Big Changes in the World of Advertising

(By Stewart Elliot)

The advertising business is undergoing an upheaval, forcing executives to alter how they do business. Marketers are trying to stay ahead of the technological innovations that are changing how consumers view their messages - and are putting pressure on their agencies to adapt.

The ad firms are trying harder because the major public agencies face shrinking profit margins and sagging stock prices. But it's unclear if the traditional agencies will be nimble enough to halt a slow decline that has seen many famous names vanish.

The big agencies also face many big rivals, which have jumped on the opportunity and are looking to steal business. Those boutiques use odd names - like Mother, Nitro, Soul - as devices to signal they are not about business as usual.

"Clients are looking at the results they're getting and they are not happy/ said Miles S. Nadal, chairman and chief executive of MDC Partners in Toronto, the parent of innovative agencies like Crispin Porter & Bogusky and Kirshenbaum Bond & Partners.

But some agencies may be moving too slowly. "There is an incredible ability to cling to what's been done because there's a comfort in that," said Ian B. Rowden, executive vice president and chief marketing officer for the Wendy's brand at Wendy's International in Dublin, Ohio.

The origins of the industry's current problems are many: collapse of many technology stocks in 2000, the fallout from the September, 11 terror attacks and the explosive growth of technologies that help consumers avoid ads - like digital video recorders, iPods and satellite radio. Advertisers are still trying to recover.

"The onus is on the agencies to make sure they have the right creative talent," said Lauren Rich Fine, an analyst who follows the ad industry for Merrill Lynch. "I suspect that's more difficult that ever," she added.

Ad spending in the United States declined in 2001 for the first time in four decades. Worse yet for agencies, profit margins have been shrinking significantly as clients, facing relentless competition and consolidation - in categories like automobiles, fast food and telecommunications - are eliminating waste from their ad budgets.

"In the 80's, we used to fight with clients over creative. In the 90's, it was about strategy. Now, it's only about money," said Jonathan Bond, co-chairman of Kirshenbaum Bond & Partners in New York.

So in a trend-conscious industry, economizing has become the newest trend. For instance, when Kirshenbaum Bond recently filmed a commercial for Liberty Mutual Insurance Company, retelling the tale of a Trojan horse, "instead of building a massive set, we used miniatures," said Rob Feakins, vice chairman and executive creative director. Using the miniature set saved about $150,000, or about 10 % of the budget for the commercial, he estimated.

"It's almost accepted that the model is broken and it's true for a new approach," said Carl Johnson, a former executive at agencies like TBWA Worldwide. He and four other high-profile refugees from main-stream agencies are now partners in a New York boutique named Anomaly.

"No one comes to us for more or the same," Mr. Johnson said. "Our last resort is an ad, if we can't think of anything else."

Anomaly is among a rash of boutiques that have started up to capitalize on the desire among marketers to do things differently -and the inability of many of the bigger agencies to accomplish that.

"Creativity used to be, 'Think inside the box." Then it was, 'Think outside the box.' Now, there's no box," said Linda Kaplan Thaler, chief executive of Kaplan Thaler, part of the Publics Group.

Over to you:

1. Why it is so important to be flexible on the current advertisement market?

2. What are the most significant characteristics of a successful advertiser?

3. Is Russia competitive on the current international ad market?

Summarize the text in no more than five sentences:

Как поступать с талантливыми сотрудниками (Read the text and translate it into English)

UNIT 4

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"THE TOWN CRIER" PART II