Are TEch clients killing San Francisco creativity?

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A tsunami of technology marketers is threatening to wipe out San Francisco's creative boom.

Some 20 years ago, San Francisco put itself on the creative map, starting with FCB Worldwide singing the blues for Levi Strauss' 501 jeans, Hal Riney's marketing Saturn as a different kind of a car company and Goodby, Silverstein & Partners getting milk.

Increasingly, however, the city's ad business is anchored not in high-profile consumer products with TV campaigns likely to garner awards but in high-tech, business-to-business campaigns likely to run in more narrowly targeted journals.

"San Francisco's little heyday is crashing," said Mary Moudry, chief operating officer at DDB Worldwide, San Francisco.


One West Coast ad vet is concerned about the quality of the work. "The work hasn't really stood out anymore," said Tom Hollerbach, president-CEO, BBDO West. "It's not as interesting as it once was."

Rob Bagot, exec VP-group creative director, GMO/Hill, Holliday, San Francisco, said, "It feels like we've hit a plateau for the last year or so."

The plateau follows a year-and-a-half cycle in which agencies large and small feasted on accounts from free-spending dot-coms. In the best cases, those clients offered agencies the opportunity to add cutting-edge creative to their reels. In the worst, shops were left without termination fees or even holding the bag on some stiff production and media outlays.


But San Francisco's dot-com ads, like those produced elsewhere, didn't especially enhance creative reputations. Even some San Francisco dot-com ads that stood out became associated with ill-founded schemes: TBWA/

Chiat/Day's Sock Puppet drew attention, yet the ads' effectiveness is open to debate given the e-tailer's implosion last week (see story, Page 86).

In the place of the flurry of billings from now floundering or failed consumer dot-coms, pure technology companies have begun to seek agency help. San Francisco agencies that are thriving are either those setting out with a high-tech specialty (see story, Page 28) or those using their general advertising strengths to lure high-tech clients.

"Of the pitches we are invited to in San Francisco, 70% are tech related one way or another," said Kieran Hannon, chief operating officer, Grey Worldwide, San Francisco. "Unfortunately, that's the reality."

Grey has grown from 19 employees and $22 million in billings last year to 68 employees and $185 milling in billings, Mr. Hannon said. "Most businesses [Grey has won recently] are technology, new economy companies," he said. One of Grey's recent wins, for example, is AskJeeves, once a consumer-focused dot-com that now is turning its attention to business-to-business opportunities.

Y&R Advertising's San Francisco office garners 70% of its billings from the technology sector. McCann-Erickson Worldwide, one of the largest shops in the city with 278 employees and billings of $375 million forecast for 2000, is almost exclusively focused on its Microsoft Corp. work.


At FCB Worldwide, the shop's biggest recent creative splash was for a $60 million branding effort for Avaya, a communications company itself spun off from AT&T Corp. spinoff Lucent Technologies. While the new work used visually arresting art in the Impressionist style, in January the campaign will switch into a lower-key, business-to-business focus.

J. Walter Thompson USA's San Francisco office has floundered since the loss of the $150 million Sprint Corp. account in 1998. Yet when JWT won the $100 million Sun Microsystems business this year along with Tonic 360, a San Francisco interactive shop that JWT subsequently purchased, JWT indicated the business would be handled out of its New York office. JWT also recently relocated its West Coast headquarters back to Los Angeles.

Saatchi & Saatchi's outpost also is finding it hard to overcome the loss of Hewlett-Packard Co., a longstanding, high-profile tech account. "There isn't a lot of activity on the West Coast," said Julie Bauer, president-CEO. "It's a tough market right now. It's an adjustment time. We've got to get back to the real business of real clients."

Another element in the adjustment is the proliferation of out-of-town shops opening San Francisco branch offices (see chart at left).


The Martin Agency, Mad Dogs & Englishmen and Ogilvy & Mather Worldwide have opened in the city. Richards Group and London's Bartle Bogle Hegarty soon could join the fray for opportunities in a market with a limited client base.

Lowe, Lintas & Partners Worldwide, once flying high, is trying to rebuild following its loss of the $100 million Sun Microsystems account to JWT.

DDB's Ms. Moudry is charged with finding new clients amid a competitive landscape that she said she sees as filled "with all these agencies and not enough new business."

"Everyone has their own personal agency," said John Yost, a founder of Black Rocket, a shop that has built its business with the Yahoo! account. His agency is believed to be in discussions with a bigger network to provide Yahoo! with more seamless, integrated global advertising.

In addition to the dearth of new clients and the tight competition, boutiques spun out of the city's creative powerhouses are not thriving.


Swirl, started by former FCB executives in 1997, grew initially thanks to last year's dot-com explosion. But recently it has significantly cut back as its remaining executives attempt to reposition the shop with a bent toward developing the next wave of agency relationships, one wherein clients would pay to license the right to use creative ideas.

Meanwhile, London-based Leagas Delaney's San Francisco office, started by a top crew from Goodby, faced the loss of a bevy of dot-com clients, such as, as well as a portion of the U.S. advertising for Adidas, an anchor account that now will be handled more on a global basis. Leagas Delaney last week agreed to be acquired by Envoy Communications Group, Toronto, and picked up the $30 million Replay TV account (see story, Page 32).

It's not surprising that San Francisco is relying more on technology: Silicon Valley is in the neighborhood, and ad budgets for technology companies have exploded in recent years.

Additionally, San Francisco has created some significant successes in tech advertising, including Goldberg Moser O'Neill's work for former client Dell Computer Corp. and Cisco Systems. But as a genre, technology advertising is "not the kind of thing you want to hang on your wall," said Brian Hurley, founder of Grant, Scott & Hurley, another shop formed by former Goodby creatives. On the new-business front, "for every one [prospective client planning] TV at visible weights, there are 99 behind them that are running occasionally in Fortune and more often than not in PC Week," now known as eWeek. "Even if it is really great, who is going to see it?"


Greg Jorgensen, VP-strategic creative for corporate marketing at Oracle Corp., who worked at Goldberg on the Cisco campaign, said the amount of creativity afforded agencies depends on the involvement of top executives at the client company. At Oracle, founder Larry Ellison is "steering the vision and position of Oracle," he said. That, combined with systems allowing for quick feedback on whether different creative messages are working at different Web sites where Oracle has placed advertising, has provided "a huge opportunity," he said.

"We're not going to put billboards in Times Square," he said.

Oracle latest effort, from Grey Worldwide, San Francisco, tagged "Oracle software powers the Internet," ran primarily in media targeted to businesses, and more recently focused on product pushes on the Web.

Longer term, Mr. Hurley said, San Francisco shops will find it "harder to recruit talented, hungry creatives." Internally, the tech pitches that come along aren't the kind of thing good creative departments are saying, "We've got to get that."

Said one San Francisco creative who recently produced a high-profile tech campaign, "Technology clients usually end up talking to themselves and forget about consumers."


The city also is looking for some new top creative leadership, some executives said.

"San Francisco is struggling for someone other than [Goodby Silverstein Co-Chairman Jeff] Goodby," said Courtney Buechert, managing director of Leagas Delaney. "San Francisco has been `it' for the better part of the decade. I don't think it's going to keep being `it,' " he said.

Other post-dot-com problems also persist. Shops have found themselves with "leftover inflated salaries" from the dot-com boom, as one agency president put it. "We were all held for ransom, paying people who weren't qualified as account supervisors just to compete" with offers those junior employees were getting from dot-coms. "Now, we're all living with it."

Another executive, Carisa Bianchi, president-CEO, TBWA/Chiat/Day, said San Francisco continues to attract the "best and brightest talent." But getting them to commit to San Francisco is difficult given the area's high housing costs. "You can't get people to move here," she added.

Still, Ms. Bianchi and others are not about to write off San Francisco's creative vivre.

Technology is spawning whole new consumer product categories, such as set-top TV boxes, with competitors going head to head at the city's top creative shops.

Mark Kvamme, a founder of CKS Partners and now a partner at Sequoia Capital, said technology is becoming a greater portion of the gross domestic product, and therefore marketers of tech products will be major players for years to come. "Pretty soon technology accounts are going to become more important than beer [accounts]" at ad shops, said Mr. Kvamme, who is talking with some of the top names in ad agencies about developing a next-generation marketing company.

Even Microsoft, which frustrated Wieden & Kennedy, Portland, Ore., over creative, now appears ready to take some creative risks, an executive familiar with the situation said.

Some agency executives are optimistic today's dry tech clients will turn into tomorrow's superstar creative powers. Grey's Mr. Hannon pointed out Sprint began as an offshoot of the Southern Pacific Railroad, which at one time had excess optic fiber lines strung along its tracks.

Austin McGhie, president of Y&R, San Francisco, said, "Tech clients have been phenomenal for the San Francisco ad business."


BBDO's Mr. Hollerbach said he anticipates a "new wave of dot-coms will be back at some point," with the industry cured of some of its rush-to-market, irreverent ad foibles.

Other optimistic signs for the community include FCB's recent win of billings it claims to be worth $500 million, including the $400 million Taco Bell account. FCB also scored against New York shops to win the $20 million to $30 million Major League Baseball account. The shop's new creative director, Rooney Carruthers, "wants the work to be great, and we're getting there," said Tom O'Keefe, group creative director on the and Taco Bell Corp. accounts.

Others in the creative community believe the nearby tech community will provide the city with the tools to become creative in different ways. "The shakeup in the technology industry is going to give a lot of people a lot of opportunities," said Jeff Iorillo, senior VP-group creative director, who worked under the late Mike Koelker and recently developed FCB's Avaya campaign.

Mr. Goodby argued the "golden age of advertising in San Francisco" is far from over. He said he believes the city's location in the heart of a center of technological change offers a creative challenge beyond that posed by a traditional TV spot.


Creative shops are being asked to pioneer with new communications technologies, integrating campaigns throughout the Web and other evolving media.

"It used to be much easier to solve these [marketing] problems," Mr. Goodby said. "There's nothing boring about getting to think that way."

Another benefit is that many of the newer companies have different expectations of agencies, offering creatives new freedom of thought. "Relationships are expected to be short, tempestuous and [offer] the right to do whatever creative you want," Mr. Goodby said. "The secret is to get out before they change personnel, go out of business or implode is some way."


With rents in the city so high, he said, "You can't sit around and answer the phone and screw around like we did" when Goodby, Berlin & Silverstein started in the '80s. "The whole reason to be here is to bask in the San Francisco creative culture. Yet the pressure on [start-ups] is very strong to take any old client."

Even out of the office, the San Francisco ad community isn't as clubby as it once was. What has been the San Francisco Advertising Club since 1903 is now calling itself the San Francisco Advertising Association. Association President Michael McNamara, also president of start-tup shop NotCom Advertising, replaced the club's logo, a sketch of Alcatraz tagged "Prisoners of Advertising," with a more dignified portrait of Coit Tower atop Telegraph Hill.

Hal Riney, venerable founder of the city's creative movement, said he's not overly concerned about San Francisco losing its creative prowess. However, he cautioned, "I think we have to remember our own integrity and not grab any piece of business just to make a buck."

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