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Take Subaru. After more than 15 years with the New York agency Levine, Huntley, Vick & Beaver, Subaru of America in June awarded its $60 million account to Wieden & Kennedy, the hot shop in Portland, Ore., that handles Nike's ads. Subaru hopes the right ad campaign will help boost U.S. sales from last year's 108,000 to as many as 150,000 in 1992. Said Chris Wackman, Subaru vice president of marketing: "Consumers are looking for qualities like safety, affordability and rugged performance, all of the things that Subaru represents. We've always been called bulletproof. If we can find a way to communicate that to more consumers, we think we are poised for a real good decade."
Beyond concerns about the tone and methodology of advertising, though, is a far more profound shift in the industry balance of power, from the sellers (agencies) to the buyers (clients). Vast changes in entertainment and other technologies since the mid-1970s have fundamentally transformed the task of delivering ad messages to U.S. consumers. The explosive growth of cable, specialized publications and other media has helped splinter the mass market into thousands of audience shards, scattering consumer attention in all directions.
That search has raised the cost and frequency of advertising. On TV, more than 900 commercials interrupt network programming every day, up from 814 in 1987, according to the Television Bureau of Advertising's Arbitron data. Despite the current plateau in ad spending, U.S. companies have doubled their outlays, from $63 billion in 1984 to last year's $129 billion. At the same time, the great array of new products flooding the American marketplace has made it harder for individual brands to distinguish themselves from the pack.
Computer advances that enable companies to gather vast amounts of consumer data have helped advertisers track down their targets. Marketing firms can now identify the customers most likely to buy a particular product, tailor advertising content for them and even track which ads actually lead to a purchase. More and more, advertisers are pressing agencies to prove that their ads deliver customers and market share.
Clients have become much smarter shoppers in other ways too. General Motors now has an ad czar, Philip Guarascio, who controls an estimated $900 million corporate marketing and advertising budget. By negotiating huge coordinated media buys for all GM divisions as well as multi-year deals at discounts, he is saving the company about $100 million annually. Guarascio insists, though, that effectiveness, not necessarily price alone, is his first consideration. Says he: "The most important aspect of an agency's performance is to create ideas for us that build business."
Agencies are scurrying to meet the new demands made by haggling clients. Last December the New York agency Avrett, Free & Ginsberg won the $45 million TWA account by offering to work for a 5% commission on the business, roughly half the going rate. This month Sean Fitzpatrick, McCann-Erickson's chief creative officer for North America, will move from New York City to Detroit in order to keep a closer watch over his agency's $500 million account with GM.