Advertising: Confidence crisis

When Carmichael Lynch landed Subaru of America's $150 million media and creative account last month, the Twin Cities advertising community collectively embraced the news as fresh validation for a creative community that has had bouts of self-doubt in recent years.

"It's been a tough year for Minneapolis advertising," said Tom Moudry, chief executive of Martin/Williams, the region's fourth-largest agency. "We have a challenging retail environment. Corporate marketing departments are being seen as expenditures. I don't think people have the stomach for faith in big [creative] ideas."

High-profile client departures have included Fallon Worldwide's loss of a reported $150 million Citigroup account this year and Carmichael Lynch's loss of its $40 million Porsche account.

But agencies have been landing new clients as well, with a number posting modest year-over-year revenue gains.

Martin/Williams recently added Hoover vacuum cleaner products and Cellular South to its roster of clients. Fast-growing Olson last week announced that it would be the agency of record for upper-end shoe manufacturer Allen-Edmonds, and in October it became the new agency for Starkey Laboratories, the Eden Prairie-based manufacturer of hearing aid products. Fallon Worldwide added Equinox Fitness Clubs.

Agency chiefs acknowledge that advertising is, if nothing else, highly cyclical, and clients tend to change their chief marketing officers more frequently than the Minnesota Timberwolves change coaches.

Howard Liszt, retired Campbell Mithun CEO and senior fellow at the University of Minnesota School of Journalism and Mass Communications, said that losing clients is "an occupational hazard" at ad houses.

"Minneapolis' success had been so dramatic in the '80s and '90s that when it plateaued [in recent years] it seemed like it declined," said Denny Haley, president of the Minneapolis office of New York-based BBDO. "It's not as much in the doldrums as people convey. Minneapolis continues to be a magnet market."

In a recent presentation to the Twin Cities advertising community, Lee Lynch, the former CEO of Carmichael Lynch, asked rhetorically, "Has our pilot light gone out? Is the Minneapolis brand on the skids?"

Two weeks later, when asked those same questions, Lynch said Minneapolis is heading toward an up cycle.

"Some of the older agencies will get smaller. Some of the newer agencies will get larger. Even New York and Chicago have their ups and downs," Lynch said.

Chuck Porter, chairman of one of Crispin Porter + Bogusky, said that the strength of the Minneapolis market in the 1980s, led by Fallon, made it acceptable for companies to go to agencies in places other than Chicago, New York and Los Angeles.

"I think Minneapolis is not as singularly noted for great creative [work] anymore, only because a lot of other places grew agencies that did great work," said Porter, a Minneapolis native whose agency is based in Miami.

"But I think Minneapolis opened that door."

Local creativity shines

Minneapolis can credit its prowess in advertising to the timber industry that flourished here in the late 19th and early 20th centuries and brought printing companies to the region that attracted writers and artists, said Jim Bendt, president of Gabriel deGrood Bendt and chairman of the Minnesota chapter of the American Association of Advertising Agencies.

By the 1930s, companies such as Pillsbury, General Mills and Malt-O-Meal stopped going to the East Coast with their ad needs and looked locally for copywriters and creative types to name and sell their products.

Out of this confluence of events was born landmark advertising agencies Campbell Mithun and Colle + McVoy. Martin/Williams joined the industry after World War II, and Carmichael Lynch arrived on the scene in the early 1960s. Fallon Worldwide was created as Fallon McElligott Rice in the early 1980s.

Industry observers can't say exactly why the talent pool deepened in the Twin Cities, but almost anyone asked that question cites the arts community.

"Its hard to put a finger on it.... The creative class likes what's in the Twin Cities a lot," Liszt said. "I can't explain why the Twin Cities has been such a great advertising market and why cities like Denver, St. Louis and Pittsburgh are second-tier markets."

Twin Cities agencies routinely win national awards. Fallon was nominated for an Emmy this year for its Travelers ad that featured a man out for a walk who starts rolling downhill, creating a snowball around him and then lands safely at the bottom of the hill. It was Fallon's ninth nomination for an Emmy. (They've won three.)

Nearly 3,000 people work in the state's advertising community, according to the advertising agency association. The top 25 firms generate combined annual billings in the neighborhood of $2.5 billion.

The face of the Minneapolis advertising industry changed in the recent years as national and international holding companies started buying up the biggest Minneapolis agencies. Instead of being independent, the agencies now had to report to bigger organizations in Chicago and New York.

"The holding companies changed that [independent] perspective," said Christine Fruechte, president of Colle + McVoy, which was acquired by Toronto-based MDC Partners in 1999. "It wasn't just about Minneapolis anymore. We want to put Minneapolis back on the map."

Fruechte called her agency's corporate parent "a good coach" that gives Colle + McVoy latitude running the business.

One of the key challenges facing advertising is dealing with the Internet. Firms like Olson are beefing up interactive staff, and Olson recently created an interactive campaign for Nike Bauer hockey equipment that lets players customize their hockey sticks.

"Creative thinking is one of our greatest exports," Olson founder John Olson said. Advertisers aren't "coming here for the weather," he said.

David Phelps • 612-673-7269

David Phelps • dphelps@startribune.com