The offer from Dean Studios was complicated

“I can’t even remember the details, it was so in-depth,” said Peter Flynn Sr., who handled the photography studio’s advertising account in the early 1960s. “You really had to jump through a lot of hoops to get this deal.”

Flynn said if a client sent in prints for enlargement, and could get 10 friends to do the same, in addition to several other forgotten obligations, the studio would mail them a Chihuahua. Not a stuffed toy, but an actual live dog.

“They had this ad with a dog in an oversized coffee cup saying, ‘Please give me a home,'” he said. “They never figured anybody would go through all this for a dog. But, for whatever reason, some people did, so the owner had to go to Mexico to find six or seven Chihuahuas.”

Advertising agencies have to be a little more sophisticated in today’s market, but the principles he has learned over his 50 years in the business still serve him today, said Flynn, who is now chairman emeritus at Flynn Wright Inc., the company he helped establish in 1984.

“It’s still about people,” Flynn said. “You want to be successful, you surround yourself with brilliant people.”

But the environment for advertising agencies is getting tougher. A recent study by the Chief Marketing Council found that 54 percent of the 350 top marketers surveyed plan to drop one of their ad agencies this year. Nationally, 2006 saw two-thirds of marketers dump agencies. Though the recent effects haven’t been felt as much locally, many say there could be danger on the horizon, with agencies battling to keep long-term clients while scrambling to find new ones.

“There are a declining number of local accounts,” said Louis Laurent, president of ZLR Ignition and a veteran of the advertising business in Central Iowa. “There used to be a local bank branch on every corner. Now there are three or four national banks with their own agencies outside the area.”

All it takes, Laurent said, is the loss of one major client to force an agency to cut staff, or worse, shut its doors.

“When the economy slows down, companies start looking around at what they can cut to increase the bottom line,” he said. “We’re usually the first thing to go, which is strange. Shutting down advertising to save money is like setting back your watch to save time.”

So even in the good times, Laurent said, agencies must be keenly aware that fortunes can change at the drop of a hat, a lesson the entire industry learned after Sept. 11, 2001.

From boom to bust

A booming economy in the 1990s led to a huge windfall for advertising agencies.

“The industry was really booming,” Laurent said. “There were probably 750 people in the advertising field in Central Iowa at that time.”

But change was in the air.

Mergers among Central Iowa’s banks, insurance companies and other businesses meant fewer clients in the market. And after the terrorist attacks on Sept. 11, the economy went flat, Laurent said.

The area went from around 750 advertising employees, Laurent said, to around 450. Companies such as The Integer Group, CMF&Z and Strategic America were forced into layoffs. Clients continued to slash spending, creating the worst advertising industry climate since World War II, Laurent said.

“We were lucky to avoid losing people,” Flynn said. “Not everyone was so lucky.”

The death of an icon

At the height of its influence in the early 1990s, CMF&Z was the largest advertising firm in the Midwest. Its creative team designed the corporate logos for some of Iowa’s biggest and best-known companies, including those of Pioneer Hi-Bred International Inc. and Ruan Corp.

It had annual billings of more than $100 million and listed as clients some of the world’s biggest companies, including Dow Chemical Co. and Ericsson AB, the Swedish telecommunications giant. Its dominance in Iowa was beyond question.

It hired the state’s best and brightest students and became known as a breeding ground for talented young advertising professionals. Many of today’s top advertising executives in Des Moines have, at one time in their careers, worked at CMF&Z.

The agency had 225 employees in the late ’80s and early ’90s. In addition to offices in Des Moines and Cedar Rapids, CMF&Z had a spot on Washington, D.C.’s K Street, famous as the location of some of the capital’s top public relations and lobbying firms. It also had an office on Madison Avenue in New York City.

Then the economy caught up to the local advertising legend. It started losing large clients, including John Deere Credit and Alliant Energy Corp. In the end, both the client losses and the poor economy apparently made it impossible for the company to pay off its debt. After the advertising market faltered in the wake of Sept. 11, the company began losing money.

3i LLC, a Chicago holding company, purchased the firm in January 2002 as part of a plan to roll together regional firms into a national advertising powerhouse. But the company’s debt burden was too great. After several rounds of job cuts, 3i threw in the towel nine months after it purchased the firm.

CMF&Z had more than 100 workers when 3i bought it. Fewer than 20 were on hand when the doors closed for good in September 2002.

Laurent said the industry in Central Iowa has been able to rebound from those losses. He estimates around 50 percent of the jobs lost in the wake of Sept. 11 and the economic downturn have been recouped.

Flynn said that the agencies that have survived offer their clients more than advertising.

“You have to do so much now to compete,” he said. “It’s critical that you do advertising, Web design, public relations, crisis management – just much more than we had to do years ago.”

The fragmented media environment makes it harder to reach consumers, Laurent said, increasing the need to diversify.

“But at the end of the day, the Internet is just another vehicle to communicate a message,” he said. “It’s just another piece of the puzzle.”

Laurent said the biggest change he has seen in the industry is the number of clients local agencies have been able to attract from outside Iowa.

Local agencies compare favorably to agencies in bigger markets, Laurent said, and the fact that they are used to operating on tighter budgets gives them an advantage.

Optimistic outlooks

Both Laurent and Flynn, who combined have nearly a century of experience in the advertising business, are optimistic about the future.

“There will always be a place for a small agency like ours,” Flynn said. “I have no doubts about that. We serve a particular purpose, and I’m extremely optimistic.”

Laurent agrees, but said he is concerned that a flurry of mergers and acquisitions means Des Moines is no longer the headquarters for some large corporations.

“The nature of the local economy changes when you see that migration,” he said. “You could see the local accounts migrate with them. Being home to a branch office is much different that being the home of a home office.”

But the talent pool in Iowa has grown a lot over the years, making Laurent very optimistic about the future of his industry.

“There wasn’t always this high a quality of talent in the state,” he said. “The discrepancy between our market and the bigger markets was much greater. We haven’t caught them yet, but the parity is much closer.”