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Five years ago, there were 14 blisteringly hot creative shops in San Francisco. Today, seven survive.

"The conventional wisdom in the `80s and `90s was that San Francisco was emerging as a national player," said John Geoghegan, VP-marketing, LucasArts and a former agency executive. "We're not going to realize that promise. Northern California has fundamentally changed since the dot-com bust. There's not a big enough business base in northern California to support more than one or two national agencies."

Among those closing up shop are Publicis Groupe's Saatchi & Saatchi; Havas' Arnold Ingalls Moranville; and independent Black Rocket. Odiorne Wilde Narraway Groome & Partners, now called See: Advertising, became the latest once-upon-a-time San Francisco hotshop to take a major hit. Its contract with founding client Electronic Arts for that $70 million account expires in March; the business is believed headed to Wieden & Kennedy, Portland, Ore.

Dot-com survivors such as Yahoo and E-Trade Financial Corp. have fled town. Yahoo, a brand whose yodel was invented by Black Rocket, left for WPP's Soho Square in New York, although the main creative is still developed by two San Francisco admen, Steve Silver and Curtis Melville. E-Trade moved to Omnicom Group's BBDO.

What stings most is the exodus of homegrown marketers. A number of San Francisco-based companies such as Visa International that traditionally shopped in town for agencies are straying. Chevron became a global account following its merger with Texaco and top client services management was transferred to New York, although the retail creative remains in San Francisco.

long-distance relationship

Even the Gap, whose in-house agency was one of the largest marketing shops in the city, has begun to work with resources distant from the Golden Gate. Laird & Partners, New York, picked up the business for Gap stores, with MDC Partners-backed Crispin Porter & Bogusky, Miami, recently snared an assignment for men's clothing. Old Navy's work was parceled out to Interpublic Group of Cos.' Deutsch, Los Angeles. Only one Gap brand, Banana Republic, stayed in town with Omnicom's Goodby, Silverstein & Partners.

"Where did they go, Joe DiMaggio?" said Rich Silverstein, co-chairman of Goodby, Silverstein. He noted that the onetime view of individual cities as creative meccas has changed as geographically disparate creative standouts such as Weiden & Kennedy, Crispin Porter and TBWA/Chiat/Day become marketing-services destinations. San Francisco's agency-business climate, he admitted, is "pretty bleak."

Ian Beavis, formerly head of Interpublic Group of Cos.' Foote, Cone & Belding, San Francisco, and who most recently departed as senior VP-marketing, Mitsubishi Motors North America, said San Francisco shops will "have to position themselves as regional shops and get used to it." Local agencies, with bleeding business and lean staff, no longer have the depth to pitch national accounts, he said. "If you prune a tree too far, you might just kill it."

The pruning followed the branching out of tech innovation beyond Silicon Valley and what Brian Hurley, general manager, Grant, Scott & Hurley, calls a "residual backlash [by marketers] to the frivolousness of the dot-com days."

"People have a certain distrust of San Francisco as a place that has a bunch of whackos," said Jeff Goodby, co-chairman of Goodby, Silverstein. "In reality it's incredibly industrious and entrepreneurial."

Anchored by a group of mavericks determined to make creativity a top priority and to shake off the corporate shackles of Eastern headquarters, San Francisco in 1997 was home to three of the nation's top 100 shops, according to Advertising Age rankings: Hal Riney & Partners; Goldberg Moser O'Neill and Goodby Silverstein.

One by one, the iconoclasts left the business. Hal Riney no longer leads the Publicis Groupe office that bears his name. Now with its fourth head of the office in two-and-a-half years, Publicis & Hal Riney counts among its few large clients Hewlett-Packard Co., shared with Goodby. It also faces uncertainty in another anchor client, Sprint, about to merge with Nextel, now handled by Omnicom's TBWA/Chiat/Day, New York. Riney executives said they are confident the merged telecom will remain at the agency.

Fred Goldberg, a feisty creative-supporting suit, retired soon after he sold Goldberg Moser O'Neill to Interpublic, which later closed the office.

FCB, once the largest agency in the West, led by the late Mike Koelker who created the standard-setting Levi Strauss 501 Blues ads, is now in its fourth venue, having shed staff and floor space with each move. The former pillar of the San Francisco creative community is now located in the Interpublic offices where Hill Holliday staffers were given their pink slips.

critical mass

By last year, only Goodby remained on Advertising Age's top 100 listing, jumping from 64th place with revenue of $39.9 million on billings of $403 million in 1997 to No. 44 with revenues of $39.6 million in 2003. Current billings are not available, although estimates for the close of 2004 put the shop at close to $1 billion.

Two other agencies have achieved critical mass: Interpublic's McCann Erickson, agency for Microsoft, and Omnicom's DDB, which handles Clorox. A third agency branch office in town also is beginning to gather creative steam. WPP Group's Y&R, under the creative leadership of co-executive creative directors Scott Larson and Brad Berg, won a shootout with Crispin Porter for an $25 campaign for 7Up's citrus-infused 7Up Plus drink.

West Coast agency veteran Jim Harrington, president of O'Leary & Partners, Orange County, Calif., said the Northern California shops thriving are small- to midsize independents able to control expenses without kicking back a share of the profit to holding-company parents. He cited as examples Butler, Shine, Stern & Partners, Sausalito, Calif.; Gardner Geary Coll; Grant Scott & Hurley; and Hoffman Lewis. Venables Bell & Partners, a breakaway created by former Goodby creatives, has shown promise, making its way into the finals for two national accounts, Arby's and Smart Car. Chris Cornyn, president Cornyn & Partners, opened a separate company, Dine, specializing in food marketing as a strategy for survival.

Goodby continues to bring some big-name marketers into town, most recently winning the $250 million to $300 million Subway account. Mr. Silverstein is optimistic San Francisco will continue to draw talent and vibrant thinkers from all fields who will invent the next generation of the nation's economy. "The creative promise remains," he said.

In fact, many of the executives behind the defunct shops are plotting a reinvention. But "I don't know how [the San Francisco agencies] can reinvent themselves," said Jerry Gibbons, exec VP, American Association of Advertising Agencies.

Russel Wohlwerth, principal at consultant Select Resources International, sees the movement simply as part of the historical boom-and-bust cycle of a city that's risen like a phoenix from the ashes of earthquakes and fires. "The creative will return," he said. "It's just a question of how and when."

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