• by Larry Dobrow , January 7, 2004

As executive partner of Hall Dickler LLP (which represents more ad agencies than any other law firm in the United States) and general counsel of the Association of National Advertisers, Doug Wood tends to have a bit more credibility than most of the ad industry's talking heads. When his PR minions contacted MediaPost to proffer an interview, then, it seemed a little suspicious, as if there might be an ulterior motive beyond discussing the legal state o' the business at the dawn of 2004.

Wood, however, laughs off any such thought. "You know me. I've been doing this for 30 years. I like to bullshit," he says. As for the necessity of employing a PR firm to pitch his expertise? "I like the job they do. Maybe their contract's up for renewal? I dunno."

Wood's easy way with words, generosity with his time, and seeming willingness to call 'em as he sees 'em has long made him a reporter's favorite. And heading into a new year in which the ad business has high expectations for a revival, he's got more than his share of opinions and predictions to share.

The issue he seems to find most compelling is the continued skirmishing among media buyers, broadcast networks, and measurement companies (read: Nielsen). "As late as ten years ago, everything was buddy-buddy," he says, recalling how relationships among the various parties were often managed without formal contracts. "The ad business hasn't been under the auditing microscope as much as other industries. [Agencies] haven't been questioned much over time. Now, CEOs and CFOs [of companies who advertise] are saying 'I want better proof.'"

Which, of course, proves slightly more difficult to do when there's measurement chaos - witness the American Association of Advertising Agencies' ongoing questioning of Nielsen's methods. "It's always been a mystery of advertising, how to measure it," Wood notes. "On one side you have the agencies who talk about 'the magic of the idea.' On the other you have these executives wanting to know where their dollars go."

He pauses, then adds, "I used to think it was insane that people were spending all this money without any contracts, but they'd say 'hey, it works.' Back then, nobody was suing anybody, nobody was complaining. It's a different landscape today."

The lawsuits to which Wood refers are competitive advertising actions, in which one company sues another for using in its ads a "false or misleading description of fact, or false or misleading representation of fact" (section 43(a) of the Lanham Act, the federal statute under which most of these actions are brought). Such lawsuits, Wood believes, present a major challenge to the ad business - certainly in terms of cost, but equally in time and effort.

The potential solution? "The self-regulatory system has to step up to the plate," Wood emphasizes. "But how do you self-regulate at such a highly competitive time?" The impact is clearly being felt by the country's biggest concerns: after decades of de facto immunity from competitive advertising suits, Procter & Gamble has been forced to contend with four of them in the last year or two.

Indeed, Wood can't recall a more litigious era during his years as a lawyer in the ad business. He cites the "insanity" of a new and "vexatious" California statute, under which tens of class actions are being filed. For example, the always-rational People for the Ethical Treatment of Animals is currently suing the California Milk Advisory Board, claiming that the board's recent "Great cheese comes from Happy Cows. Happy Cows come from California" ad tagline is deceptive ("The reality is that most of California's dairy cows live anything but easy lives," PETA argues in a press release). Then there was the recent Taco Bell case, in which the fast-food giant was found to have misappropriated its Chihuahua ad campaign. In June, a federal jury awarded $30.1 million to two men who claim to have created the campaign; the verdict is being appealed.

"There's so much more out there that can burn you," Wood says soberly. "That $30 million figure sure got the attention of the plaintiff's bar. And then there's an organization like the National Association of Attorneys General - they were a non-factor ten years ago, but now they're feeling much more macho about what they do."

"You used to worry about the FTC and maybe an occasional action in New York or California," he continues. "Now, so many groups are out there and some of them are incredibly litigious."

Despite all this, Wood says his firm's clients are reasonably optimistic as they enter the new year: "The numbers look pretty good and they're doing some really innovative things with product placement and cross-selling." As for the one piece of advice he'd give a media or ad agency, he strongly suggests that every company in the business should conduct an internal audit of its procedures and processes.

"They should take a look at their agreements and relationships, and make sure they are structured the right way," he says. "Whenever something goes wrong, there's always so much pointing fingers and throwing blame around. The smartest thing to do is prevent this in advance by doing some real basic corporate housekeeping. It's done in just about every other sector; I don't see why it shouldn't be done in advertising and marketing."