As the economy continues to slump and big-budget reviews become more the exception than the rule, large agencies locally and nationwide have begun targeting smaller accounts they likely wouldn't have pursued just a few months ago.
Examples include soy milk marketer White Wave, chocolatier Lindt & Sprungli USA and the domestic division of French ski products company Rossignol. None of these clients is expected to spend more than $5 million on ads—in fact, they may not spend that much combined. Despite the modest budgets, however, the three have had little difficulty capturing the attention of sizeable New England agencies.
"It's not surprising. The economy is down, and agencies are trying to fill holes [with small accounts] and keep people busy," said Bill Montbleau, who runs industry consulting company Montbleau Associates in Burlington, Mass. "It will continue at least through the summer, which is traditionally slower for new business; and then agencies will see where they stand in the fall."
Boulder, Colo.-based White Wave last week tapped Arnold, Boston, the region's largest traditional agency, to handle its account. Arnold's local billings for 2000 were more than $1 billion, and the Havas Advertising shop has been in the midst of building a global agency network.
Arnold's new-business machine, however, has been in low gear, with the biggest score so far this year for the flagship Boston office being Sappi Fine Paper, which will likely spend $5-7 million on ads. White Wave, which looks to Arnold to support its Silk brand soy milk, also has a seven-figure budget, a client official said. Carmichael Lynch of Minneapolis previously handled White Wave's advertising.
Fran Kelly, president of Arnold, called the account "an interesting creative opportunity." Sources close to the agency say that may be true, but stressed that Arnold executives are also pleased to be able to add new business of any size.
"It's a sign of the times, the reality of the moment," said Skip Pile, chairman of Boston-based consulting firm Pile and Co. "Big agencies take on $1-2 million accounts. They have to pay the rent."
Pile at the height of the dot-com craze from late-1999 through mid-2000 often had seven or eight agency reviews going at any one time, with the average budget in the $15-20 million range.
Those days, Skip Pile said, are long gone. "New business is as slow as it's been in [our] 14 years," he said. "What we have going now is small."
Lindt, Stratham, N.H., last week began a Pile-directed review. Skip Pile wouldn't disclose the budget and Lindt executives did not return calls, but sources pegged spending in the $1-3 million range.
The client has done scant media advertising in recent years; but given the slow business climate and high-profile Lindt name, agencies as large as $300 million in billings are considering taking part in the pitch, sources said. Skip Pile declined to disclose the names of shops that have been contacted. Sources said agencies in Boston, New York and the Midwest have been approached.
Recent advertising efforts have centered on Lindt retail stores and holiday promotions. The client is now seeking a broad image campaign. In the late 1990s, the client in rapid succession traded in Gearon Hoffman, Boston, for Leonard/Monahan, Providence, R.I., before working on projects with Clarke Goward, Boston.
Rossignol, Williston, Vt., is seeking a shop to handle a print-based project budgeted at $500,000-1 million, though the work could lead to a long-term relationship, sources said.
No fewer than three Boston players of note are in pursuit, sources said. They are: Hill, Holliday, Connors, Cosmopulos, the region's No.2 agency with 2000 billings of $610 million; Holland Mark, New England's largest independently owned agency; and Modernista!, which despite its small size—about 20 employees—has in the past year won assignments from the Gap, General Motors' Hummer and MTV. Lisaius Marketing, a Burlington, Vt., boutique, is also pitching Rossignol.
A Rossignol staffer confirmed talks with agencies but would not name them and referred other questions to Jeanne-Marie Gand, vice president/advertising & communications, who did not return calls. Executives with Holland Mark and Modernista! did not comment. A Hill, Holliday spokesman confirmed that the shop has been talking to Rossignol.
The sudden scarcity of dot-coms isn't the only factor spurring large agencies to pursue small clients, Skip Pile said. Reviews by large traditional bricks-and-mortar clients have fallen off as marketing directors, spooked by the economic downturn, become increas-ingly skittish about risking an agency change, he said.
If present trends continue, there's a likelihood of smaller agencies being squeezed out of even modest reviews by large players. Several new-business executives at sizeable agencies, unwilling to alienate potential clients, declined to speak for attribution. Most agreed, however, that they are now willing to consider going after clients of virtually any size.
"Win 'em small now, maybe they'll pay more later. As long as they pay," one executive said.