That lead article you published last week [Washington Business, Oct. 6] was quite an indictment of the Washington advertising community.
I am quite sure that had your reporters been able to benefit from the vantage point which my long involvement with this profession has given me, they would have presented a far more balanced picture. To understand the profession with what that article dealt, one would have to know something of its history and its basic market. And that's what I intend to touch on here.
When I started selling advertising for the Hearst papers, the biggest advertisers here were retailers. Agencies were few and very small. The larger department stores and specialty shops had their own advertising departments. Most of the other retailers used the several newspapers' ad-service departments -- made up of a few writers and artists whose services were provided free of charge to advertisers. These writers and artists seldom, if ever, saw the merchants. They took the information provided by the newspapers' sales reps (who knew very little about retail merchandising) and wrote very simple ads that contained little more than a bare (and often incomplete) description of the merchandise.
Because the newspapers provided free creative services -- including layouts, art, copy, type and engravings -- and because most merchants didn't know the difference between good and bad advertising, it was pretty tough going for any agency operating independently until radio came along. Radio stations offered 15 percent agency commission on local rates. Being a new medium -- about which advertisers knew little -- radio created an opportunity for agencies to become important to local advertisers.
Remember, during those days, we had no manufacturers. Government agenices didn't advertise. Until 15 or 20 years ago, 90 percent of the trade association offices here were branch offices or small headquarters staffs whose major function was lobbying. The broadening of association functions has been a very gradual thing and since those that did (in more recent years) engage in advertising got most of their advertising budget from major industry advertisers, the latter had a lot to say about which agency was chosen and often picked their own.
You, engaged in the newspaper business, don't know how much you're indebted to those hardy (maybe "foolhardy") souls who engaged in the agency business here. They're responsible for the great improvement in local retail advertising. Those improvements contributed much to the effectiveness of the advertising you carry. So much so that this market has become one of the greatest retail areas in the country. And the retail advertising is not only voluminous, it's very good and much of it is produced by local agencies.
When you compare these agencies size-wise with the giant international agencies you forget that the latter are multioffice agencies. Many of the branches are in major cities where there are industrial clients doing business internationally. They actually bill less out of some of those offices than some of the local D.C. area agencies bill. J. Walter Thompson has been here for years and, until the last few years, billed less out of Washington than any of a half dozen local agencies. Ketchum, MacLeod & Grove, big in industrial Pittsburgh and big in New York, never made a wave here in 15 or more years of trying until they got the C & P Telephone Companies account. To get that business they had to send a team of heavyweights here who, to the best of my knowledge, over the past three or four years haven't added much to their C & P billing. Needham Harper, a truly great agency, struggled here for several years before getting much more than the McDonald's regional billing they were set up here to serve.
A lot of government business is handled here by local agencies -- known and unknown -- but what would you do if you were a government official with no commercial background suddenly faced with a $5 million or $10 million advertising budget and you were responsible for choosing the agency to handle it? You'd play it safe like many government execs do, so in a pinch, if Congress says, "You blew it," you could say, "Well, I chose one of the biggest agencies in the world -- they should have known what to do." Despite that (which applies to trade associations, too,) a lot of government and association business is going to local agencies. Mine got a lot of it, government and association, and some international business any major agency would have been delighted to serve -- Porsche, Phillips (of Europe) and many others.
My agency once belonged to a national network of agencies, most of which handled big sounding clients like Caterpiller Tractor. I felt funny about my little local and regional accounts (which were my bread and butter until I decided to go after national and international business). You want to know something? Some of my local clients spent more than their national clients. My billing matched most of theirs and my bottom-line was the best for those in my billing category.
We had a public relations division long before most national and international agencies realized that P.R. was just an extension of what they were already doing. We were among the first to apply management engineering principals to agency operations and one of the first to offer inhouse research services -- initially as a support service and later as a profit center. Some of our local competitors followed suit in varying degrees. We and other area agencies have won major national creative awards in competition with the world's largest agencies. One local outfit won three first place awards in the two biggest competitions in New York last year -- a feat equaled by few agencies anywhere.
I didn't move from local to regional to international clients because local wasn't profitable or wasn't a growth area. I did it because unlike other local agencies, (and I'm not sure they were wrong or I was right), I was committed to the policy of not serving conflicting accounts. After my outfit had garnered a client in most retail categories, our growth potential diminished. I had some soul-searching to do, and I opted for national business.
What you ought to do is compare the retail advertising -- print and air -- here and elsewhere. Compare the creativity. Compare the volume. Compare that which is handled by agencies and that which isn't. Do that and you're in for a surprise.
What you did was three miles wide (you really covered the waterfront) and about three inches deep. You came to a lot of conclusions, drawn from the highly competitive postures you encountered. You measured the new business successes of the past year of Needham and J. Walter Thompson and forgot to examine the growth records some locals have racked up over the past three or four years. Until the past few years, despite 15 or 20 years of trying, no national or international agency with a branch office in Washington did enough business to justify that office. Over a dozen national and international agencies tried and gave up. (That says something for the rather substantial number of Washington agencies now billing in the $15 million to $20 million range.)
This is a tough market, but a lot of locals are making The Washington Post and other local area media look good -- while making more than a good living out of it. They're dedicated. They're hard working and no other local market has anything better than the local agencies dedicated to serving this market.