OPINION: Stuart Elliott in America

When it comes to the mood of Madison Avenue, is black the new black?

For months, a cautious optimism had started to pervade the offices of agencies across America as executives hoped that the struggling economy would pull out of its funk in time for 2002 to end on a high note.

There certainly were enough signs of improvement to suggest that this year would manage to finish ahead of 2001, when the industry suffered the after-effects of the largest percentage decline in ad spending since the Depression year of 1938. For instance, the demand for commercial time on the big TV networks ahead of the fall season, in what's known as the upfront market, was surprisingly strong, exceeding all forecasts. The total take set a record of more than $8 billion - higher than even the all-time ad boom year of 2000.

Viacom, the parent of networks such as CBS and MTV, reported the best third quarter in its history, fuelled by better results in radio and outdoor advertising as well as in TV.

"In 2002, we are rocking big-time," Mel Karmazin, Viacom's president, said, using language rarely found in a press release from a major American corporation.

That upbeat sentiment was being echoed by numerous agencies with clients spending aggressively in those media, in categories including automobiles, beverages, fast food, packaged goods and retail.

They're busily cranking out campaigns at a frantic pace reminiscent of the frenzied dotcom days, and some, such as Deutsch, actually have been hiring, not firing.

But in recent days, several doses of disappointing and disheartening news from some high-profile places has served to cast a palpable pall over the industry.

First came the Publicis Groupe's swan song for one of the country's oldest and most heralded agencies, D'Arcy Masius Benton & Bowles, in the form of a dirge titled: "I Dismember You." To be sure, D'Arcy was no longer the powerhouse it was back when its predecessor shops boasted "Look, mom - no cavities!" for Crest toothpaste, co-opted Santa Claus for Coca-Cola and asserted "Where there's life, there's Bud" for Budweiser beer.

However, the outpouring of affectionate and mournful tributes in trade publications suggested that the imminent disappearance of the D'Arcy name is unleashing a flood of melancholy feelings.

Next came the bombshell disclosures by the Interpublic Group of Companies of a substantially increased restatement of earnings - from $68.5 million to as much as $120 million - along with word that results for the third quarter and full year would lag analysts' estimates.

After that, Sir Martin Sorrell warned that the WPP Group's profits were heading southward, and trimmed his target for 2002 operating margin for what by one count was the fourth time. While he consistently has been pessimistic, predicting that solid growth wouldn't resume until 2004, Sir Martin's admonition did additional damage as Kevin Sullivan, an analyst at Lehman Brothers, downgraded his rating for the Omnicom Group, concluding there were few "tangible signs of a turnaround in sector fundamentals".

With only two months left to the year, can the positive spirit be rekindled? Even for a group as congenitally optimistic as American ad folks, it looks as if time may be running out.

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