Industry Officials Optimistic Despite Expected Slower Economy, More Choices for Consumers.

THE Los Angeles advertising and marketing community faces a hit or miss 2001, when a cooling economy may tighten up clients' budgets. But industry officials expect to forge ahead by creating better promotional campaigns and clinging to lucrative accounts involving technology, politics and interactive television.

While signs nationwide point to an economic slowdown, many in the local marketing community aren't ready to resign themselves to slower times. Dot-coms, which buoyed the advertising and marketing industry in 2000, will be replaced by more solid businesses such as computer hardware and software companies, they said.

And personal video recorders, even if they catch on and viewers edit commercials out of their television programs, will simply make advertisers work harder to keep viewer attention, they contend.

"Consumers don't dislike advertising," said Greg Hill, president of Lunch, a Santa Monica ad agency. "They just dislike bad advertising."

Some advertising industry observers said segments of the industry will remain busy throughout the new year developing ways to sell products through interactive television. Companies such as Artifact in Santa Monica will spend the year and some serious cash exploring ways to make commercials interactive. One example is a computer-generated overlay of traditional commercials that prompts viewers to pursue further information on a product, maybe by authorizing direct mail or opening new routes to more in-depth information.

Such interactive-advertising technologies could attract an increasing share of investors' attention in 2001, especially with the deflated  appeal of dot-coms.

"I wouldn't be surprised if venture capitalists, with other opportunities seemingly tapped out, would be looking for greener pastures," said Artifact President Michael Waters:

While cable companies experiment with interactive services, the advertising community will bury its head in R&D, looking for that one promotional technique they hope will become widespread in coming years.

Going abroad

One lesson learned in 2000 is likely to have an impact on the advertising industry in the new year. The Screen Actors Guild commercial strike forced advertising agencies to search internationally for talent and locations that are hospitable for filming commercials. At the same time, the advertising industry learned the benefits of a strong American dollar in foreign locales, and found fresh locations where they could shoot.

"We need to look beyond our borders and find production centers around the world where we can find savings on production costs and different look," said Damon Webster of Saatchi & Saatchi Los Angeles.

A side from the economic trends, a few events expected to occur in 2001 will likely fuel the marketing industry. The new year brings the opening of Disney's California Adventure in Anaheim, the Los Angeles mayoral and City Council primaries and elections. Also ballot-related, but still undetermined, are the referenda that will make it through the electoral process. All will mean a bonanza for advertising and public relations firms.

While Disney might have its own in-house professionals to push its new attraction, California Adventure will prompt other theme parks around the area to promote their attractions.

The Los Angeles market also has an industry some consider economy-proof: Hollywood. Robert Chandler, president of Robert Chandler & Partners, said that movie studios will not release movies without their requisite marketing blitzes, regardless of whether Alan Greenspan is raising or lowering interest rates.

And even if consumer spending tails off, that might merely prompt retailers to advertise more aggressively to lure shoppers back into their stores, industry observers noted.

"A lot of times, when it's harder to sell something, the advertising has to be built up -- because it's harder to sell," Webster said.

Merger business

On the corporate side of public relations, the heavy mergers-and-acquisitons activity promises to keep the industry hopping. While the pace of consolidations might slow somewhat, companies that merge and buy other companies still will need spokespeople to push the new, larger companies and assuage critics and the public at large, who may be concerned about issues such as layoffs, profitability and market strength.

But advertising budgets are far from immune to economic downturns. Indeed, they could be cut dramatically in a slowdown.

"The law of gravity will go into effect," said Leonard Pearlstein, former CEO of Team 1 who now provides consulting services as The Pearlstein Group.

Pearlstein isn't so concerned about the impact of personal video recorders, saying that a viewer's ability to skip over television commercials does not mean they'll do so.

Like Hill, Pearlstein said advertising is improving in quality. The more compelling the content of commercials, the less likely are viewers to run from them.

Despite the dot-com meltdown, as long as there is an Internet, there will be companies providing information and merchandise. Some of that will be on the back end, where retailers sell their products. Other companies will work on the front end, making products that connect people to the Internet and help them navigate the complex Web and find what they're after.

Further, the failure of Internet startups could prove to be something of an indirect blessing for advertising and public relations agencies. Liquidation of payroll thrusts talent into the job market. Where once a fledgling dot-com attracted young professionals with promises of stock options and off-site events, more and more startups are viewed with skepticism about long-term survival.

"The job-hopping has slowed and the out-growth is the availability of good, young, competent people," said Maureen Crow of Carl Byoir & Associates.