For the past several years, an uncomfortable perception has been widespread in the West Coast advertising community: that San Francisco is eclipsing Los Angeles as an industry center.

There are some numbers to back up that notion. Though L.A.'s ad industry is still larger than San Francisco's, the business is growing more quickly to the north. And many believe the quality of the work is superior there.

"I think it is true (that better creative work is being done in San Francisco than L.A.)," said a top locally based ad executive. "I don't think we like that in L.A., but it is true."

In terms of media billings, L.A.'s ad industry is the third biggest in the country, though it is still dwarfed by New York. L.A.'s share of the national advertising market was 7.4 percent in 1997, the latest year for which figures are available, according to the American Association of Advertising Agencies. That compares to 33.9 percent for New York and 12.1 percent for Chicago.

San Francisco comes in at No. 5 (after Detroit) with a market share in 1997 of 4.9 percent. But that's up from 1996, when its market share stood at 4.5 percent. L.A.'s market share was flat during that period.

The fact that Los Angeles remains a bigger advertising market than San Francisco is largely driven by the presence of two heavy-advertising industries: movie studios and Asian auto makers. Neither of those industries is growing significantly.

Meanwhile, San Francisco's ad community is being fueled by Silicon Valley tech companies, many flush with cash after going public and suddenly pouring money into marketing campaigns.

"Tech clients, in particular, are comfortable with ad agencies that understand their industry," said Jerry Gibbons, executive vice president for the Western office of the Four A's (which is based in San Francisco). "There's so much tech up here, it just becomes part of the fabric of the community."

The difference in the types of clients handled in the two cities might explain the perception that better creative work is coming out of San Francisco. Little-known tech companies are often looking for brand-building campaigns, which usually involve finding clever new ways to develop an image in the consumer's mind. More "retail"-oriented campaigns such as the sort done by car dealers or restaurant chains emphasize price or product features, and have little room for creativity.

"Essentially, you have New York that does everything. Chicago is heavily into packaged goods. San Francisco has high tech, and L.A. has retail," said Marina del Rey-based ad consultant Mike Marsak.

In terms of national reputation and profile, San Francisco agencies also have the edge. Foote, Cone & Belding, Hal Riney & Partners (bought last year by French giant Publicis SA) and Goodby, Silverstein & Partners in San Francisco are regarded among the top creative agencies in the United States. In Los Angeles, the only agencies with a comparable reputation are TBWA Chiat/Day Inc. and possibly BBDO West.

Interestingly enough, both TBWA Chiat/Day and BBDO West opened satellite offices in San Francisco last year. Chiat/Day's new office represents a shift in strategy for the agency, which had pulled the plug on its San Francisco outlet in 1990, spinning it off into the current Goldberg Moser O'Neill. Now, agency Chairman Lee Clow says the plan is to create a West Coast powerhouse by teaming Los Angeles with San Francisco.

Despite the trends, L.A. ad executives don't seem particularly worried about losing business to San Francisco agencies. John Crosson, president of the Western States Advertising Agencies Association and executive vice president with Miracle Mile-based Grey Advertising Inc., says the real competition is between agencies, not regions.

"The bar has been raised, but I don't think it's San Francisco that's doing it," Crosson said. "I think, on the new business front, creativity is emerging as a more important element. I'm not worried about San Francisco per se, I'm more worried about competition from highly creative agencies."

Seven more for the trash

Marina del Rey agency Ground Zero shows its disdain for ad-industry awards by storing them in a metal trash can near the entryway. But that has its limitations.

"We're going to need a bigger trash can," said partner Jim Smith. "We're trying to get one custom-built."

Ground Zero is running into storage problems thanks to its performance at this year's Belding Awards, the annual creative show sponsored by the Ad Club of Los Angeles. The agency not only took home the Sweepstakes Award given for the best overall piece of work from an L.A. agency in 1998 it won six of the 21 individual Belding bowls awarded, far more than any other agency.

It was a fairly impressive accomplishment given Ground Zero's relatively small size. Ground Zero had only about $65 million in billings last year. TBWA Chiat/Day, which has won the Sweepstakes Award three times in the 1990s, had $1.2 billion in billings last year; it took home only three bowls this time around.

"We have less than 1 percent of the billings in the geographic area covered by the Beldings and won 30 percent of the bowls," points out Smith.

Ground Zero's Sweepstakes-winning work was its "Knowledge" campaign on behalf of ESPN; the agency was also honored for its work for ESPN2, ESPNews, Genesee Brewing Co. and Virgin Cola.

Now that award season is upon us, these campaigns might still win further honors but they won't be winning an Effie. The New York American Marketing Association announced last week that six L.A. agencies have been selected for the award, and Ground Zero isn't one of them.

Congratulations are in order, though, to Suissa Miller Advertising, Campbell-Ewald Advertising, TBWA Chiat/Day, DDB Needham, BBDO West and Torrance-based Conill Advertising Inc.

News Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.

For reprint and licensing requests for this article, CLICK HERE.