THE ADMAN COMETH
that admen may play a much bigger part in our public life
A HUNDRED years ago this January, William Lever began making his own soap in Warrington, called it Sunlight and used mass consumer advertising to sell it. The advertising industry which thus came into existence is now going through a revolution which may have even more important consequences for us. The business is inter- national and worth about $160 billion a year. To grab and keep big shares of this global market, agencies have to expand. The result has been a series of dramatic mergers. Until recently, the top league consisted of six firms: four American (Young & Rubicam, Ogilvy, Ted Bates and J. Walter Thompson), one Japanese (Dentsu) and one British (Saatchi & Saatchi), each of them doing business of between $3 and $4 billion a year. At the end of last month, the 6th, 12th and 16th largest US agencies merged to form by far the world's largest advertising combine, with business of over $5 billion. This month Saatchi & Saatchi capped the deal by buying Ted Bates, thus creating a new Anglo-American super-agency over the $6 billion mark.
There are several interesting aspects of this move. When the Government was accused over the Westland and Austin- Rover affairs of opening British industry to US takeovers, it failed to get across the important point that British investors are doing the same thing in the US, only on a bigger scale. Since the ending of exchange- control in 1979, using the cash generated by North Sea oil, Britain has recreated its overseas investment portfolio wiped out by the second world war, much of it in the booming American economy. Saatchi's move is a good example of a strategic investment in US prosperity. It raised $600 million on the London Stock Exchange and is now to use a total of $450 million of it, spread over three years, to acquire Amer- ica's third biggest agency and the psycholo- gical advantage of the world's leading position. Saatchi may be a term of abuse in Labour circles but the truth is these gifted brothers have written a major British success story, nationally and international- ly, and one that has to be continually repeated if Britain is to remain a serious economic force.
The Saatchi takeover also illustrates the huge scale on which advertising is now conducted and the fortunes it generates. Robert Jacoby, who has taken Ted Bates to the top over the past 20 years, will make over $100 million from the deal, described by Campaign as 'the largest amount perso- nally owned by any executive in the history of American advertising'.
In Britain, clever young people find advertising more attractive than any other industry, with the exception of the City. Like the City it has a small, largely non-unionised workforce, making possible quick responses to change. The rising non-public firms reward the creative and thrustful with a slice of the equity. The more adventurous find it comparatively easy to start their own firms. There is constant movement, excitement and opportunity. It is one of the few areas where an enterprising man or woman can create a billion-pound business from abso- lutely nothing. Now that the British news- paper industry has at last entered the high-tech revolution, it may again begin to attract our best young talents. But at present advertising (or the City) is where the ambitious Oxbridge graduates want to go, and for solid financial and creative reasons. That in turn helps to explain why the industry is changing so fast and so profitably: it attracts the brain-power.
I have often argued in this column that our right-thinking establishment should take advertising more seriously. The de- bates over the Peacock Committee instruc- tively revealed how many people still ignorantly suppose advertising to be both parasitical and dishonest. It is, in fact, an important dynamic in expanding the eco- nomy, and in this country at least it is far more scrupulous about telling the truth than newspapers. Many of the non-stories which now appear in our press (often in the most august journals) could not conceiv- ably pass muster as advertising material. The Advertising Standards Authority is far more successful in enforcing moral disci- pline than the Press Council. The industry is held in low regard by politicians — one reason why it has proved so difficult to persuade them to substitute adverts for the present BBC poll-tax. But the fact is that the only really dishonest advertisements which now appear on television are the Party Political Broadcasts. Viewers are far more likely to be deliberately misled by a supposedly high-minded television documentary than by a soap commercial.
The maturing of the advertising industry presages, in my view, a much bigger role for it in public affairs. This is already happening in large-scale business deals. For takeovers and mergers the City now turns automatically, and on a huge scale, to the ad-agencies to explain itself both to shareholders and the public. High finance is increasingly complicated, and with the tripling of share ownership an ever- expanding number of people needs to know something about it. Hence in the financial world, advertising campaigns in the newspapers are becoming an important part of adult education. The financier needs the skills of the adman to explain to a vast public what he is trying to do. This role for advertising will expand rapidly after 27 October when the City is due to undergo a decisive dose of deregulation in a fierce struggle to keep itself alongside New York and Tokyo as a leading financial centre. This is one reason why firms like Saatchi are striving so hard for top place in the global agency league.
Where the financiers go, the politicians will be well advised to follow. They have never been more unpopular because they have never been less successful in persuad- ing ordinary people that their policies are sensible. Just as financial men need the adman to communicate with shareholders, so politicians will have to employ him more and more to reach the minds of the voters. There are indications that this is being grasped even in unlikely places. The recent Labour resurgence is due in great part to the willingness of Kinnock & Co to listen to the advertising industry. The TUC is positively begging its members to employ the experts to get its case across. The laggard, oddly enough, is the Government. Its troubles over Westland would have been infinitely less serious if it had em- ployed a leading agency to give the public the facts. But there is an absurd convention that whereas political parties can use advertising, governments must operate through their own information services. Ken Livingstone at the GLC showed what nonsense this old distinction is. Whitehall's information departments are intolerably expensive, full of deadbeats and should be privatised or replaced by agency contracts. One of the Thatcher Government's biggest successes, the floating of British Telecom, was achieved in great part by senous, high-quality advertising. So it seems odd that the Government should be coasting to defeat because it refuses to employ profes- sional skill in the area where it is un- doubtedly weakest — explaining its row cies.
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