Small Independent Agencies Make Their Way By The Bay

The San Francisco ad community was nearly decimated in 2001 when the dot-com bubble burst. The quick demise of so many free-spending clients left many inside and outside of the Bay Area wondering when—or if—viability would ever return. While no one would say the city is anywhere close to its 2000 heyday, when area billings topped $4.6 billion, the city’s smaller independent agencies that had the temerity to stick it out have emerged from the ashes.

Agencies such as Collaborate, Eleven Inc. and Maiden Lane have all have added new business in recent months. And though the clients are smaller and less sexy than the freewheeling dot-com clients of the past, they are more stable. And for these survivors, that could be just as important.

Collaborate, founded in 1999 as the dot-com marketing continued to boom, is one of the shops that has showed signs of life in recent months. The shop is actively hiring after adding more than $50 million in new billings from three separate accounts this spring, including Seagate Technology and New Century Mortgage Corp. The shop expects its annual revenue to more than double from $2.5 million last year to nearly $6 million, said managing partner Hans Ullmark.

“We went through some really tough times since the dot-com crash in 2000,” Ullmark said. “But we fought it out and now we’re harvesting some [business] thanks to that hard work.”

In 2000, San Francisco’s top 10 agencies (which included none of these three agencies) registered $4.6 billion in billings, and shops across the country vied for a piece of the pie. But when the bubble burst the next year, the region lost more than a quarter of its billings (down to $3.4 billion) and many of those shops (which included Lowe, The Martin Agency, Hill, Holliday, Connors, Cosmopulos and Arnold) shuttered their operations.

But the smaller agencies, which did not have large rent overheads and were willing to improvise—like making desks out of doors—proved they could be more adaptable and survive, said area consultant Harold Mann.

“That sort of gritty, bootstrap approach is what enabled these shops to weather the storms,” he said. “I saw principals have to get back in and do account planning. They had to answer their own calls. It was an ego bruise. But it made a huge difference.”

And their efforts seem to be paying off. Last month, Maiden Lane (formerly Gardner Geary Coll), added lead advertising duties on Chevy’s Mexican Restaurants’ estimated $2 million account, having won the San Francisco Examiner in November 2004 and Morrison Foerster in March 2004. Agency founder Bob Gardner cited the shop’s independence as a main factor in the renewed interest. “We are not slaves to Wall Street quarterly numbers or distant holding companies,” he said.

Similarly, 6-year-old shop Eleven Inc., which opened as a hybrid of advertising, design and interactive, added an estimated $1 million from BEA Systems in June and has been taking calls from blue-chip clients like Old Navy (the shop was a contender in its recent project review), said agency president Jordan Warren. “As bigger companies go off their roster … we are starting to see a lot of attention on the West Coast,” he said.

Most of this new business isn’t coming at the expense of crosstown rivals. Instead, they’re coming from clients that are emerging from a period of dormancy and didn’t have incumbent agencies (The Examiner is one such example). Or they’re coming from outside markets, like Seagate, which was most recently at Tocquigny in Austin, Texas.

Granted, these clients and the project work may not be as showy as the dot-com company that has Super Bowl stars in its eyes. But for these survivors, their stability might be a decent tradeoff. As Mann said, “These smaller agency principals appreciate a client that will stay with them for a number of years.”