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For their part, agencies point an accusatory finger at client mergers, and with some reason. Fifteen years of mergers and acquisitions by client companies are now beginning to show their effects. The RJR Nabisco firing of Saatchi DFS for producing an anti-smoking campaign for another client wouldn't have occurred if the tobacco marketer had not merged with the cookie-maker.
Andy Harris, a marketing-placement executive, says that client mergers have had much broader effects. A recent executive-compensation survey from his firm, Harris, Heery and Associates, turned up what Harris calls a widespread mood of apprehension and caution among marketing executives.
"Let's say you've been working at a consumer products company for someone named Charlie, and Charlie knows your work," Harris says. "All of a sudden there's a merger. Charlie's gone. The new guy doesn't know you. All the old promises go out the window. Your upward path is dramatically halted. Career decisions are more difficult. People take fewer risks with new products or new ventures. They don't know where their company is going or where they might go if they left.
"It's not an upbeat, can-do environment," he continues. "It's a climate of caution, fear and apprehension. It makes relationships with agencies much less warm-spirited." Harris was one of the many who pointed out that many promises marketers and agencies made to each other now are entrusted to people who weren't around when the promises were made.
The increasing publicity about top advertising salaries has also made a difference. Clients have long resented the stylish lifestyles of their agency counterparts. When marketers looked at their ad agency people, they frequently saw dilettantes who couldn't follow directions, but still made more money than they did. Or at least they seemed to be making more money- how else could they afford to dress like that?
"Agency people had expense accounts with travel and entertainment built in," says Joseph Smith, head of the Oxtoby-Smith Inc. market-research firm. "They got to live in New York, performing minuets, whereas the manufacturer went out and bent metal and made real product. The resentments were kept in check until agencies became publicly held. That meant the salaries had to be publicized, and client-side people could see the discrepancy for themselves."
As a result, Smith says, the mystique of advertising began to fall away. If ad agencies were going to give up their special creative status and take on the business-as-usual attitudes of ordinary corporate executives, then marketers could treat agency billings with the same ungentlemanly, bottom-line harshness they treat other expenses. Marketers began to haggle for lower commissions- "an overtly appropriate subject for discussion, for the first time in decades," Smith says. Or they haggled for fees instead of commissions, or for previously unheard-of concessions such as conflict insurance.
In the short run, that has resulted in lower profits for large- and mid-size agencies. "This is the worst time since I've been in the business," says Martin Puris, chief executive of the Ammirati and Puris ad agency. "I don't think there's a client I've heard of who isn't figuring out some way to cut commissions. The underlying message from clients is 'We don't think you're worth what you're asking. We think you're making usurious amounts of money.'"
More damaging still, many marketers no longer consider agencies their sole go-betweens with consumers- a role that as much as anything cemented the trust between agencies and clients. A new rival is gradually emerging- the retailer.
"All of a sudden," says a high-level supermarket executive, "getting close to the retail trade has become fashionable. Manufacturers suddenly realize that a 10% market-share increase in one large chain is equivalent, in numbers, to a 10% market-share increase in, say, Pittsburgh."
Retailers, armed with data from checkout counters, are sitting in on more and more strategy meetings at companies. Retailers are rejecting more and more promotion ideas that don't fit with their strategy or schedule. As a result, marketers are aligning their strategies with the needs of their sales forces, and their marketing executives are forging closer working relationships with retailers.
"There's definitely been a power swing in favor of retailers," says Wallace Meyer Jr., vice president of Glendinning Associates, a Westport, Conn. consulting firm. Glendinning's advice has helped swing the balance of power further toward retailers for such brands as Planters, Ocean Spray, ad Yoplait.
"The manufacturer, in the past, did not consider the retailer as much of a partner as he should have. But now, some manufacturers are coming to retailers with their own shelf-management techniques and strategy suggestions, presenting themselves as preferred or value-added vendors."
This situation augurs a nascent competition between retailer and advertising agency for the attention and trust of marketing executives. The battle has barely begun. Says Lee Griffith, a vice president at Scott Paper Co., "The retailer's market-research advice may or may not be consistent with what an agency says is going on. That problem is surfacing more than it has in the past."
Even the creative role at many agencies is threatened by another perception- that mergers have taken away the unique creative identities that each agency enjoyed. In the past, an agency's identity has been defined, in large part, by its creative avatars- people such as David Ogilvy, Bill Bernbach, Leo Burnett, and Rosser Reeves, in the 1950s and 1960s. It also emerges from a shared culture that evolves as people work together.
Being thrust together with strangers in a merger can be a rude jolt. Nancy Millman's book, Emperors of Adland, describes how the Omnicom merger turned into a culture clash.
"In September 1986, a scaled-down Needham Harper New York staff moved into already cramped Doyle Dane Bernbach offices-.... (Needham's) Tony Vanderwarker's background was as a producer- the person who works with outside directors on the nitty-gritty of commercial production. (But at DDB) the top namesÉ never used producers in their own work."
Vanderwarker's style collided with the close-knit partnership between writers and art directors that was the hallmark of Doyle Dane Bernbach creativity. There was so much hostility toward him, Millman writes, that Vanderwarker eventually left.
You might expect the much-publicized new wave of smaller creative ad agencies to pick up some of the business from disaffected large clients. But it's still a comparatively rare event when a giant advertiser patronizes them. Still, there have been notable exceptions recently. When General Motors Corp. recently hired the Hal Riney & Partners ad agency for its $100million Saturn account, the assignment made headlines as a symbol of potential change in the industry.
So far, few other marketing giants have followed GM's lead. The head of every small agency expects large corporations to come around with business. Every one of them has had nibbles from a variety of large advertisers. But as the new-business scout at one such agency points out, "They all announce they're coming out, but my phone ain't ringing."