the top 16 U.S. agencies reducing staffing by almost 5% in 1988 alone. "We're not nailing diving boards to the windows, but things are changing and changing for the worse," Martin F. Puris, co-founder of the Ammirati & Puris agency, told me at the time.

The cutbacks and substitutions did little to ameliorate the pressures on brand marketers. Goaded into promotional wars, pushed into competition with low-priced generic products, their goods stacked against a dizzying array of like wares in discount-friendly superstores, they saw shares decline and margins pressured. It was a veritable war against brands -- one that seemed all but lost when, on April 3, 1993, Philip Morris Cos. slashed the price of its flagship brand, Marlboro cigarettes, a move that set brand marketers' stocks plunging on Wall Street.

If brand marketing was to survive the commodity spiral, advertising agencies needed to find a new way to communicate with an overwhelmed and jaded audience. And indeed, they were. It was similar to the response the industry had made in the '60s: a turn in the cycle, as historian Stephen Fox described it, "from bigness and mergers back to smallness and meiosis; from ancillary services to the creative product; from science and research to art, inspiration and intuition."

Jerry Della Femina had prefigured it. "Cleveland will eventually change," he wrote in 1970. "The Creative Revolution will eventually get there." It did, by way of Los Angeles; Minneapolis; Richmond; Portland; San Francisco; Miami; Seattle and a host of smaller burgs that had once been considered the backwaters of the ad biz. No single campaign or event or occurrence focused the industry and its public on the fact that a creative renaissance was taking place. Rather, there was just a gradual recognition that a Los Angeles agency that had branched into New York in 1980, Chiat/Day, was making spots and spreads the likes of which the U.S. had not seen in years.

Chiat/Day's work touched upon a range of idioms, not only from advertising's culture but the culture at large: auteur film, rock video, poster art -- the panoply of forms that the post-'60s generation used to identify itself.

By cultural osmosis, the agency's style of advertising rapidly became indistinguishable from these other kinds of communication. What, after all, was the difference between Randy Newman warbling "I Love L.A." in a Nike ad or in an MTV video? Does it matter if an exquisitely produced strike against totalitarianism is written by Phillip K. Dick or sponsored by Apple computer, so long as both are directed by Ridley Scott?

Like Bill Bernbach, agency leader Jay Chiat revered creativity and the people who provided it. Like Charles Saatchi, he cultivated an image of mercurial aloofness that magnetically drew attention and acolytes. This succeeded in further pyramiding his agency's growth, as marketers, stymied by their inability to cut through the media's increasingly opaque clutter, opted to give creativity a chance.

With fax machines, geostationary satellites, overnight delivery services and computers, marketers no longer saw a need to get that creativity solely from New York or Chicago. From the Midwest, the Fallon McElligott agency used wickedly challenging headlines ("Perception/Reality" for Rolling Stone) to alter readers' preconceptions about familiar icons. From the Northwest, a cadre of postmodernists at Wieden & Kennedy challenged the values of their elder siblings by employing the Beatles' "Revolution" to sell athletic shoes.

Emboldened, New York agencies once again took up the cudgel of creativity, with Ally & Gargano inciting vaudevillian hysteria for Federal Express, and TBWA apotheosizing pure visual imagery in its campaign for Absolut.

Taken together, this work and the dozens of smaller agencies producing it galvanized a new generation of writers and graphic designers who saw advertising not as an occupational way station between fine-art projects, as our dear family friend Jack Vilinsky had done, but as a worthy venue to work their craft -- a place to create entertainment, commentary, even art.

It was a generation that deified its precursors, even as it tried to supplant them.

Poised at the precipice of a new century, it's inevitable, perhaps, that the pendulum should be swinging again.

As the new creativity drew public and client attention, it was only a matter of time before it attracted acquisitive eyes. Jay Chiat, who once had famously quipped, "I want to see how big I can get before I get bad," sold his agency and retired from the business before either happened. The buyer was TBWA, whose chief, Bill Tragos, used to boast how his agency was "built, not bought" -- before he sold out to Omnicom. Most other independent, midsized agencies also gradually disappeared under the umbrellas of publicly traded, multinational conglomerates.

But a pendulum may be the wrong metaphor for the changes now taking place in the agency business. For the stark bifurcation which for decades existed between "big" and "good," between "service" and "product," seems now to be an antiquated boundary.

Creative partisans, many of them veterans of past artistic rebellions, are today guiding some of the world's largest agencies -- Martin Puris at Interpublic's Ammirati Puris Lintas; Lee Garfinkel and Gary Goldsmith at the same holding company's Lowe & Partners/SMS; Chiat/Day veteran Bill Hamilton at WPP Group's J. Walter Thompson. The list is long, a recognition that The Contradiction, which lay within the ad industry's heart for this entire century may, at millennium's end, be reconciling.

And not a moment too soon. For as any moment's glance at a Nasdaq chart will show, a new form of communication has risen up to turn every prejudice about marketing upside down. A mere eight decades after Claude Hopkins prematurely assured that advertising was a science, the Internet at last promises precise accountability. But it also destroys the hegemony of broadcast networks and other communications oligopolies that could reliably deliver mass audiences. With viewers, readers, consumers -- hell, citizens -- now able to program their own media experiences, the irritating repetition caricatured by Frederic Wakeman and delivered by Rosser Reeves has become a recipe for brand disembowelment.

The boundary-blurring Internet has placed renewed emphasis on the importance of brands, now deemed the only forces powerful enough to draw the audience's eye and income through the chaos of the World Wide Web. That's why, only three years after its founding, Amazon.com is considered to have such a powerful marque that the market has valued it at close to $29 billion. To create and sustain such brands, consultants are counseling the virtues of entertainment, likability, and refreshment. They're arguing that in an age of interactivity and an era of choice, advertising, to succeed, must act no differently than film or TV -- or a conversation with a friend.

So a new generation of advertising agencies, unburdened by the biases of the past, is rising to serve these new clients and fulfill these new needs. Their names -- Agency.com, Modem Media, CKS Group -- may be unfamiliar now. But 50 years ago, who knew from Doyle Dane Bernbach?

I can't say whether Jack Vilinsky would like this new advertising industry any more than the one he left for his artist's studio back when. And far be it for anyone to assume that serving marketers' needs is any less important than it's ever been. But as we near the end of the broadcasting era, at the twilight of the advertising century, this much is now clear: In the spark of creativity lies

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