Report from Advertising Week in NYC

ADVERTISING WEEK IN NYC FACES FINANCIAL LOSS

Organizers View $300,000 Shortfall as Investment

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NEW YORK (AdAge.com) -- Advertising Week in New York City now expects a financial loss of about $300,000, according to the American Association of Advertising Agencies, which has to pick up the tab.

The 4As, which never expected to turn a profit on the event, characterized the loss as an investment in the future of the ad business.

Advertising Week's budget planned for expenses between $1.3 million and $1.4 million, and income has come in at about $1.2 million, according to Kipp Cheng, the 4As' vice president and director of public affairs. So the Week already was headed for a loss.

$1.5 million in costs
But actual expenses are coming in "closer to $1.5 million," Mr. Cheng said. So subtract the roughly $1.2 million in "committed money" that organizers have received or expect to receive from sponsors and others, and the Week is looking at a loss of about $300,000, he said.

"There's a discrepancy [between expenses and revenue] that will need to be paid for by the 4As," pending board approval, Mr. Cheng said.

The 4As board will take up the issue next Tuesday at a regularly scheduled board meeting, he said. Assuming board approval, the money probably will come from the 4As' reserve fund and will not affect members' dues or require the 4As to cut any programs, he added.

'Happy and pleasantly surprised'
Mr. Cheng said he's not aware of any concerns among 4As members about the loss. "People are happy and pleasantly surprised that everything's been moving as smoothly as it has" at Advertising Week, he said.

The 4As conceived and is helping to bankroll this week's ambitious event in New York even though the city is home to just 13.8% of the trade group's 437 member agencies. But Mr. Cheng said the 4As' New York-based shops account for the lion's share of ad agency employment and revenue as well as 4As membership dues. Nine of the nation's 10 largest ad agencies on Advertising Age's annual ranking are based in the city.

'Could be a concern'
One 4As' board member contacted today by AdAge.com, Victor Ornelas, said he hadn't heard yet of the Week's loss. "It could be a concern," said Mr. Ornelas, president of Hispanic shop Ornelas & Associates in Dallas and secretary-treasurer of the 4As' board. "We're going to have to have that discussion at the 4As' board meeting."

But Mr. Ornelas stressed the issue of the loss shouldn't overshadow the positive side of Advertising Week. "It doesn't temper my enthusiasm," said Mr. Ornelas, who calls Advertising Week "an incredible concept." Mr. Ornelas said it made sense to establish the event in New York but hopes it can be extended outward to connect with other cities in future years.

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