ADWorks throws in towel
By Dan Nakaso
Advertiser Staff Writer
In a sign of continuing struggle for Hawai'i's advertising industry, ADWorks president Darrel Kloninger told what remains of his staff of 22 yesterday that he's shutting down the advertising company he founded 36 years ago in Waikiki.
At its peak in 2001, ADWorks generated $26 million in billings and had 44 employees. It's down to a little more than $10 million in billings and has slipped from the No. 3 agency in town to No. 4.
Despite a rebounding economy, Hawai'i ad agencies have seen longtime accounts become consolidated by larger Mainland agencies while local companies cut back on advertising.
"The economy is doing well in certain segments — home building is strong, visitor arrivals are strong," Kloninger said. "But there are a lot of weak spots in the economy, and one of the areas is advertising. There's a lot of movement to take accounts from Hawai'i to the Mainland."
Jenn Thompson, director of client services for Bates/Lee Advertising, believes that the era of large Honolulu advertising agencies is drawing down.
"I definitely see the days of the big, huge agencies going away," Thompson said. "Huge agencies aren't quick enough or nimble enough. They can't support the big overhead of having a lot of staff and expensive leases."
Bates/Lee's clients insist now on measurable results — especially from mass e-mails and other Web-based approaches, Thompson said.
"Basically, every single one of our clients is now telling us that everything we do has to be trackable and measurable," Thompson said. "It's causing a huge shift away from traditional advertising, which is buying radio, television and print ads."
Everyone in advertising also has to cope with clients' shrinking budgets, said Page Gaylord, media director of Laird Christianson Advertising.
"And certainly some of our business has gone out of state — you can't deny that," Gaylord said. "Many of them have just gone corporate for basic efficiency sake. You can't blame them. But it takes dollars away from our industry."
In an hour-long meeting just before lunch yesterday, Kloninger assembled his staff in their Hobron Lane office and said he was closing the company he founded in 1968 with four employees.
"We lost AT&T wireless three, four months ago, and other agencies have also lost major accounts," Kloninger said. "Finally the pressure from some of the creditors was such that we could no longer continue. They got more and more aggressive about collections, and I couldn't meet their demands."
Through September, ADWorks will continue with a skeleton crew of five employees to pay bills, collect outstanding payments and other tasks. Most of the rest of the staff will finish up projects next week, Kloninger said.
"Everybody's really unbalanced at this point," he said after the meeting. "It's just a very emotional time around here."
Legions of advertising executives got their training with ADWorks as it took on little-known clients such as Budget Rent A Car, which grew into Hawai'i's largest car rental company, and Hotel Corporation of the Pacific, which ADWorks helped rename Aston Hotels & Resorts Hawaii.
Other current clients include Aloha United Way, Papa John Pizza, Windward Dodge and Avis Rent A Car.
Outside factors such as the Sept. 11 terrorist attacks contributed to ADWorks' demise, but Kloninger is quick to take responsibility.
"I cut costs, but I couldn't cut fast enough to keep up with how the business is declining," he said. "I probably should have had a tighter rein on staffing, and I should have done other things. But I'm very proud of the work we've done and the people that have gone through ADWorks."
At age 65, Kloninger plans to close down ADWorks and enter a new phase in his advertising career as a consultant.
"It will be nice to continue without a big overhead," he said. "I won't miss having to spend time with people phoning me about collections."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.
