U.S. Agency of the Year: Goodby, Silverstein & Partners

NEW YORK “Hire at least two new people every day.” Jeff Goodby may have been exaggerating, at least at first, when he gave that directive to in-house recruiter Zach Canfield in the spring of 2007. But the reality was, it was a necessity. Goodby, Silverstein & Partners was in a hiring frenzy following an unprecedented new-business windfall, which itself followed a major account loss early in the year that threatened to trim rather than swell the agency’s ranks. Suddenly, the San Francisco agency needed to find a lot of talent, and fast.

Just a couple of months prior, the agency’s seven partners faced the possibility of having to lay off 40 percent of its staff of 350. In January, the shop lost one of its three cornerstone accounts, Saturn, which was just shy of the Hewlett-Packard business in size and represented approximately $20 million in revenue. Goodby had produced award-winning work for the client, such as “Sheet Metal,” a 2002 spot that branded the GM nameplate as the car that put people first. Ironically, the marriage ended over creative differences involving sheet metal—specifically, the relative lack of product being showcased in the advertising.

Despite Goodby’s creative chops, the Saturn loss threatened to send the agency into a downward financial spiral. Instead, it ended 2007 in a position that even its battle-tested co-founders could not have predicted: with $2 billion more in billings than at the end of 2006, a 14 percent increase in revenue and more than 200 new employees, who spill into two new office spaces across the street and down the block from headquarters on California Street. After a loss that would have rattled any shop, Goodby grew to 500 staffers in in 2007, tripled its billings and created work that was more diverse than it has ever been.

“The company changed more in the last two years than it did in the first 23,” co-chairman Goodby says of the agency he and Rich Silverstein started after they left Hal Riney in the early 1980s. “It’s a necessary change, and the whole business is going to have to change to exist. Nobody knows what advertising is anymore and the change in our company is a reaction to that fact.”

With minimal growing pains, the agency in the past couple of years dared to overturn the TV-centric culture it had built its reputation on, reconfigured to better meet digital demands, and stretched its celebrated creative skills with award-winning multimedia work for a range of clients, from the biggest (HP, Comcast) to some of the oldest (the California Milk Processor Board). For a 12-month run in which the agency lived up to and even surpassed its strategic and creative reputation, Goodby is Adweek’s U.S. Agency of the Year—for the second year in a row.

“It was a magical year,” says co-chairman Silverstein. And it came in the wake of a methodical reformulation of the creative mix. With 60 percent of creative staffers now able to work in all media, up from 31 percent in the fall of 2006, the agency enjoyed even more potent firepower behind its campaigns. Goodby’s real magic trick of 2007? With the future of its staff hanging in the balance, the agency, which prides itself as much on its working environment as on its caliber of work, managed to win Sprint, Hyundai, the Commonwealth Bank of Australia and the National Basketball Association within a period of just four weeks. “A few things came together luckily for us,” says Goodby, in characteristically understated fashion.

Omnicom CEO John Wren partly attributes the agency’s success to its evolution. “They extended a complete transformation from a traditional advertising firm to a multimedia, forward-thinking advertising group,” he says. “And because of their positioning, they had a phenomenal new business year and retained their tremendously high standards of creativity across all media platforms.”

At the beginning of ’07, things looked more morose than magical. Coming off a good new-business year in 2006, the agency was hit with the cold reality that its troubled relationship with Saturn was coming to an end. “Bizarrely, we presented the work right before Christmas that we thought would save us,” recalls managing partner Derek Robson, a former planner who has helped lead the agency’s self-analysis that instigated the structural and procedural changes of the past several years. “[Saturn] wanted to see more car. We produced ads with more car. We did what they wanted, and then when they didn’t work, they lost faith in us.”

The agency was in production on three or four new spots when it was fired. “It was a strange experience,” Robson says, but not surprising. More than once in the previous year, the partners had discussed the possibility of losing the business. And just two weeks before the final dismissal, Saturn had taken the agency off its digital business. “They fired us twice,” says Robson.

Driven to save jobs and feel like winners again, the agency dove headfirst into new business like never before. “These things happen for a reason,” says Robson, who addressed the agency in an all-staff meeting immediately after the firing. He shared the news and explained the likely repercussions: The agency would suffer layoffs, but they would cut deeper if the shop didn’t quickly bring in new business. “There are financial plans you have to make, and there is also emotional buttressing,” says vice chairman Harold Sogard. “When you lose something like that, you do have to do things to keep the company healthy. We absolutely had to face the fact there would be layoffs.”

The partners huddled, considering various ways to make the economics work with the fewest casualties. Several factors seemed in their favor: The agency was coming off a good financial year; it was the beginning of a new year; and there were several opportunities on the horizon that could replace the revenue and keep the former Saturn staffers busy. “We were going to hold onto people as long as we could,” says managing partner Robert Riccardi.

Fifty employees were let go. Expenses were trimmed, and managers were told to take stock of their departments and identify their most valuable staff members in the event that the agency was unable to replace the revenue from the GM business. Layoffs could have been as high as 140 people. “I was carrying around this list of people that we would have to lay off,” says Robson. “It was difficult. People thought I was a kind of Grim Reaper. The reality is, you have to put as much thought into it if you don’t win things as if you do.”

But then, the agency took a gamble and hit the jackpot. “We threw our heart and soul into new business,” says Riccardi. “Super karma was with us and we won it all.”

At the time of the Saturn loss, Goodby was already pitching the mammoth Sprint account and had paired with Amsterdam’s 180 in a bid for Volvo’s $150 million global business. However, a larger and more promising auto opportunity soon materialized. In February, Hyundai dismissed its longtime agency, The Richards Group, and launched a review to find another agency to take on its business, valued at approximately $600 million in billings and worth some $16-20 million in revenue. Goodby decided to pull out of the Volvo review to pursue Hyundai.

“Hyundai was frankly larger and on a gambling basis was a better bet,” explains Riccardi. “It didn’t involve other agency partners, and we had a better chance of winning it.”

The Hyundai client, vp of marketing Joel Ewanick, was a former client of Goodby’s at Porsche, and director of marketing communications Chris Perry was a former Isuzu client. Plus, the agency felt that the creative opportunities on Hyundai surpassed those on Volvo, a brand that had a much more defined personality. “It was a more interesting opportunity,” says Robson.

The agency was eager to get its hands on another car account, and while the partners say it was difficult to leave 180 in the lurch in the Volvo review, they were fighting to save jobs and their reputation. Notes Robson: “Everyone wanted to prove [Saturn was] wrong and we were a great agency.”

In the end, the agency proved its point four times over, winning not only Hyundai, but also Sprint and the Commonwealth Bank of Australia within weeks of each other, from late March into April. (Commonwealth, Australia’s second-largest bank, spends about $300 million in media annually and hired the agency without a creative presentation.) Also, another past client came knocking: the NBA, an account Goodby had worked on in the early 1990s, when it crafted the line “I love this game.” In its second run on the business, Goodby last year introduced the slogan “Where amazing happens” and launched brand ads that celebrated the sport and its players.

“It’s a reflection of their judgment and their team,” says Wren. “They have an approriate amount of confidence in their own work. They made all the right decisions.”

In addition, the agency won more work from existing clients, adding Frito-Lay’s Cheetos account to its Doritos business and expanding its assignments with HP, Adobe and Anheuser-Busch. “Rather than drowning in the sorrows of the loss of Saturn, we were dealing with the pressures of getting everything up and running,” says Riccardi.

The biggest piece of business to absorb was Sprint, which spent approximately $1.2 billion in media in 2006. While Ogilvy & Mather in New York, the other finalist in the Sprint review, was much larger than Goodby and would presumably have had an easier time managing the mammoth account and its heavy retail component, Goodby aptly demonstrated it could handle the business, says Bill Morgan, svp of brand management at Sprint, who was a former client of the agency’s while at SBC. “They did a very impressive job,” Morgan says. “They were methodical in showing how they would amp up their current systems, add a complementary retail component and organize themselves with a dedicated force.”

More than half of the agency worked on the Sprint pitch in some capacity, and while Hyundai would return a car account, the telecom account was even more critical to its fortunes. “Sprint was huge, that was the make-or-break one,” says Robson. “We knew that Hyundai would have helped us, but Sprint would have allowed everyone to keep their jobs.”

Both finalists were strong, says Morgan, but “the thing that separated Goodby was the depth and breadth of their thinking. What they have done really well [is] to create this tapestry of communications.”

The agency chose to forego messages about minutes and pricing and focus instead on humanity and the beauty and speed of the technology. In July, Sprint bowed its new positioning, “Sprint. Ahead,” with warm ads that represent the company’s technological advances as an animated beam of light, taking the form of a spaceship in one spot, for example, and a rising sun in another. “We were trying to figure out a way to make the intangible tangible,” says cd Ronny Northrop. “The category is all about chest-beating and price wars rather than about this incredible magic screen we carry around in our pockets.”

The human touch seems to be working. “What we’ve been really impressed with since this campaign broke [is] all the measurements, all the key metrics, are moving in a positive direction at a much greater pace than we had anticipated,” says Morgan. “We are extremely pleased with the performance to date.”

Hyundai also reports solid early returns on its agency decision. Goodby’s first work for the client was dealer driven, focusing on a summer sales event. An over-the-top series of spots characterized the decision to buy a Hyundai as a big “duh!” The effort was initially polarizing within the automaker, says Hyundai’s Ewanick, but the agency “found a creative way to break through,” he says. “We spent half as much money as the previous year and saw twice the results.”

The breadth of thinking that won the agency the account, however, wasn’t revealed until September, when Hyundai began airing teaser spots posing questions about car companies and asking consumers to “Think about it” at thinkaboutit.com. The brand was never mentioned, save for a faint shadow of a logo in the corner of the screen. Subsequent branded 30-second commercials fleshed out Hyundai’s value proposition. For example, a spot for its 10-year warranty program talks about instant gratification and asks, “Whatever happened to commitment?”

The decision to start the effort virtually unbranded was based on consumer testing which showed that when the Hyundai name was attached to a car model, it actually decreased its attractiveness to prospective buyers. “Adding a brand to a product normally brings up that consideration at least a point or two. In the Hyundai case, it went down 19 percent,” says Goodby. “It was an eye-opener, and they took it to heart.”

The client reports that the strategy is working. “The results are certainly proving out the strategy,” says Ewanick. “In a very short period of time, we’ve got 64 percent awareness of the campaign versus another campaign a year ago, which amounts to 20 points higher. We’re very pleased about that number.”

Creative for existing clients continued to evolve in new and innovative directions. The agency used scent strips to make bus shelters smell like chocolate chip cookies and created a TV campaign about a family of thieves that extended to the Web with an online board game at gettheglass.com for “Got Milk?” For an HP printer campaign that asked “What do you have to say?” the shop partnered with Gwen Stefani to create customizable Web-based digital content. And for Doritos, it asked consumers to get involved with everything from naming and choosing a flavor for a snack product to making its Super Bowl ad. “We’re all happy to see that we’re having as much fun and doing as good work as we’ve ever done,” says partner and cd Jamie Barrett. “It’s always more fun when things are changing and evolving.”

With the agency now some 500-plus employees strong, however, the danger is becoming too big. Will the agency be able to protect its culture as it continues to grow? Silverstein and Goodby have made a concerted effort to spend time with new hires, holding orientations and informal gatherings, and the partners say they plan to integrate the additions working in the adjunct offices. “Everybody who comes in changes the place in a certain way,” says partner and cd Steve Simpson. “The real important thing is that the founders are still here, and that answers a lot of questions. They are the continuity in this place.”

And when the founders are asked what made the difference in 2007’s remarkable turnaround, they point to the strength of the talent across the board—a collection of staffers whose collaborative skills ease the burden on each other. “No one feels the weight of the whole company,” says Silverstein. “I don’t even feel the weight of the whole company.”

The partners credit the fact that the agency has empowered its creative directors with more responsibility, and the partners say they’ve risen to the occasion. That came in particularly handy in the early months of 2007, when spending was restrained and new-business activity required months of working nights and weekends.

Reflecting on the year’s wild ride, Robson says the most gratifying part of 2007 is that the agency proved not only to the outside world, but to itself that its reinvention was worth the effort. And in fact, he adds, “maybe the agency is the best it has ever been.”