Berlin beckons

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When Jorg Dietzel settled happily into Beijing as DDB Worldwide's general manager for China in November 1998, a quick return to his native Germany was the last thing on his mind. Then Berlin beckoned.

"This is the only place I would even consider coming back to," said Mr. Dietzel, 39, who now heads DDB's new Berlin office as managing director. "It's the most happening and international city in Germany."

Next week marks a decade since the reunification of East Germany and West Germany. Since then, the former communist capital of East Berlin has melded with West Berlin to form a hotbed of capitalism. Berlin, a vibrant, culture-packed and at times decadent city of 3.5 million, is rapidly becoming an international creative center with ad agencies from McCann-Erickson WorldGroup, BBDO Worldwide and Grey Global Group suddenly discovering a need to open or expand offices, and marketers as diverse as Sony Electronics Corp. and DaimlerChrysler shifting their European headquarters to the city.

"Berlin has become the political, economic and cultural center of Germany," said a spokeswoman for DaimlerChrysler. "The dynamic process in the city [attracted us]. Also, other companies and decisionmakers are here or are moving here."

"The city has become very trendy. First came the art galleries and now the agencies," said Sebastian Turner, managing director at Scholz & Friends' $100 million Berlin office. "Berlin is the hottest place for hot ideas, and agencies will grow here."

DDB'S SAFETY NET

That's the plan for DDB, which opened its outpost on April 1 with a big party held in a rundown East Berlin building that was once the headquarters of the Communist Party. In a city without a lot of big advertisers -- a not insignificant drawback in building a thriving ad community -- the new DDB shop has the safety net of $180 million in billings. Like other shops opening in Berlin, DDB's foundation was built on a client formerly serviced out of another German city. In DDB's case, Volkswagen -- whose domestic account was handled by DDB, Dusseldorf -- agreed to be the engine of the new Berlin operation.

For Volkswagen, DDB's move to Berlin means more personal contact. The train journey from DDB's Duesseldorf office to VW's headquarters in middle-of-nowhere Wolfsburg took four hours. From Berlin, it's a 57-minute ride. The difference is "we can almost be on standby, if the head of marketing needs to see something quickly or suddenly has an opening [in his schedule]," Mr. Dietzel said. Storyboards are sometimes rushed over at the last minute before VW's weekly Monday meetings, speeding up the approval process for ads.

Publicis and Grey already have offices in Berlin. Joining them in October is McCann-Erickson WorldGroup Communication House, dubbed MECH for short. McCann envisions the Berlin MECH as the first agency in a new stand-alone international network combining traditional advertising with media, public relations, design and interactive marketing. Although not opening until next month, MECH already has a sizable client: the $30 million worldwide Deutsche Lufthansa account, formerly at Springer & Jacoby, Hamburg.

`SECOND CENTER OF EUROPE'

Berlin was chosen as the first site for the new MECH agency model because of the city's regeneration and Germany's place as the "second center of Europe" after London, said Lee Daley, chief strategy officer for McCann Europe, who devised the MECH concept. (Mr. Daley, however, is staying in London).

A McCann executive said that Frankfurt-based Lufthansa didn't require McCann to open in Berlin but that Lufthansa liked the MECH concept and the choice of city was "a meeting of the minds."

For McCann, the Berlin office is a homecoming. It became the first U.S. agency network to enter Germany when it opened an agency in Berlin in 1928. When Germany was partitioned at the end of World War II, McCann moved to Frankfurt.

BBDO Worldwide opened shop in Berlin in late August. Still to come is JvM and der Spree, one of Germany's most creative shops, opening in October with billings of $75 million from Deutsche Post and business weekly Wirtschaftswoche.

"Berlin's environment makes the city so attractive for ad agencies, services and media, and most of all the Hochschule der Kuenste [art school] is excellent," said Frank Lotze, the new agency's general manager. "It was an absolute must for Jung von Matt to start in Berlin."

Even so, most agencies in Germany are based in Frankfurt or Duesseldorf, with a handful in Hamburg and Munich. Frankfurt is the fourth-largest ad city outside the U.S., home to billings of $5.5 billion, and Dusseldorf ranks No. 10, at $4.6 billion, according to Advertising Age.

But Berlin's lure for shops is growing. Its famed underground scene of nightclubs and performance art, and its mixture of the renovated and the dilapidated provide a potent stimulant for creative thought, Mr. Dietzel said. "It's more concentrated here."

Bullet-riddled, decaying buildings are as much a part of the scenery as chic new restaurants such as Vau. Most of DDB's 57 employees live within walking distance of the office, in the trendy East-side district of Mitte (German for middle). Crowded with street cafes, Mitte is also home to most of the city's ad agencies.

On regular "Museum Nights," all museums are open until midnight, with free admission. Every second Wednesday is "Blade Night," when the main thoroughfares are closed and more than 50,000 inline skaters take to the streets, starting out from the Brandenburg Gate. "My staff loves it," Mr. Dietzel said.

Clients, too, are beginning to drift toward Berlin from Hamburg, financially oriented Frankfurt and Duesseldorf and the Munich industrial belt.

DAIMLERCHRYSLER

DaimlerChrysler moved its German Mercedes-Benz retail operation two years ago from Stuttgart to Berlin's Potsdamer Platz, a newly developed office, shopping and entertainment complex that the company partly owns. One of its new neighbors at Potsdamer Platz is Sony Corp., a recent arrival earlier this year. The DaimlerChrysler spokeswoman said most of the buildings are now rented to corporate tenants.

In fact, the DaimlerChrysler Summer Festival held every August began as a marketing event to promote Potsdamer Platz, but has taken on a life of its own. Although there is no need to continue to push for tenants, the popular festival remains as an entertainment draw, and this year featured French popster Patricia Kaas.

FUTURE GROWTH

Although it's growing fast, Bernd M. Michael, CEO of Grey Global Group for Germany and Europe, predicts building Berlin into a major ad center will take another decade. An old-timer in Berlin, Grey opened there in 1993, and now has estimated billings of $35 million. As a sign of its confidence in Berlin's future, in the past year Grey has added Berlin offices to its media network MediaCom and Internet agency group Die Argonauten.

Mr. Turner, whose Scholz & Friends is owned by Cordiant Communications Group, put the same timetable on the city's rise to advertising importance. "When we started [in 1993], Berlin was a huge disappointment," he said. "But the situation changed after the German government moved [here in September 1999]."

While Berlin's high energy is attractive to young, creative people, recruiting more experienced executives is still difficult, DDB's Mr. Dietzel admitted. That may get even harder once the first rush of enthusiasm for the city is past.

Opening in Berlin is a risk, he said, citing that as a reason why it's taken a decade for companies to start moving into the city in significant numbers.

"Will we be able to pick up more clients -- and the ones we want? Will we be able to attract talent?" he asked. In Berlin, getting things done is not as easy as in more sophisticated ad centers, although "every agency which moves here helps us all grow the infrastructure," Mr. Dietzel said.

AGENCY HOLDOUTS

Not all agencies are sold on Berlin.

Berlin "is a most attractive city for young people," said Lothar Leonhard, chairman of Ogilvy & Mather Worldwide in Germany and president of the German Advertising Association. But, he added, "We are pursuing no plans to open a Berlin office for the time being," noting that "so far, Berlin has no importance as an advertising city compared to Frankfurt, Hamburg, Duesseldorf and even Munich."

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