Slowing Economy Didn’t Dampen Ad Agencies’ Growth

Slowing Economy Didn’t Dampen Ad Agencies’ Growth

Bellantonio, Jennifer

MARKETING: Shops added less workers; grew on new accounts

Orange County’s biggest advertising agencies gained some ground last year despite a slowing economy that impacted their clients’ spending.

The 40 shops on this year’s list saw their OC capitalized billings grow 7% to $2.48 billion in 2007. The figure included four estimates. Excluding estimates, ad agencies boosted OC billings 8.3% to $2.2 billion.

The group outpaced the national trend, where total ad spending in the U.S. dropped 0.5% in the first three quarters of 2007 versus the year-ago period, according to the Nielsen Co., which tracks advertising spending.

Local agencies said they kept a close eye on operations, with some tightening their workforces or delaying hiring.

Employment at the shops increased 2% to 1,686.

Despite an 8% drop in its own workforce, Young & Rubicam Brands in Irvine edged out No. 2 W.B. Doner & Co. in Newport Beach in terms of total OC billings.

Doner held steady with $350 million in local billings and 120 workers.

New Accounts

Young & Rubicam brought in several new accounts and grew its billings to $384 million, a 20% jump. The agency counts 185 OC workers.

Rick Eiserman, who heads the office, said the shop brought in about $150 million in billings, including a $70 million account with Jenny Craig Inc., James Hardie Industries NVs $15 million account, Barbeques Galore Inc., worth $10 million, and Accenture Digital’s $20 million account.

‘Our 2006 was about reorganizing the office to meet the needs of Southern California-based clients,” Eiserman said. “In 2007, we were ready to jump headfirst into locally based business opportunities and it paid out to the tune of a 20%-plus increase in our business.”

Eiserman said the shop is still hunting around for workers to help with new business, and has about 12 openings.

“2008 has really kicked off with a bang,” Eiserman said.

Young & Rubicam recently launched three national brand campaigns for Jenny Craig, Land Rover North America and Callaway Golf Co. It’s “in the midst of three major pitches” for Walt Disney Co., Pentax Corp. and an undisclosed airline brand, Eiserman said.

“Moving forward, we’ll continue our focus on growth while aggressively investing in all (hings digital, now nearly 50% of our business,” Eiserman said.

No. 3 Pacific Communications in Costa Mesa saw a 17% jump in billings to about $228 million and grew workers 4% to 125. The hires have been across the board, including an associate creative director and account supervisor.

Clients Expand Work

The shop has been expanding work with its major client, Irvine-based drug maker Allergan Inc.

Pacific Communications, which focuses on healthcare marketing, started as the marketing arm for Allergan and is still owned by the company.

New work includes promoting Allergan’s use of Botox to treat hyperhidrosis, or severe underarm sweating. The shop bested BBDO Worldwide in Minneapolis for the account, which is for consumer marketing-the first direct-toconsumer Botox assignment for Pacific Communications.

The shop has been working hard to carve a name for itself in Healthcare advertising, a field that has been traditionally dominated by shops on the East Coast, said Ryan Abbate, Pacific Communications’ president.

Excluding estimates, seven shops posted no change in OC billings, 23 saw increases and six reported declines.

Some of the biggest gainers percentage wise, beside Young & Rubicam, included Blue C Advertising in Newport Beach, up 38% to $18 million, and Dailey Marketing Group Inc. in Rancho Santa Margarita, which grew 33% to $18 million. Both tied at No. 28.

Dailey’s OC workers were up 77% to 23. The shop said it brought on more salespeople for its promotions division, which won some new accounts last year.

The unit makes novelty marketing items, such as coffee mugs, coasters and leather jackets, for clients’ employees or marketing events.

No. 8 LehmanMillet in Newport Beach was up 21% to $84.4 million and doubled its workers to 30.

The Boston-based medical marketing shop made the hires after bringing in two business wins last year: Obagi Medical Products Inc., a maker of skin care products; and Carl Zeiss AG’s vision unit, which focuses on the manufacturing, distribution and marketing of lenses and more.

Hires were in client and agency services, including an account supervisor and account executives.

LehmanMillet has grown since buying local shop BLVDWest in 2005.

No. 16 Most in Newport Beach posted a 29% jump in billings to $47.3 million.

A bulk of the growth came from the agency’s Internet division and existing clients, including the National Association of Realtors, Chief Executive John Most said.

He said the shop is optimistic about growth in 2008 despite being focused on clients in the housing industry, which is battling a downturn.

“We think there’s going to be a turnaround in the fourth quarter,” Most said. “We think the ad business is going to be steady for us this year.”

No. 17 Rauxa Direct in Costa Mesa also saw a 29% jump in billings to $44 million. The shop’s OC staff grew 24% to 99 workers.

Chief Executive Jill Gwaltney said Rauxa’s existing accounts added business and that it brought in some new clients in the telecommunication and entertainment industries.

The hires were across the board, including in data and analytics, Gwaltney said.

Rauxa opened an office in New Jersey last year, which has “been a big success,” she said.

The shop expects to double its East Coast staff this year, which is currently at four workers, according to Gwaltney.

Decliners

Dectiners included No. 30 L&A Marketing & Advertising Inc. in Irvine, which posted a 3% drop to $17.2 million and a 39% decrease in workers to 19.

L&A President Elliot Light said a large percentage of his clients are in the homebuilding and financial services industries and “as their business has stowed down so has ours.”

“We have cut staff in an effort to reduce overhead,” Light said. “Our cuts in staffing have been across the board,” including in the creative department, account services and administration.

Light said he expects revenue to be down again in 2008 by about 20%.

“We are not forecasting a turnaround in housing or financial services until late in 2009,” he said. “We are continuing to look for ways to diversify our portfolio of clients while reducing expenses.”

No. 31 J-U in Irvine saw a 36% drop in billings to $16 miHion. OC workers were off 30% to 14 after a few folks left, including retiring founders, said President Donna Carter.

The main reason for the billing decrease: The shop is buying less media time for clients, Carter said.

“We have more and more clients who want to pay us a media planning fee and then have the media billed directly to them so they can control cash flow,” Carter said.

The shop also picked up some new accounts last year, including Black Angus Steakhouse restaurants, which replaced the loss of the Taylor Woodrow account, she added.

There were four shops new to the list this year: No. 8 LehmanMillet in Irvine, No. 14 ELA Advertising in Irvine, No. 26 MossWarner Communications in Mission Viejo and No. 35 Hobbs/Herder Advertising in Newport Beach.

Copyright CBJ, L. P. Mar 24-Mar 30, 2008

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