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BEATING SWORDS INTO MARKET SHARES WITH GUNS QUIET, AGENCIES AND CLIENTS PONDER POTENTIAL OF FORMER YUGOSLAVIA

By Published on .

Stan Kozlowski is looking ahead to re-starting DHL's courier operations in Bosnia, a move that would have been unthinkable only a few months ago.

For two years, DHL Worldwide Express' only contact with the besieged city of Sarajevo has been through the former station manager's brother. One brother, who worked as a courier, escaped to Macedonia, but the DHL office manager stayed behind to look after their parents. The siblings' only contact was an occasional chat by ham radio.

Through the brother in Macedonia, Mr. Kozlowski has passed along the message that he hopes to be working with the brother in Sarajevo again soon.

"We're hoping to re-open Bosnia in the near future," said Mr. Kozlowski, DHL's Ljubljana, Slovenia-based sales and marketing manager for the Adriatic region. "There hasn't been fighting for about a month now, and all three sides seem to be talking more and shooting less."

Even so, it won't be easy. Mr. Kozlowski figures DHL's Sarajevo office has been destroyed, commercial air service is unlikely for a while and telecommunications have completely broken down.

But renewed tram service the last week in March brought with it new ads-a public service appeal asking for donations from around the world to help rebuild the transit system.

After several nightmare years, DHL and other marketers and their ad agencies are seeing signs of spring in the former Yugoslavia.

With the area splintered into five separate countries, companies must adapt to addressing much smaller individual markets. Take Slovenia, the most prosperous republic but with a population of only 2.2 million, only a 10th of the 22 million strong in the former country.

McCann-Erickson, for example, saw billings in the former Yugoslavia fall from $2.5 million in 1991 to $1.25 million in 1992 after war broke out. Billings climbed back to $5 million last year as the Slovenian Tourist Office resumed advertising. After operating from Zagreb, Croatia, for four years with a staff of 20, McCann added a five-person office in Ljubljana last year.

Konrad von Viereck, managing director of McCann-Erickson Germany, based in Frankfurt, and former head of Eastern Europe for the agency, forecasts $10 million in billings from former Yugoslavia this year: "I believe that many international marketers will start in Slovenia and Croatia this year."

"Last year, we had nobody except DHL and Shell," said Tatjana Cukvas, a Vienna-based account director-Central and Eastern Europe at Ogilvy & Mather. "Now all the multinationals are there."

Working through affiliates in Slovenia and Croatia, O&M is handling Microsoft Corp., Wilkinson Sword and Polaroid Corp.'s Studio Express photography business, and has just won Warner-Lambert Co.'s Stimorol gum.

Most marketers returning to or entering the area are focusing on small but prosperous Slovenia, and Croatia, less developed but with a larger population of about 4 million. Macedonia has about 2 million people but is poor.

Serbia-Montenegro and its capital city of Belgrade are off-limits for international trade since the U.N. embargo was imposed in 1992.

The U.N. allows DHL to operate a carefully monitored service from Belgrade, transporting only documents weighing a maximum of 12 ounces. Because of the U.N. sanctions, DHL can't take money out of Serbia or send in funds to pay salaries.

DHL's Belgrade staffers "have to survive on the [little] revenue they generate," Mr. Kozlowski said.

DHL's Serbian volume is about 10% of what it was two years ago, he said. By contrast, the company's business is growing by 100% a year in Slovenia and Croatia.

DHL, one of O&M's main clients in the former Yugoslavia, is about to start an outdoor and a 2,000-piece direct mail campaign in Slovenia. The company already claims it controls 79% of the air courier market in Slovenia, competing against United Parcel Service and TNT. A Croatian direct mail campaign will follow.

For clients like Procter & Gamble Co. and Mars Inc., which prefer to deal with the former Yugoslavia as a single region, SMS BSB Saatchi & Saatchi in late 1993 developed a regional coordination system.

"We approach the whole of former Yugoslavia as one region and one advertising opportunity," said Ivan Stankovic, vice chairman and international client services director of SMS BSB Saatchi & Saatchi, Belgrade. "We have two regional account directors and do account, media and creative regional coordination."

After billing $5 million in 1993 from offices in Slovenia, Croatia, Macedonia and Serbia, Mr. Stankovic expects about $10 million this year from new clients and new business from existing clients.

Covering the entire region is a challenge. Mr. Stankovic lives in Belgrade but travels widely. Late last month, his car was banned from entering Slovenia, despite finagled diplomatic license plates, because it's registered in Serbia. He left the car in Croatia and took a train.

Mr. Stankovic gets occasional letters from two staffers in Sarajevo, both designers who opened the agency's office there several months before the siege started. He tries to send them humanitarian aid ranging from food to pencils and toner for office equipment.

The once thriving Croatian and Slovenian tourism industries are already working to persuade frightened tourists that their coastal resorts are unaffected by the war. Half a million U.K. tourists alone used to summer in northern Croatian resorts such as Pula and Porec. Croatian government-owned Phoenix Holidays, currently the only U.K. tour operator selling summer holidays there, is determined to get them back.

After hastily flying its travelers home when trouble started in 1991, Phoenix canceled the 1992 season and cautiously flew 2,000 U.K. tourists to Croatia in 1993.

This year, the company is running tiny ads by Smee's Advertising, London, in U.K. newspaper travel sections promoting Croatia as a "small country for a great holiday" with unspoiled landscapes, a clear sea, pure sunshine, enchanting cities and welcoming people. The ad is pulling about 1,000 queries a week for brochures with the aim of drawing about 8,000 summer visitors, said David Skillicorn, Phoenix's sales manager.

"If we have a recurring nightmare," he said, "it is that we've probably underestimated demand for Croatia."

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