Advertising

Many ad executives publicly expect 1998 to be an even stronger year than 1997. But behind their typically rosy forecasts, executives on Madison Avenue (and Wilshire Boulevard, where many of L.A.’s biggest agencies reside) are a little nervous.

“There’s a cautiousness going into 1998 that there wasn’t going into 1997,” said Jerry Gibbons, executive vice president of the American Association of Advertising Agencies. “There’s a sensitivity about what’s going on in Japan, Korea and the rest of Asia.”

A downturn in Asia might have a negative impact on the Asian carmakers whose U.S. headquarters are based in L.A. County, and that in turn would likely be felt at large local agencies. Movie studios, too, are increasingly looking to Asia as a new frontier for selling films that can no longer pay for themselves through domestic box-office results alone.

Certain trends that have been affecting the advertising business for years are likely to continue and even accelerate in 1998. Probably the most profound change gripping the industry is the evolution of media buying and planning.

Just over a decade ago, there were three major television networks, the 50- to 100-channel cable universe was only a dream in most parts of the country, satellite television didn’t exist and the Internet was a little-known tool for university professors. Media buying and planning was a comparatively simple process of number-crunching and market research.

With today’s myriad choices, media strategy has become paramount at most advertising agencies. Cable channels and the Internet make it possible to target a desired demographic more easily than before. Clients now consider effective media strategizing to be as important, or more important, than the agency’s creative approach.

With increasing media complexity also comes increasing expense building the infrastructure for the computer models and other tools needed to compete today can be hard for smaller agencies. As a result, more of them are “unbundling” handling creative assignments themselves, while contracting out the media function to independent media-buying firms.

In Los Angeles, most of the small and even mid-sized agencies unbundled years ago, but the trend is becoming increasingly common in advertising centers like New York and Chicago. That is likely to bode well in 1998 for companies like Western International Media and Carat/ICG, two of the biggest media-buying companies in the country, both of which are headquartered on the Westside.

Dan Turner