Advertising agencies can't sell their way out of slump.

Assessing the first half of the year, the consensus among Los Angeles advertising agencies is that things are good because they aren't getting any worse.

While there were a handful of notable account wins in the L.A. region, maintaining the status quo seemed a small victory for most shops after weathering a persistent slump in new business over the past two years.

"Everyone in the L.A. market is effusive and optimistic just because things are quiet," said Ben Wiener, chief executive of Wong-doody, a mid-sized agency that also has an office in Seattle.

Bob Elen, the president of the oldest ad agency in L.A., Davis Elen Advertising. said he has never seen the new business climate so slow. "No, there is not a lot of new business coming around the corner but this is the time to take the lead," he said. "You have to manage your expectations and do right by your current clients."

Still, there have been several developments in the first half of 2004.

* Despite a 14 percent increase in sales during the first half 2004, the Irvine-based automaker, Kia Motors America, put the creative portion of its $240 account in review. The account, which has been at the agency davidandgoliath for about five years, is one of the largest pieces of business handled by an independent L.A. agency.

* The Marina del Rey shop Deutsch/LA, a unit of the Interpublic Group, lost the $160 million DirecTV Group Inc. account in March and picked up a $180 million account from Gap Inc.'s Old Navy division the following month.

* Dailey & Associates, also a unit of Interpublic Group, lost the creative portion of Callaway Golf's $20 million account after handling the business for seven years, although it retains media buying duties. The Carlsbad-based client selected WPP's Young & Rubicam in Irvine.

* TBWA\ChiatkDay Los Angeles, a division of Onmicom Group Inc., picked up three pieces of business that the agency said are collectively worth nearly $200 million. Included was the Master Foods USA dog food brand Pedigree and two Sara Lee Corp. brands, Ball Park Franks and Jimmy Dean Breakfast Meats.

While the L.A. market is still driven by the twin engines of automotive and entertainment. the biggest change involves survival skills as agencies push to expand their role and at the same time break away from traditional methods.

Integrated campaigns

"We just pitched a major brand and there was no TV involved," said Robert LePlae. president of TBWA\Chiat\Day Los Angeles, when asked about changes shaping the market during the first six months of 2004. "Now more than ever the agencies are embracing integrated media: direct marketing and interactive trade promotions with retailers. Our marketing services division has grown 50 percent this year."

Fragmentation of media and a desire to make a greater contribution to a client's long-term strategy have shaped the approach being used by ad agencies, according to Joe Stauff. equity research analyst for Schwab Soundview Capital Markets, a unit of Charles Schwab Corp.

"They want to become an integral part of the business plan,' said Stauff. "It is not a trajectory that we all anticipated but the business model for ad agencies is under review."

Gerrold Rubin, president and chief executive of Rubin Postaer and Associates said the decision by Kia to hold a review was a reflection of the climate in advertising in general and in L.A. in particular.

"I'd hate to see Kia leave davidandgoliath and I'd hate to see it leave this market," said Postaer, whose Santa Monica agency has handled the American Honda Co. account for 30 years. "This is a market that has been dominated by automotive for years."

Postaer noted that apart from the increased expectations on the part of most clients, consolidation and downsizing in the industry have increased the pressure on individual agencies. "That is the negative that we've seen in the first six months of this year," he said. "There is going to be increased revenue pressure."

The ad climate has also prompted agencies to reassess their current structure. Two Interpublic Group shops, Dailey and Suissa Miller, were merged into Dailey's office at the start of the year.

Also, the Los Angeles and San Francisco offices of WPP's J. Walter Thompson were combined into one entity called JWT/west.

"When you look at the potential in the West it didn't make sense for us to have separate management for the two offices," said Brad Fornaciari, the L.A.-based president of JWT/west. "We didn't do it to save money but to make ourselves a more efficient operation."