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2007 U.S. AOY: Goodby, Silverstein & Partners

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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."

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