Major Client Puts Quirky Chiat/Day to the Test

No one at the ad firm Chiat/Day has much of an office--except Jay Chiat. But even the Los Angeles agency’s millionaire chairman often spurns his office to go sit out in one of the agency’s dozens of tiny cubicles with no doors.

The purpose is to encourage creative bantering. Last week, one of the world’s biggest auto makers, Nissan, made a $150-million bet that some big ideas will flow out of these small cubicles.

With the $150-million account from Nissan, Chiat/Day is about to be put to the greatest test in its 19-year history. It has built a reputation as one of the nation’s most creative shops. Tackling almost exclusively smaller accounts--in the $10-million range--the firm has created larger-than-life images for companies such as Apple Computer and Nike.

Now, advertising executives coast to coast are watching to see if Chiat/Day will steer a giant, far more conventional advertiser like Nissan into a brick wall--or over it. And, frankly, Chiat/Day officials don’t like the industry skepticism.

“Maybe good news doesn’t sell papers,” said Lee Clow, president, executive creative director and heir-apparent to Jay Chiat. “But we’re trying to prove that the West Coast has a vital and creative ad community. We can do better than all that wallpaper that you see on TV every night.”

Traffic-Stopping Billboards

After all, this is the agency that dreamed up the publicity stunt pulled by Fox Broadcasting in March, when it slapped its name over the famous Hollywood sign. This is the firm that spent nearly $1 million for an award-winning Apple ad called “1984” that aired only once--during the Super Bowl. When the Olympics came to Los Angeles in 1984, it created those traffic-stopping Nike billboards showing athletes in action.

Today, however, Fox, Apple and Nike have all turned elsewhere for their advertising. And Monday came word that Chiat/Day had lost its $22-million Pizza Hut account, leaving the firm with cheese and pepperoni on its face after a short, four-year relationship. “The fact that we severed our relationship with the agency pretty much says it all,” said Roger Rydell, director of public relations for Pizza Hut.

Nissan has turned to Chiat/Day for more than window dressing. It is an auto maker badly in need of an image. “They have an amorphous personality right now,” Chiat said. But big auto makers are generally regarded as the ad industry’s most demanding clients. The only thing they crave more than attention is results.

Chiat/Day is an ad firm with creative chutzpah but with serious administrative lapses, according to interviews with clients, employees and rival ad executives. “Their strong points are also their weak points. They’re so busy being creative that it hurts the rest of the business,” said one former senior employee.

“That’s an albatross that an agency that does high-profile work carries,” responded Chairman Jay Chiat in an interview at his Los Angeles headquarters Friday. “For 20 years, people have perceived this agency as being lucky. Well, this should be the best test of all.”

Some of those who know Chiat say the 55-year-old chairman may indeed make a mark on automotive advertising that could eventually send reverberations throughout the entire industry. “Jay has a way of incubating good ideas until they become great ideas,” said Paul F. Keye, chairman of the Los Angeles ad firm Keye/Donna/Pearlstein.

Former employees say Chiat is a master at creative direction. “He walks into a room, turns everything upside down and then walks away,” said L. Brent Bouchez, a former creative director at the firm, now senior vice president and creative director at the Los Angeles office of the ad firm Ogilvy & Mather. “But the advertising inevitable turns out better because he makes you question yourself.”

“Jay cares about each and every ad that goes out the door as if it were an extension of himself” said Bruce Mowery, director of marketing communications for Apple Computer, who worked on the Apple account for Chiat/Day. “But he’s not an easy guy to work with. If you want to see what you’re made of, he’s the kind of guy to be around.”

Chiat/Day wins more advertising awards annually than just about any other agency in the business. Although Madison Avenue competitors have finally grown accustomed to that, they are not accustomed to competing with Chiat/Day for such huge accounts as Nissan. “Everyone else is choking with envy,” said Keye.

Others are simply choking. “Chiat/Day is so dedicated to doing esoteric work that the product often suffers,” said Jack Roth, chairman of Admarketing Inc., a Los Angeles agency whose company handles advertising for large retail operations such as Circuit City and Standard Brand Shoes. “Nissan is looking to recapture lost ground. So Chiat/Day will have to remember that they’re in the ad business, not the entertainment business.”

Chiat brushes aside such criticism. “Most of the people who say that kind of stuff do very tired, boring and uninspired advertising,” he said. “Agencies that do ordinary work tend to keep their accounts much longer.”

There is a certain mystique to Chiat/Day. If it were a politician, the name would probably be Kennedy. And were it a state--or perhaps even a state of mind--it could only be called California. It is an agency that fascinates everyone.

But the agency’s critical flaws are as plain as the San Andreas fault. And these self-destructive flaws--primarily in not adequately servicing clients--have cost the firm many of its best-known customers. “The agency doesn’t always hear what the client is saying,” said one former client who asked not to be named.

Fox Broadcasting wanted immediate results when its network programming premiered in April, so it took its $15-million account to Chiat/Day. But within six months, the agency lost the account, Fox executives say, because of poor administrative support. “They were not able to keep up with the constantly changing logistical demands we were placing on them,” said one Fox executive who also asked not to be identified.

Snazzy Porsche Ads

To its credit, Chiat/Day has done some very respectable automobile advertising. It was the agency that introduced Honda into the U.S. in 1969, and it created some snazzy advertising for Porsche until it resigned the $10-million account a few weeks ago. “It was an agency you could leave alone,” said Gerhard Blendstrup, vice president of marketing at Porsche. “We just supplied them with the same data that we had and let them go.”

Nissan’s account, however, is 15 times larger. And no one expects Nissan to give its new ad firm free wheel. “The picture of Chiat/Day suddenly changes a lot,” Bouchez said. “It will become less like a family and more like a big, big company.”

“Getting Nissan is like getting the Pentagon for a client,” said Patrick Sherwood, a former vice president and management supervisor at Chiat/Day who recently left to take on a similar post at the San Francisco office of the ad firm Foote, Cone & Belding. “The agency will be dealing with issues that it’s never dealt with before.”

Traditionally, it is the ad agencies that adjust to their client’s whims. “But in this case,” said Mowery, “Nissan will have to go through as much re-adaptation as Chiat/Day.”