April 27, 2009

Smaller Ad Agencies Doing OK So Far

Filed under: Operations — Joe Grant @ 1:18 pm
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We’ve gotten a lot of questions lately from agency execs wondering how other agencies are doing. Sure, you read about the latest layoffs at the mega-shops (MDC’s Accent just laid off 163 according to the BNET site) but Grant’s clients are mainly small to mid-size shops. What’s their take?

Here’s what we’re hearing from our small albeit reliable grapevine.

The 1st quarter wasn’t as bad as expected. In the 2nd half of ’08 it appeared the advertising industry as we’ve known it might cease to exist – well, almost. Agency owners were plain scared. But for most, at least the ones we work with and know, Q1 was at worst flat and in many cases better than anticipated.

The rest of the year will probably be OK. That’s not my prediction; that’s what we hear from across the country. Agencies have made tough decisions RIFing redundant, mediocre or unnecessary talent and that’s helped push salary costs as a function of AGI closer to where they should be (as near to 50% as possible). Salary cuts and freezes are in effect at many places and operating expenses have been whacked wherever possible. Those moves have helped keep shops above water. Smart. But of course you’ve got to keep the clients you have – see 8 Ways to Fortify Your Accounts for ideas to strengthen client relationships.

New business is trickling in. Agencies used to skating on their laurels and word-of-mouth to generate new accounts are now ramping up actual calculated NB programs. Remember, it can take as long as 18 months for a consistent, strategic new business process to bear fruit. But there’s that funny Law of the Universe – and you know what I’m talking about – that says if you begin pushing here, something will pop up over there, seemingly unrelated. That’s why you get an over-the-transom RFP when you’re running a big direct campaign. Happens all the time. RFPs have not dried up; if anything, there’s more action out there than most would have expected.

Talent is on sale. Some awfully good people have been let go, especially from the bigger firms, and they’re scrambling to land someplace. Now’s your chance to scoop up first-rate experienced people at clearance sale prices. That will help you raise internal bars as well as attract new, perhaps bigger/more sophisticated clients. I’ve written about this before in It’s Time to Hire and The Good News About JWT Closing

Look, I’m not trying to say it’s all rosy and the storm is over. But most of the people we chat with seem to believe ’09 is beginning to look survivable.

Now ain’t that better than a poke in the eye with a sharp stick?

Your 2 Cents

Would love to hear from some agency owners about how the year has been so far. . . and how you think it’s going to pan out. Please comment.


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