Ad industry reacts News of the bankruptcy filing by The Schiller Group Ltd. spread like wildfire through Hawaii's advertising agencies Friday morning.
to agency closure
Schiller receives encouragement
a day after filing Chapter 7By Erika Engle
eengle@starbulletin.comPresident and CEO Martin Schiller said, "I've been talking to clients all morning and the overwhelming support is humbling." Schiller said the Chapter 7 bankruptcy "is not something I wanted on my resume."
Some insiders had seen it coming, though they wouldn't go on the record.
TSG recorded $12.4 million in capitalized billings in 1999, but then it lost big-dollar, high-profile accounts. Schiller said current capitalized billings were down to $4 million.
A client Schiller called a "major win in 2001," is SCD International LLC, developer of 588 homes at The Peninsula at Hawaii Kai and of 168 condominium units at Waikoloa Colony Villas. SCD President Stanford Carr said, "It's unfortunate for (Schiller) from the financial aspect, but as far as The Schiller Group and the work they do for us, we're very pleased, they do a fantastic job." He said he had fun working with TSG's creative people and "great staff."
Carr said, "as the economy has gotten better, I'm confident he'll work things out and we'll stand by him and continue to work with him."
The Radisson Waikiki is another client. General Manager Gary Jutz said he's only been in Hawaii three months, but described Schiller as "a gentleman -- extremely helpful.
"I can't tell you how many people he's introduced me to, he's just first-class and I'm very proud to know him."
Schiller plans to stay in the ad business, as a sole proprietor, and Jutz said, "We're going to continue to do business with him just as soon as he's able."
A force in the Hawaii media industry since his arrival in 1967, has received empathy from his colleagues.
AdWorks Inc. President Darrel Kloninger said, "I'm just sorry for anybody in business in Hawaii that fails. It's just very difficult running a business here."
>> 1967: arrived in Hawaii to work as an account executive for Lennen & Newell, which later became Seigle Schiller Rolfs & Wood Martin Schiller curriculum vitae
>> 1979: Left Seigle Schiller to start Schiller Communications Services
>> Six months later met Ogilvy & Mather Worldwide Chairman Bill Phillips and started Ogilvy & Mather Hawaii. Served as president of the wholly owned subsidiary and as senior vice president of O&M Worldwide.
>> 1992: left O&M "because of management changes at O&M New York and system-wide and I thought it best to move on." Started The Schiller Group Ltd.
Source: Martin Schiller
He added, "Hawaii's economy hasn't turned around yet. Things in certain segments are looking good but it's still difficult for a lot of people and that's having an effect on advertising revenue."
Even the biggest of the big agencies was not laughing. At Starr Seigle Communications Inc., Media Director Chuck Cohen said, "When any advertising agency fails in Hawaii; all agencies feel the pain."
"We're all subject to the downturns of the economies of both the U.S. and Japan," Cohen said, "It's a difficult business to be in and make a profit, during healthy times." Cohen recalled a lesson learned from Schiller, "Marty always said that the assets of the agency went down the elevator every evening."
He continued, "Less revenue equals less assets; less assets equals less creative brain power; less creative brain power leaves any agency at risk."
Cohen said by its nature, advertising is a collaborative process and larger advertising agencies have the benefit of more brain cells to work with. Larger agencies are also in a better position to withstand even significant account losses.
AdWorks' Kloninger said, "Also unfortunately over several years, there's been a trend of accounts going to the mainland and that hurts too," Kloninger said. "It hurts everybody, not just the ad agency -- it hurts the clients, because they don't have advertising targeted to specific local interests, needs and desires."
Kloninger said, "When Liberty House decides to produce ads on the mainland then local people lose jobs working in the Liberty House ad department, and modeling department, and their ads will look like Macy's ads from anywhere in the country."
"I don't believe they're going to be as effective," he said.
Accounts don't have to go away for agencies and others to lose money. Across the United States, media outlets for months have reported a downturn in advertising revenue over last year.