RFPs and Reviews Increase; Some Agencies Hiring


But Fear the Dampening Effects of War

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NEW YORK (AdAge.com) -- After two years of relentless layoffs, slashed budgets, office consolidations and canceled business, some areas of the advertising and marketing industry appear to
Agencies are receiving a flurry of new requests for proposals; some are starting to hire again.
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be showing signs of returning vigor.

But even as advertising executives report their positive observations, they express concern and frustration that the expected outbreak of war in Iraq could squelch the beginnings of an economic comeback.

In anecdotal descriptions of a new sense of optimism, executives told AdAge.com that the last few months have seen a significant upswing in the number of advertising creative accounts going up for review; the volume of request for proposals, or RFPs, being issued; and the initiation of hiring efforts in agencies that have come through a long period of personnel retrenchment.

'Dramatic' difference
"The difference between last year and now is so dramatic," said Cleve Langton, executive vice president and director of business development worldwide at Omnicom Group's DDB Worldwide, speaking about the volume of account reviews. "January and February have been busy months for activity."

Interpublic Group of Cos.' Martin Agency reports that it has already received more RFPs in the first two months of this year than in all of last year. Chris Shumaker, the agency's senior vice president and director of development, said: "We attended a new-business conference in February in Atlanta and agencies big and small, across all geographies, are reporting the same thing."

And while Chairman and CEO of Publicis in the U.S., Susan Giannino, characterized the current rush of RFPs as "unbelievable," she adds, "I think that with the political situation, when we're ready to go to war then all bets are off."

New hiring efforts
In a small but keenly welcomed sign that business prospects are picking up in some areas, several offices of major agencies are in moderate hiring mode: Grey Global Group's Grey Worldwide in New York has added 27 employees to its staff since January, and the agency anticipates bringing another 49 onboard; Interpublic's Deutsch has added a combined 35 to its staffs in New York and Los Angeles since January and it intends to hire 40 more employees, while WPP Group's Berlin Cameron/Red Cell in New York is looking to fill 20 new openings.

Late last December the two major forecasts at the UBS Warburg Media Week conference predicted moderate increases in marketers' advertising spending during 2003. And, at least to some degree, that appears to be holding true. Last week Viacom's chief operating officer Mel Karmazin predicted a record upfront season in TV advertising sales.

Catherine Bension, president and CEO of Select Resources International, West Hollywood, Calif., said starting in mid-November, the phones began ringing at a pace the search consultancy had not seen since the peak of the dot-com boom. "We had four big projects in the first two weeks of the year," she said.

Accounts in play
Meanwhile, at least 30 of the country's larger marketing companies across a range of sectors are seeking new agencies to help boost consumer spending. Collectively, the reviews have put just over a billion dollars worth of business in play, according to AdAge.com's Account Intelligence center. This month E.I. du Pont Nemours & Co. became the latest major corporation to join the pack, sending out a request for information to agencies for its $70 million account.

In the pharmaceutical market, Pfizer is looking to realign its brands Zoloft, Zyrtec and Valdecoxib, while Bristol-Myers Squibb is searching for a new home for Excedrin. Amanda Kavanagh, business development director at Publicis-backed Bartle Bogle Hegarty, New York, said, "There are a lot more opportunities now than there's been in a long time. Pharmaceutical direct-to-consumer appears to be booming right now, there are so many accounts in review."

In the bruised telecom sector Sprint, Nextel Communications and Alltel are all on the hunt for new creative agencies. "I think there's been more new-business activity in January and February than the entire year last year," said Bill Katz, president-CEO of BBDO Worldwide, New York, which is involved in pitching AOL Time Warner's America Online account. "We're talking to companies purporting to be spending around $200 million."

In the financial sector, Capital One is looking for an agency for its estimated $160 million account, one of the most lucrative around. Even hard-hit travel companies such as Virgin Atlantic Airways and AeroMexico are planning new marketing campaigns and searching for new creative agencies.

New campaigns
And there has been new movement by some large marketers in recent months. Last week, H.J. Heinz Co. announced that newly appointed chief growth officer, Casey Keller, has been given as much as $200 million in additional marketing to spend this year across the company's flagging brands to replicate the strong performance of its ketchup division. Heinz Ketchup grew 6% because of innovation, and in large part because media spending was raised significantly. Meanwhile, cereal giant Kellogg Co. is pushing ahead with plans to increase its advertising spending by well over 20%. The company's sales declined 4% in the fourth quarter 2002.

Technology companies are also reviving their marketing efforts: Cisco Systems unveiled a new $150 million global ad campaign in late February, while Hewlett-Packard Co. launched a $400 million corporate campaign in November 2002. Microsoft is also spending heavily on corporate positioning.

"It isn't surprising. It's a sign of the times, marketers are looking for change," said Chuck Porter, chairman at Maxxcom's-backed Crispin Porter & Bogusky, Miami.

While consolidation was the driver for much of last year's movement, marketer-side personnel changes are prompting the reviews in 2003.

'Fresh budgets'
Charlie Taney, vice chairman of Interpublic's Foote, Cone & Belding Worldwide, said, "It's the start of the year, clients have fresh budgets to do new things. We are getting into the fourth year of a tight economy and clients have done all the cutting they can do."

In a move that seems to confirm as well as accentuate the new mood found in some agency executive suites, the American Association of Advertising Agencies is organizing its first official new-business conference.

The event will be held June 9-10 in New York. Bill Nicholson, 4As executive vice president of management services, admits that the rise in creative reviews "took everyone by surprise."

Still, the heightened prospect of war could still put a damper on this uptick. One consultant said last year's drop off in reviews may have been caused by the prospect of war, terrorist threats and the poor economy.

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Alice Z. Cuneo and Tobi Elkin contributed to this report.

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