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Chiat/Day Will Quit Australia, New Zealand : Advertising: The agency is selling its operations to Foote, Cone & Belding.

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TIMES STAFF WRITER

Ad agency Chiat/Day/Mojo announced Wednesday that it will sell its operations in Australia and New Zealand. Analysts say the move signals the unraveling of Los Angeles ad man Jay Chiat’s vision of an international advertising empire.

The price of the sale to giant Chicago agency Foote, Cone & Belding Communications was not revealed.

Industry sources say it may be as little as half the estimated $60 million that Chiat/Day paid in 1989 for Mojo MDA, known best for its “Shrimp on the Barbie” ads for Australian tourism.

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The sale--initiated two weeks ago by Foote, Cone executives--includes Mojo offices in the Australian cities of Sydney, Melbourne, Brisbane and Perth, and New Zealand cities Auckland and Wellington.

The sale is viewed by industry analysts as a reluctant but wise move by Chiat/Day to focus on its domestic operations. Like most agencies nationwide, Chiat/Day has struggled during the lengthy economic downturn that began to hit the advertising industry at least a year before most other industries.

“It’s a humiliating retrenchment, but it’s also a smart move,” said Fred Danzig, editor of the trade magazine Advertising Age. “Chiat/Day is caught in the same bind as most other agencies. Clients are completely changing their expectations of advertising and marketing communications from top to bottom.”

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The move comes at a trying time for the Los Angeles ad community, which has seen two of its agencies closed recently.

Two weeks ago, Hill, Holliday/Los Angeles said it would close after Chiat/Day snatched its $70-million Infiniti luxury car ad business. And the Vogel Communications Group quietly closed earlier this month.

“It’s a sign of the times,” said Gerrold R. Rubin, president of the Los Angeles agency Rubin Postaer & Associates. “Agencies are finally trying to run their businesses prudently--and that means for profit.”

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While Chiat/Day, based in Venice, is by far the largest agency in Southern California, it has failed to become a significant player internationally. “To really be effective overseas you need huge operations,” said Philip Joanou, chairman of the Los Angeles agency Dailey & Associates.

With the economy gone sour, most advertising clients are looking for fast ways to save money and sell products. And late last month, one of Chiat/Day’s largest clients, American Express, fired the agency’s New York office from its $60-million credit ad account.

But agency founder Jay Chiat strongly denied that the Mojo sale was related to the recent financial headaches in the firm’s struggling New York office.

“It’s a good deal for us and a good deal for them,” said Chiat in a telephone interview from New York. He said there are no plans to close the firm’s four remaining international offices in Canada and England.

Chiat also said that Mojo will retain an association with Chiat/Day to serve clients in Australia and New Zealand.

Chiat/Day’s decision to expand internationally in 1989 was bad timing, pure and simple. The much-desired opening to the Pacific Rim never developed into a financial windfall.

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Meanwhile, major clients in the United States began reacting to the recession by paring back on marketing budgets.

But Chiat/Day, the firm that set the Eveready bunny bouncing through TV commercials, has itself been compared to the rambunctious rabbit. The agency often seems to find a way to bounce back.

Industry analysts point out that some of the ad firm’s greatest accomplishments have been born from adversity.

The firm lost--then won back--the Reebok ad business in the last few years. And while it was ridiculed for its earliest ads for Nissan, featuring actors talking about “human engineering,” it has since captured the full confidence of Nissan, which recently handed the agency its Infiniti ad business.

“They’re the Robo-agency,” said one top Los Angeles agency executive, referring to the “Robocop” movies that feature a robot that cannot be stopped. “Maybe they should rename themselves Chiat/Day/Robo.”

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