Perhaps reflecting the somber mood of a consuming republic, the stock market’s nosedive Monday hit advertising agency holding companies and entertainment companies especially hard, bringing new worries to companies already reeling under a tough economy.
While the Dow industrials fell just over 7 percent Monday, the Standard & Poor’s index of advertising and marketing companies sank more than 10 percent. The entertainment sector–led by the 18 percent drop in Walt Disney Co., the biggest among the Dow stocks–fared worse, down 14 percent. Broadcasters and other media companies also suffered sizable declines.
Although networks were slowly resuming regular programming, advertising agencies and their clients were still trying to gauge the mood of the public to try to determine when would be the right time to begin significant advertising spending again.
Several blue-chip advertisers, from PepsiCo to Toyota, cut back significantly or pulled out of advertising altogether, sensing that the country was not in the mood for either funny or hard-sell advertising following last week’s terrorist attacks.
Many analysts called Monday’s advertising sell-off a “knee-jerk” reaction to events and don’t see a long-term downward trend. “This is a predictable reaction. The advertising business fell off around 3 p.m. last Nov. 4 and has been precarious since,” said Alan J. Gottesman, who watches advertising and marketing as managing director of New York-based West End Communications/Consulting. “The prime media … devoted space and time to the tragedy that was expensive, and people are reacting to that.”
Agency executives–who expressed hope that they could ride out the storm even as clients were cutting back–on Monday remained cautiously upbeat, suggesting that after an appropriate period, advertising would bounce back.
“Uncertainly is certainly what’s prevailing right now,” said Roger Haupt, chief executive of Leo Burnett Co. parent Bcom3 Group Inc., who witnessed the destruction of the World Trade Center from Bcom3’s New York offices last week. “Every one knows, from the president on down, that the one thing we need is the economy to keep moving. Advertising has an important role to play. There’s a large amount of shock still. We’re barely a week into this. Everyone’s saying, `How do we handle this situation?’ There’s an appropriate time of reflection as to what we do.”
The first litmus test, believe it or not, may have come Monday night, with the return of Major League Baseball. As the first major pro sport to return to action and to the airwaves, both advertisers and executives Tuesday will look closely at attendance figures and television ratings.
“Every stadium in America will be very emotional,” said John McDonough, marketing chief for the Chicago Cubs, which, like this newspaper, is owned by Tribune Co. “Anything you do has to be really respectful and tasteful. We don’t know yet, for example, what we’ll do during the seventh-inning stretch. The mood will be unlike any sporting event anytime in our nation.”
Levy restaurants cross borders: For the first time in its 23-year history, Levy Restaurant, is opening in a venue outside the United States. The Chicago-based restaurant organization will handle all fine-dining operations for events at the 21,273-seat Molson Centre in Montreal, home to hockey’s Montreal Canadiens. Levy nabbed the contract after Pierre Boivin, president of the Molson Centre, was introduced to Levy’s service at the 2001 NHL All-Star Game in Denver.
Rudnick takes G/H Texas duties: Gary Rudnick, senior vice president for Golin/Harris International in Chicago and global account director on the public relations agency’s Tyson Foods account, is assuming leadership of the firm’s Dallas and Houston offices. A five-year agency veteran, Rudnick helped win the Tyson business in 1999.
On the move: After more than 20 years with McDonald’s Corp., Mary Kay Eschbach is retiring as head of U.S. media in December.
Account action: Brussels-based Toyota Motor Europe Marketing & Engineering named Bcom3 Group’s Magellan as the agency to handle the European advertising campaign for the launch of the Toyota Corolla there. … DiMeo & Co. picked up new business from Charlotte-based Motorsports Decision Group to produce collateral material for the NASCAR licensing and talent management firm. The agency also will handle Merlin’s Muffler & Brake Corp.’s “Care Days” program.
