The World: America seeks a creative solution to recession

In the second part of our series on Madison Avenue, Ann Cooper discovers that creativity can thrive in a recession, after all.

Ogilvy's recent reshuffling of its New York creative decks, reassigning Steve Hayden to chief creative officer, North America and New York, and elevating Lars Bastholm to head of digital creative in an attempt to amp up the agency's lagging creative standards, is emblematic of the shake-ups and restructuring going on up and down Madison Avenue.

As the perfect storm of a deep recession, an explosion of new media and digital technology, and jittery clients slashing ad budgets all result in ad agency layoffs across the board, a new agency model is emerging. The ad agency of the future is a leaner, more creatively driven entity focused on digital, new media and integration. It is also one dealing with the new fiscal reality of marketing giants such as Coca-Cola, Anheuser-Busch and Unilever moving towards performance-based compensation.

"You have to restructure," Saatchi & Saatchi New York's chief creative officer, Gerry Graf, says. "We have to be much faster. We need creative people who know how to get things made and go out on their own." Graf, ex-TBWA\Chiat\Day, was brought on board in 2008 to replicate the kind of humorous, award-winning work on Sprint, Snickers, Budweiser and E-Trade that he was famous for. When he arrived, he acted quickly, he says, and assembled a good group. Recently, however, it's been a different story: "It's been one thing after another. With clients cutting back so much, I've had to let people go who weren't contributing, but the good thing is that there isn't any fat left here."

Restructuring has also been top of JWT's chief creative officer Ty Montague's "to do" list for the past four years: "We've been restructuring since I got here. So we feel as if we've been preparing the ship for this storm and it has come. We particularly restructured the creative and production departments to eradicate any bias towards traditional forms of storytelling and expression by creating a level playing field for people with digital and interactive backgrounds."

McCann Erickson New York's chief creative officer, Joyce King Thomas, is focusing more on adding processes such as crowd-sourcing in order to invite everyone's contributions. "Also, our technology group has joined with our digital group, so we're kind of scrappier and looking for talent and ideas everywhere we can," she says.

As for how all this is impacting creativity, it depends on who you talk to. "I just judged the Clios, and there's definitely a damper on creativity," King Thomas says. "Clients are all about driving business in this economy and they're holding on tightly to the few dollars they have. But when we want to experiment and break out of the hard sell, some suppliers are very happy to do that." She points to her agency's animated film for Cadbury's Dentyne Gum, called "blog smog", that shows the catastrophic effects of a blogger who doesn't take the time to unplug. "We're also doing a lot with activating," she says. "We have a Weight Watchers programme called 'Lose for Good', and every pound that customers lose, we give a pound of food to food banks. Things like that are the most interesting to me right now."

According to David Lubars, the chairman and chief creative officer of BBDO North America, creativity is all about doing more with less. "There's always been pressure from clients," he says. "We've all had to become more integrated. You'll see more guerilla, more design, smaller, viral campaigns and more creativity emerging in other ways. TV is shit right now. We all have to deal with budget cuts. Is it making any difference in my day- to-day? No. This has been going on over the past six years."

Clients are reacting in different ways to the recession. While some want more creativity, others are focused on the hard sell, while still others do both. John Seifert, the chairman of Ogilvy North America, says he sees more examples of clients breaking the rules and not doing pre-testing. "Clients are saying: 'Let's experiment more and learn what works, then we'll invest in that,'" he says. "Others are terrified unless they've gone through the six steps necessary to get the results they want. Some are putting us through an even more intense rationalisation process and are even more research crazy. I think the pendulum is swinging towards the former rather than the latter."

Graf agrees: "Our client JCPenney said: 'We have faith in the clothes we're selling, so show the clothes. Price, style and value is what we want to say.' At the same time, when they wanted to sell diamonds and jewellery during a recession, they asked us for a very creative way of doing that."

Another risk-taking client is Miller High Life. "Miller is an inexpensive, blue-collar, middle-America beer, and they wanted to step up their creativity in TV commercials and how we placed them," Graf says. The result was a series of one-second ads that ran during this year's Super Bowl, breaking with the conventional 30-second formula costing $3 million. As a result, sales of High Life grew 8.6 per cent during the week after the Super Bowl versus the same period a year earlier, according to ACNielsen.

"In the past year, I've done stuff I'm more proud of than anything else I've done," Graf adds. "Clients don't know how many favours are being offered. If you have a budget of $250,000, you can get a film that has $500,000 worth of work in it. People want to work and be involved with good work. You still try to do something people haven't seen before."

Mark Figliulo, TBWA\Chiat\Day New York's chairman and chief creative officer, says: "Everyone took a deep breath and said: 'We have to watch everything we spend, including creative.' It's not that we became more conservative, but people are doing fewer things. They're looking at it twice to make sure it's right for the brand. We spend more time trying to understand our clients' business and sell more stuff. Clients want their brands to be digital. It's becoming the main thrust of their marketing strategy. It's forcing change. That's what's good about it."

Montague agrees: "The recession has clients spending more time thinking about innovation because it's a fact of life. You leave things alone when they're working, but, when things get hard, you look for better ways of doing things. As clients search for more efficient ways of creating conversations with consumers, the effect on us is exhilarating but exhausting. We're working a lot harder."

Then there's the extent to which the growing demand for performance-based compensation will shake things up. Montague sees opportunities for those willing to be flexible. "If you try to hang on to the past, you're in trouble. Two things won't change: clients need to sell stuff; and technology, the way we communicate with each other, is changing, but people are not. People are pretty much the same today as 100 years ago. A new business model is emerging and if you do a good job, the upside will be greater in the future. So, yes, I think everything is changing."

Madison Avenue, take note.