LATIN AMERICA: ARGENTINA'S AGONY - How are Argentinian advertising agencies dealing with the decline of their country's economy, and why are some surviving it better than others?

"This country is a disaster. A total disaster. And honestly, I have no idea what's going to happen next. This is the answer given by Luis Brusco, the executive director at the Lowe-owned agency Agulla %26 Baccetti, to the simple question: "How are you? Crisis, unemployment, bankruptcy and money loss are the only words 37 million Argentines have in mind right now, and it's no surprise that the head of one of the most creative award-winning ad agencies thinks the same.

Seen from the outside, the current Argentine crisis does not look so different from any other. Financial collapse, riots, devaluation and running inflation are all symptoms Argentina has already suffered more than once during its chaotic past. But there is one crucial difference.

"For the first time in our history, Ricardo Fitz Simon, the managing director at J. Walter Thompson, says, "we Argentines have absolutely no hope for better times."

The effect on the ad industry is massive. Official statistics refer to a 14 per cent drop in ad investment in 2001, or 25 per cent accumulated since the crisis started in 1998. Fitz Simon laughs at those figures: "I can assure you that the drop is of at least 30 per cent for the year 2001 alone. Over the past 12 months, there has been a growing quantity of advertising space offered for free by TV broadcasters just to fill advertising space and attract investors. These spots are included in the statistics at their official rates. The result is a complete distortion of reality."

The three sectors that have been the most severely affected by the economic meltdown are banks and telecoms - both in total disarray since the devaluation - and the car industry. Looking at Agulla & Baccetti's clients, there is Telecom, the country's fourth-largest advertiser in 2000 with a spend of $70 million and the agency's most important client.

Renault is its second most important, and HSBC its third. Neither Telecom nor HSBC has spent a single peso on advertising since January.

"Our only active clients today are Coca-Cola and DirectTV (the local satellite TV leader), who are both advertising around the World Cup," Brusco says. "As for the rest of our clients, everything is on stand-by. Inevitably, salaries have been cut and redundancies made.

"Creatives at A&B used to earn $8,000. That became 8,000 pesos after devaluation and 5,000 pesos after the salary cut, Brusco explains.

"So in US dollars, they now barely earn $1,400, which makes job offers abroad extremely attractive. A&B's reputation for creativity is such that ad agencies in Brazil, for instance, would not hesitate to offer $5,000 to get one of our guys."

CraveroLanis Euro RSCG has weathered the crisis slightly better, mainly due to a more diversified client portfolio. Juan Cravero, the vice-president and creative director, says: "I remember when I was working at Y&R, my boss was constantly repeating that we had to be very careful with our client portfolio. He believed that this was the key for success in the business."

So for the past 18 months, the number one priority for the agency has been to diversify its accounts.

"Today, we can say that we are more prepared than other agencies in facing this crisis, Cravero explains. "Like any agency, we do have clients that suffer, like a pension fund or a bank. And if these two were our biggest clients, we would be in a terrible situation right now."

So what of the future? Some are determined to stay and fight. Cravero says: "What is happening today is a new challenge for me. Of course I wish I had $5 million and three months to prepare a brand-building campaign for an interesting product. But unfortunately that business no longer exists in our country. Today the role of the ad agency is reduced to announcing a discount, a new promotion. But we try to stay creative."

And to reach the Argentine consumer will require creativity. They are now not only poorer, but they have also developed a serious aversion to large corporations, multinationals, state institutions and banks.

Brusco says: "It is absolutely impossible to communicate the way we did before. Today we have to talk to a furious consumer."

Fitz Simon agrees: "The Argentine consumer has a big 'NO' written all over his face, he doesn't trust anybody to tell him what to do, and even less to tell him what to buy."

Lacking the budget to pay researchers, Fitz Simon is sending his own account managers to the street to talk to people while they shop, to try to gauge their behaviour and state of mind.

But it's not all doom and gloom. JWT is being praised for a campaign it created for Aerolineas Argentinas, the freshly re-launched national air carrier. Agulla & Baccetti continues to win international awards after last year's Lion d'Or in Cannes and, like so many in Argentina today, is looking for opportunities overseas.

"We are being asked to work for HSBC, Coca-Cola or Levi's in neighbouring countries, Brusco says, "and we put a lot of effort into that. We were also shortlisted, together with two other agencies, by Coca-Cola's head office in Atlanta to work on its World Cup campaign."

CraveroLanis Euro RSCG has actually managed to gain a couple of clients, most recently Brahma, a Brazilian beer ranked second in sales in Argentina.

"A few months ago, in the middle of the turmoil, we took the risk of giving up on Budweiser to be able to compete with five other agencies over Brahma, and we won, Cravero says proudly.

But the overall picture is less cheerful. Ad agencies are anticipating a 40 per cent revenue drop this year, in pesos. Check today's value of the Argentine currency in US dollars, the currency used in Argentine business up until early January this year. Estimate the loss. Feel the pain.

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