Advertising

Glee amid the gloom

_Philip Kleinman

It's an ill wind that blows nobody any good, and despite the gales that are raging in Adland at -present there are a number of its denizens who feel their fortunes are looking up. These are the so-called creative consultants, the copywriters and advertising artists who, singly or in small groups, earn their livings outside the framework of the established advertising agencies and often in competition with them.

But first a word or two about the general state of the weather in the ad business. Pessimism is now back in vogue after a summer which. from the advertising expenditure point of view, was much better than many people had feared. But the figures for September showed a steep dip. In particular, the independent television companies reported a 14 per cent drop m revenue compared with the corresponding month of last year. Press advertising also dipped, though not to such an extent. ITV net revenue for the whole of this year is now expected to total £143 million, compared with £161 million in 1973. Taking inflation into account, this is quite a drop. With the big packaged goods companies spending less on advertising this year, most agencies are feeling the pinch. Their normal reaction is to cut back on staff wherever possible. One big agency, for instance, recently fired thirty people at a go. The total number of people employed in agencies is now estimated to be 14,000 which is 6,000 less than eight years ago.

The advertising recession which is of course, only one aspect of the general gloomy economic picture, has revived interest in one of the oldest controversies in the ad business, to wit whether it is better for a client company to hand over all its advertising problems to a full-service agency or to produce its own advertising with help from specialists. For years agencies mostly had things their own way, greatly aided by the commission system, whereby only recognised ad agencies could obtain a 15 per cent discount on the rates charged by TV and national newspapers.

In theory and to a large extent in practice too, an advertiser had to fork out the same amount of money for, say, a 30-second TV spot whether it had been handled by an agency or not. But for every £100 of TV expenditure which goes through an agency the latter keeps £15, while the TV station pockets only £85. In addition agencies charge for production costs and tend to make a profit on them.

Recently, however, it has become possible for any advertisr wh° wants to buck the agency system to do so. This is because of the rise of the media brokers, companies which specialise solely in buying. advertising space and time and which are not, therefore, agencies but which are able to get from the media the same discounts available to agencies.

The biggest of the media brokers is a company called the Media Department, which is actuallY owned by the Kimpher group of ad agencies and which was set up primarily as a group service for those agencies. However, 28 per cent of its turnover now comes from outside the group and ruostlY from advertisers who have decided to dispense with agencies_ Media brokers don't like to talk about their charges, but they are gener,ally reckoned to hang on to only D, per cent, instead of 15 per cent, 91 the billing. The rest of the inedia

discount stays with the client. In these cost-conscious days a growing number of clients have decided that they can save a lot of money by doing business this way and hiring creative consultants to devise their ads whose fees are not based on the number of times those ads are repeated and do not have to Foyer all the administrative over 'leads of a conventional agency.

The biggest of the consultancies, David Bernstein's The Creative usiness, has significantly increased its fee income by 75 per

cent this year — to £300,000. Often the same advertiser will Use an agency for its main account and a consultancy for special Projects. Thus The Creative Business works for companies like

Beechams which already employ

several agencies. Another consul

fl Cy, John Simmons, which also ci!airns to be attracting a lot more unsiness, works for two of the three Major tobacco companies. Rut in some of the biggest companies talk is to be heard of the

Possibility of cutting agencies out

altogether. The advertising manager of one such company tells

!lie that he wouldn't be surprised if

II took such a step in the near future. The savings could amount to tens of thousands of pounds, And °lice a company of that size took sUch a step, others would assuredly frdlow its example.

It's enough to make the already gloomy ad agencies even gloomier.