Madison Avenue Gets Grimmer

In those far more innocent days before Sept. 11, Acirca Inc., an organic-food company based in New Rochelle, N.Y., was readying a massive campaign to give away free samples of its Walnut Acres line of soups and salsas. Starting on Sept. 15, youthful workers were to fan out in New York and Seattle to hand out goodies to thousands of consumers, hoping to introduce the brand and its healthy-lifestyle message.

That was then. Now the sampling blitz is on hold because of stepped-up security in the crowded urban areas where sampling works best--and because the mood among consumers is likely to turn more sober and reflective. "We try to create an environment that's educational and entertaining, but that's hard to do when the country has been devastated by an act of terrorism, confidence has been destroyed, and people feel vulnerable," says Michael Neuwirth, Acirca's corporate communications director.

TIGHT WALLETS? In a country already gloomy about its economic prospects, the attacks likely will mark the abrupt end of the free-spending zeitgeist of the 1990s. As shocked Americans come to grips with just how dangerous the world can be, there is a real risk that they will further cut back on the spending that has sustained the economy so far this year.

In that climate, marketers' exhortations to indulge in ostentatious spending, make minute distinctions among equivalent brands--or even adopt a healthier lifestyle--could ring hollow. For marketers already on the fence about maintaining budgets, it could be tempting to dial back ads reaching out to a distracted and depressed public. It all adds up to a new blow to ad spending that had been slumping for months. Just two weeks ago, Merrill Lynch & Co. media analyst Lauren Rich Fine revised her ad-spending projections for this year from the 0.7% decline she forecast in June to a steeper 4% drop. For 2002, she sees a tepid 1% uptick.

The situation is reminiscent of a decade ago, when the gulf war drastically damped travel and other business activity, crushed consumer confidence, and prompted marketers to "defer" ads. Often, they promised to restore spending, but that year's 2% decline showed that few did.

Are we in for a replay? Marketers are just beginning to grapple with the new reality. At Snapple Beverage in White Plains, N.Y., the first reaction was to rush drinks to an emergency staging area. Later could come debate over whether to proceed with several new products--including one with a suddenly inaccurate image of the New York skyline cut into the glass bottle, says chief marketing officer Michael Sands.

Certainly, the immediate impact was extensive: retail shutdowns, canceled entertainment and sporting events, postponed business meetings. There were rumblings that TV networks, already losing millions as news crowds out ads, might delay the Sept. 17 start of the ad-rich fall season. Leisure and travel, makers of autos and appliances, all could hold off on spending, at least for now. "There could be a fear factor, a retrenchment, a thought of not wanting to take risks," acknowledges Ellis Verdi, president of New York agency DeVito/Verdi.

Expect a change in tone, as marketers abandon the frivolous appeals to self-indulgence of the boom years for an emphasis on family, community, patriotism, and other enduring values. "Marketers will be afraid to use black humor right now, since there is nothing funny or whimsical about thousands dying," says Marian Salzman, global director for strategy and branding at Euro RSCG Worldwide. "`Kinder and gentler' will be the new theme. Think Hallmark cards vs. Sony PlayStation."

For now, marketers and their agencies are putting on their bravest face. "Our lives have changed, and we don't know how yet, but we have great confidence in the American economy," says Steven G. Felsher, vice-chairman of Grey Global Group Inc. As Americans sort through those larger issues, ad campaigns likely will come back down to earth, in tone and in spending.

By Gerry Khermouch in New York

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