A pronounced pickup in the media planning and buying side of the business appears to be leading Madison Avenue out of its economic doldrums, the head of one of the world's largest agency holding companies said Friday. With especially strong first half results pouring in from its MindShare and Mediaedge:cia units, WPP chief Sir Martin Sorrell said media units are paving the way for a full-blown turnaround in the ad industry, particularly in the United States. Sorrell, who until recently had been one of the more bearish of the major agency chiefs, said WPP began to see a turnaround beginning in October 2002 and that it picked up noticeably in April with the TV upfront. "There's almost a cycle at work here. The pickup seems to come first in media planning and buying, and feeds into advertising and then feeds into other areas of our business," Sorrell said. Combined revenue at its media and advertising businesses rose 3%, with more than $2.13 billion in new business billings by the end of June. Among the second-quarter wins include $45 million in billings from Burger King by Y&R and MindShare's winning of the $150 million Nextel account. The second quarter had no major losses among agency business, said WPP's group financial director Paul Richardson. London-based WPP also owns Ogilvy & Mather, J. Walter Thompson Co., Y&R and Red Cell. "I think we are coming out of it. We've had 10 months of continuous like-for- like growth in the U.S.," Sorrell said. Sorrell sees some good signs in the United States, including the impact of the 2004 Olympics, the presidential election and the margins and profits rising at companies. He said that business-to-business spending might also be improving, with companies like Cisco Systems, SAP and IBM reporting an increase in activity. It's a change from the heavy cost cutting of almost three years, WPP said. "You're starting to see a business-to-business uptick. Not large, to some extent, it's muted," Sorrell said. "[But it is] what we need to see because the consumer is pretty fragile." He said a potential danger point is an increase in federal spending, growing at a rate faster than anytime since the Vietnam War 30 years ago. "Clearly President Bush wants to be re-elected next year and that's driving the spending," Sorrell said.
The holding companies of a number of top media agencies reported mixed results for the first half of 2003, according to a MediaPost compilation of data from company reports. Only one of the group reported a decline, but none had record-breaking revenues. Most said U.S. conditions are improving while other markets continue to lag. And Havas, which owns Media Planning Group, Arnold Worldwide Partners and Euro RCSG, has seen an 18.8% drop in its revenues, owing mainly to the euro's strength against the U.S. dollar. But even with constant currency, Havas was down 6.8% in the first half. First Half '03 Holding Company Revenues Revenues Vs. First Half '02 Grey $618 million +7% Havas $909 million -19% Interpublic $2,810 million +<1% Omnicom $4,080 million +12% Publicis* $2.030 million +59% WPP $3.000 million +3% Source: MediaPost compilation of data from company reports. Carat parent Aegis Group will not report until Sept. 9. *Organic growth rate was 0.2%.
With some Northeastern shops still reeling from the aftermath of the Blackout of 2003, some media agencies said their systems have been further strained by deluge of unsolicited bulk mail traffic created by waves of attacks from the Sobig.F computer virus. The damage ranged from a mere nuisance at some agencies to a near melt-down in the e-mail systems of others. "We're just about paralyzed here," said Tom Siebert, manager of corporate communications at Baltimore-based Carton Donofrio Partners. "Our IT guy is running around like a maniac; one of the account execs asked me if I'd gotten anything from outside the agency." "It was just kind of a nuisance," said Anaka Kobzev, spokeswoman for Initiative Media. "Some people were hit not at all and other people were hit harder. Our New York office was hit the hardest of all our offices." For many other shops, Sobig was an even smaller deal. "We haven't been hit, knock on wood," said Robert Stank, IT chief at Carat North America. "We use Lotus messaging products and we have antivirus programs that protected us." A MediaCom spokeswoman said her agency was also unaffected. But coming on the heels of a devastating power outage, some agencies, as well as outside service providers, have been feeling the strain on their communications systems. A spokesman for New York-based EarthQuake Media said the agency was "finally getting their systems fully up to speed and in running order from the Blackout" when Sobig began to hit. He added, however, "They were able to conduct business." While a Nielsen Media Research spokeswoman reported "no problems," Stan Federman, president of Telmar said the media software planning firm did experience some glitches the first day of the attack but they did not impact any agency clients. "That first day the first worm hit, we were affected internally. But we've put in all the patches and we've been fine. It was serious. It's not over," said Federman, adding that the event could lead to some changes in media industry communications systems. "What we are all looking at is looking at whole new ways of handling e-mail to avoid these kinds of problems in the future," he said.
While 65% of American women wear a size 12 and above, to say that they're not seeing themselves reflected on the covers of women's magazines is a wild understatement. Indeed, as much as women's titles may attempt to position themselves as "aspirational," such aspirations might not seem especially realistic for those who fully understand that women cannot subsist on lettuce alone. Hoping to provide a more realistic take on the women's lifestyle magazine, figure debuted last week in more than 2,250 Charming Shoppes stores (which include the Catherines Plus Sizes, Fashion Bug and Lane Bryant chains). Produced by NYC-based communications firm Brinsights and Soho Publishing, the mag offers the usual women's-mag staples - fashion, fitness and home decor - but with a decidedly more populist bent. "The market for this magazine is very, very underserved," says co-publisher and executive editor Geri Brin. "Lots of magazines talk about how they're for 'real women,' but real women do not wear a size two or four. figure is truly a magazine for 'real women.'" The publication isn't exactly launching into the most welcoming climate. While companies may be in the process of upping their ad spending, the economy is still far from stable. Similarly, women's lifestyle and fashion/beauty magazines are free-falling at the newsstand, according to the latest Audit Bureau of Circulations (ABC) data. And Mode, a magazine catering to largely the same market that figure hopes to capture, went out of business at the end of 2001. That said, certain targeted women's titles are doing quite well, both in terms of sales and ad pages. The Publishers Information Bureau has reported that More, a title aimed at the 40-and-over demographic, has seen a 38.9% gain in ad pages and 80.5% surge in ad revenue during the first seven months of 2003. Similarly, the mag has grown its readership by 18% during the first half of the year, including a 2.1% jump at the newsstand, according to the ABC numbers. Brin does not view figure as a niche title by any stretch of the imagination. "You get five million shoppers a week at Lane Bryant and Fashion Bug and Catherines," she notes. "That's a considerable number of potential readers." Though figure has quoted a rate base of 300,000 to advertisers, Brin believes the mag will sell its entire print run of 400,000 copies. Given the immediate response to the mag at the three Charming Shoppes chains - Brin gleefully reports a two-day tally of 25,000 copies sold, and has the register receipts to prove it - it's hard to dismiss her enthusiastic projections. figure's most distinguishing feature is clearly its store-first distribution model. Though the magazine is already in Books-A-Million and will be making its way onto newsstands in the months ahead, Brin isn't so sure the magazine needs distribution beyond the retail world. "What do we need newsstands for?," she says. "We want them and we'll eventually get them, but we've got all these stores." The distribution arrangement has other benefits. By closely allying itself with the three preeminent retail chains for plus-sized women, figure will never lack insight into the consuming habits of its readers. Additionally, Brin believes the arrangement will facilitate a range of marketing tie-ins that other women's titles can't easily coordinate: "We can do sampling programs in the stores and other promotions that go beyond our pages much more easily than just about anybody else." As for advertisers, the first issue of figure arrives at a modest 80 pages, but boasts appearances by consumer giants like Avon, Chase, Olay and Crest. While Brin seems mostly satisfied with the early results - "we'd like some more of the Mercks and Pfizers, but those will come with time" - she has not enjoyed her forays into the world of New York ad agencies. "I'm not interested in badmouthing agencies just for the sake of it, but it's been exasperating," she explains. "I've never seen so much bureaucracy in my entire life, so many people who have no authority to make decisions. I'm pretty sure I'm not the only person who feels this way." Such issues notwithstanding, Brin is deep into her plans for 2004 and beyond. While the magazine is officially a quarterly, its frequency could increase in a hurry if demand is there. "We won't go monthly until 2005," she explains. "I can see us doing more than four issues next year, but I don't want to be impulsive about things."
I went to college in Evanston, Illinois, a suburb north of Chicago, about 35 years ago. Recent events have gotten me thinking about those days again. It was the Vietnam war era, but before the protests had began. Summers I had odd jobs, in all senses of that word. Worked in a warehouse. Delivered pizzas. Sold insurance. Restocked cigarette machines. I think even then I was philosophically opposed to smoking, but I needed the money. Answered an ad posted at the school job office. ("Do you have a driver's license? You've got the job.") It paid good money -- $2.00 or $2.50 an hour, I can't remember exactly. It was great pay in those days. I substituted for route drivers on the south side of Chicago while they were on their summer vacations. I think the price of a cigarette pack out of the machines was 35 cents at the time. Seemed like an awful lot to pay for 20 butts. Got in a knife fight trying to protect the money I had hauled out of the machine at one of the stops. It was pretty one-sided since I didn't have a knife but the other guy did. He got the loot and no permanent damage was done. Mornings on the way to work I listened to WCFL on the car radio. They had a morning show before the "morning show" was invented. It starred Dick Orkin, and some other personalities. They had a running series called "Chickenman." (CHICKEN MAAAAANNNN!!!!!) Dick starred as the feathered friend, alter ego of Benton Harbor, who fought crime all over the greater Chicago metro area. It was hilarious and I loved it. Twenty years later, while I was running ADWEEK, I heard that voice on the radio again in very funny commercials for a variety of advertisers. Turns out Dick had gone on to open Dick Orkin's Radio Ranch and Home For Wayward Cowboys in Los Angeles. At ADWEEK, we hired Dick to do some great radio spots that styled us as the friendly up and coming alternative to the lugubriousness of Advertising Age. They worked brilliantly and helped us to grow rapidly during the middle 80s. Dick is still plying the trade (http://www.radio-ranch.com) and you can hear that great voice and loopy sense of humor for recent clients such as Kraft, Boston Market and Southwest Bank. Radio has enjoyed a lot of growth recently after many years as the sort-of forgotten medium. We are reminded of its power again in the past six months as we reach for the dial to keep up to date with events in the desert half a world away. Small wars in distant lands come and go, always unfortunate and often tragic for the participants. In terms of the progress of humanity, however, we seem to do no permanent damage from our missteps. Last fall my wife and I traveled to Vietnam and, even after the almost 6,000,000 of their countrymen who were killed in that civil war (and the 50,000 U.S. Soldiers) and even though they are a communist society still, which is what we were fighting to prevent, the people could not have been more friendly to us and more eager to do business. They just want to be part of the world community and the global economy and, like every other country in the world, sell the products they grow and manufacture to Marketplace America. Enemies who can do us harm come and go as well. The current terrorists look puny by comparison with prior foes. For most of my life, we lived with a fear of communism and the knowledge that the Soviet Union could annihilate us from a distance at any moment of their choosing. Now they are both gone and not by force of arms at all but by decay from within. I find it ironic that we lost the Vietnam war and the Vietnamese have ended up our trading partners. Now that we've won the Iraq war, what is going to happen to us and them? According to the latest Newsweek poll, half of the American public already wants us to reduce our troop and monetary commitments. This at a time when almost every informed observer says we have substantially too little of both committed to the task. Will we be mired in Iraq for a decade as some talking heads and politicians are now saying? Or, will we cut and run because we get tired, bored or scared? I do not know. But, one thing is certain, Iraqis, Vietnamese and all other people want the same things: safety for their families and the chance to earn a decent and honorable living. That means societies and economies organized the Western way. Sooner or later that system will come to the people of Iraq and other 3rd world countries as well, just like it's in the process of coming to every one of our mortal enemies of the 50s, 60s and 70s.