Small Best to Weather Economic Storm

Business owners cite flexibility, willingness to embrace new technology as key to success

by Jim Masilak 

Published in the Commercial Appeal, February 8, 2009

A few years back, the Memphis-based advertising and design firm Speak! Creative was hit hard when a major client decided to take its business in-house. Rather than seek another big contract to replace the one it lost, Speak! changed its philosophical course.

"We spread out and diversified in that we don't have so-called major accounts now," said Jacob Savage, owner and president of Speak! "We can sustain a lot of loss now in terms of quantity of clients and not have it really affect us."

Now, despite one of the worst economic recessions in living memory -- a downturn that has been particularly tough on advertising -- Savage says his firm, with its 11 full-time employees, is "really not experiencing anything bad yet."

"Things have been up for us," he said, "which is different from some of the larger agencies out there."

The idea that smaller agencies can build their business in a seemingly unfavorable climate is taking hold at some shops around town.

Tactical Magic, a brand-development, advertising and design firm with four full-time employees, opened in September 2001. Not an opportune moment, it would seem, to open a business reliant on client spending.

But creative director and managing partner Trace Hallowell said "we were able to grow and thrive post-9/11 because we were delivering a high level of work."

Faced with another challenging period for agencies, Hallowell says a smaller agency like his could be well-placed to win new business.

"Since we haven't abandoned (our principles)," he said, "I hope we'll be attractive to people who ... realize that brand equity is a serious tool for them but can't necessarily pay top dollar. I'm pretty hopeful about that."

Hallowell thinks smaller firms "can be more nimble and have the flexibility to incorporate new technology quicker ... whereas larger firms tend to be more ingrained in the traditional."

Whether an agency is large or small, Counterpart Communication Design president Sheperd Simmons says it's more important than ever for them to demonstrate value to clients.

"It means working selflessly in our client's best interest. It means sometimes saying, 'Instead of paying us to do that, why don't you just do this and it'll save you money?'" Simmons said. "It means staying on top of the latest developments in media, tools, and techniques. ... It means bringing ideas to our clients without them even asking.

"These are things we've always done, but their value to our clients is magnified in times like these."

One thing a number of small agency executives agree upon is the need to be cost-conscious.

"As a small agency, we have lower overhead than bigger ones. That helps keep our rates low," Simmons said. "We're conservative with our money, we keep our costs under control, we spend within our means. That philosophy isn't unique to ad agencies -- it's good for any business.

"But I will say that when you're in an image-driven business, it's easy to get concerned about your own image, and maybe spend a lot of money on gorgeously designed offices that your clients may never see. I admit we don't have the prettiest offices in town. We put our money into our talent, and our effort into the work, so that all our creativity is directed to the benefit of our clients."

Some challenges, however, are beyond a firm's control.

Billy Riley, principal at Combustion, an advertising and design firm with 10 full-time employees, has "made a commitment to my staff that we'll all take pay cuts before anyone gets laid off."

However, Riley says, "a lot of our clients are being very, very slow to pay, and it's causing a ripple effect throughout the whole economy."

"I don't really sense that there's a magic bullet for small agencies to turn to," Hallowell said. "These are extremely perilous times, particularly for marketing and communications firms."

For those willing to run a lean operation, promote creative and nontraditional methods and demonstrate value, opportunities will continue to avail themselves.

"As long as there's any entrepreneurial spirit left in America," Riley said, "we'll have some work to do."


"A house of brands is like a family, each needs a role and a relationship to others."
- Jeffrey Sinclair