e stands atop the conference room table in his West Coast operation's Century City office with a this-is-ridiculous-but-it's-good-for-business expression on his face, as a photographer fiddles with lighting. The founder of Horizon Media is dressed conservatively in a dark power suit that would be out of place a few miles west—where the ocean-view warehouses, which the city's creative shops call home, are located—but blends in perfectly among the lawyers and TV network executives who populate this L.A. power center.
Bill Koenigsberg has journeyed from his New York headquarters to discuss West Coast expansion (the 25-person office is doubling in size and leasing 15,000 square feet of new space) and plot business-development strategy with Zach Rosenberg, the young, ultraconnected L.A. agency player who recently joined Horizon from Initiative Media North America. Koenigsberg is standing on top of the table because the photographer wants a dramatic effect, but the symbolism of his stance is unmistakable: If one defines independence strictly—that is, no participation economically or otherwise by a larger entity—Horizon Media is the largest independent media agency in the U.S.
Since Koenigsberg founded the shop in 1989, its claimed annual billings have grown to $700 million—including $100 million the agency won this year—from a client roster that features Geico Insurance, International House of Pancakes, Boston Market, the NBC television network (plus three NBC-owned-and-operated TV stations), MSNBC, CNBC, Foxwood Casinos and Columbia Tri-Star Television Distribution, Sony's syndicated arm. In all, the agency works with about 50 clients.
Horizon Media, whose letterhead proclaims it "The Marketing Driven Media Services Company," now employs more than 180 people out of its New York headquarters and its L.A. branch. The shop plans to open a Chicago office by the end of this year, and it will launch an ethnic marketing unit in 2001.
After the photo shoot, Koenigsberg, 44, sat down with Adweek media editor Jack Feuer and discussed a range of topics, including the story behind Horizon's declaration of independence. He also provided insights into the strategies that have helped his agency flourish in a land of global media giants.
ADWEEK: How did you get into the business?
KOENIGSBERG: I've always been fascinated with the communications end of advertising. Media is always current; you are living in today's world. I went to school at the University of Miami and interned at a small agency down there, and I was immediately drawn to it. Arriving in New York in the late '70s, I went to work for a small media firm called ELA. Then Media General hired me in the mid-'80s to run their media division. I have a good, broad-based background in the business. In 1989, I formed Horizon Media.
KOENIGSBERG: I realized there was a need for the media specialty. At that time, the big agencies didn't embrace the media service concept. In fact, they fought it tooth and nail.
ADWEEK: The continued independence … was that a purposeful business strategy or did it just evolve?
KOENIGSBERG: We like to say we're "management owned," the only private media company in the U.S. today, and the largest. With independence, we don't have to worry about next quarter's earnings, where the stock is going to go or how a decision is going to be perceived in the marketplace. Obviously, we have to be profitable. But I think our independence—the fact that we answer only to clients and nobody else—is a point of difference.
ADWEEK: Is that how you position yourself? Agencies above and below you on the media hierarchy can claim either global reach or flexibility.
KOENIGSBERG: When we started, we were the only media agency that was marketing-driven. Everyone at our shop focuses on one thing: helping the client sell its product. We developed a unique account management structure, where we have marketing and media experts who do nothing but manage their clients' business.
ADWEEK: Other agencies have that.
KOENIGSBERG: But we're talking about marketers with media knowledge who don't have any planning or buying responsibilities.
ADWEEK: You've remained independent, but you haven't lacked for suitors, have you? Who has tried to buy you?
KOENIGSBERG: Over the past three or four years, we've been contacted by True North, Mediavest, Carat, Zenith, Publicis and CIA. WPP has not contacted us, IPG has not and Omnicom has not.
ADWEEK: Everyone but the big three.
KOENIGSBERG: Yeah, the true independents, we've talked to all of them. They've done a lot for the business, demonstrating to clients that it makes sense to get the best for your media dollar from a media specialist. I think they've moved the business light years ahead. And it's important for me to get an understanding of the landscape out there and what everybody is doing and how they're positioning themselves.
We certainly need a European allegiance. Right now, we have clients doing business in Europe, and we're doing about $25 million there from the states. But we've got to have a much longer-range [European] plan. I've talked to many of the global companies, and, hopefully, within the next couple of months, we'll make a decision about how to handle Europe. What I thought would be a threat has turned out to be a competitive advantage, because many clients in that $10 million to $100 million range are not getting the kind of attention, service and accountability they would expect from these huge global conglomerates.
Ninety-nine percent of the time, clients come to us because they feel they are not getting service. It has nothing to do with price or a secret, sexy proprietary research no one else has.
ADWEEK: But how long can you keep that up? You have $700 million in billings and 50 clients. You must be approaching critical mass.
KOENIGSBERG: As long as I can keep investing money back into the company, attract the kind of talent we've been attracting and not have to worry about what the next quarter's stock price is going to be, I think we can continue to do that. It's a philosophy, a mind-set, a way of doing business. Western International Media did that when they were a $2 billion company, before they became part of Interpublic.
ADWEEK: Doesn't your positioning make it more difficult for you to get, say, a national packaged-goods account? All the big national advertisers are going to use huge global networks. Is it part of your business plan to eventually win those clients, or is the pool you're fishing in now big enough for you?
KOENIGSBERG: The pool that works best for us is the one where a client needs strong quantification of results. They need immediate sales lifts within two weeks, or a month, or a quarter. Many of our clients are in retail, entertainment, direct marketing, franchise and service-oriented categories. The clients who have constantly changing landscapes are attracted to us, because those are the clients [to whom] we can show the biggest benefit in terms of their advertising dollars.
ADWEEK: Other shops have similar models.
KOENIGSBERG: I don't think there are very many, other than Empower Media in Cincinnati. A lot of competitors our size have been bought up: MBS, ICG, VSM, KSL. There's such a huge cost of entry today to stay competitive, not just in people but in technology, that some of the lower-tier guys haven't been able to grow their businesses. And the Zeniths, the Carats, the MediaComs, we've talked to all of these people, and everybody is out there selling strategy and research. Basically, everybody is packaging the same thing.
ADWEEK: Do you work with agency partners?
KOENIGSBERG: Any agency is welcome to use Horizon as a media resource. Obviously, with the Omnicoms and Interpublics of the world having bought up just about every agency in sight, there aren't many shops free to affiliate with us. We work with Gotham, which is owned by Interpublic. We've done some work for Kirshenbaum Bond & Partners. We work with six or seven agencies right now, and that number has grown. But because of our marketing focus, I think we put out a better product working for a client than for an agency.
ADWEEK: We've written a lot about how media is becoming perhaps the primary driver of the process. We know national clients are starting to believe this because we've seen consolidations. What about your clients?
KOENIGSBERG: Our clients have also consolidated their media, but they didn't have five or six buying entities to begin with. Yet the model is similar: They work with us because they want thinking with one voice. These big companies—consolidating from five agencies to one—are trying to get that single focus. They're doing it for the same reason that a $5 million client consolidates with one entity. The key challenge is, can you provide that talent pool? Can you provide that service for these big guys? All of the smaller guys, who are nice-sized media clients, are being neglected in that process.
ADWEEK: Even so, there are different takes on the media specialist model. General Motors' recent planning review is a good example. They're creating a unique planning entity. What do you think of the concept of splitting media planning and buying?
KOENIGSBERG: Planning and buying belong together, like a copywriter and art director. General Motors has its reasons, but I have a hard time understanding the concept. In today's environment, planning and buying desperately need to be integrated. They need to be held together like glue. How GM intends to integrate their planners into the process is going to be the key to the success of that operation.
ADWEEK: Have you walked away from buying-only opportunities?
KOENIGSBERG: We haven't walked away from those opportunities because I'm a businessman. But we've told our clients that to get our best thinking and their biggest return on investment, we would like to keep the two together.
ADWEEK: Have you pitched planning-only business?
KOENIGSBERG: No. We do not have any assignments that are planning-only, nor have we made planning-only pitches. Unless the assignment was large enough, I don't think we could make money on a planning-only basis.
ADWEEK: What are the biggest challenges facing a media agency today, regardless of size?
KOENIGSBERG: Two things. First, there has been an enormous amount of pressure on the larger global companies for these consolidated assignments. In fact, so much pressure to attract clients to their new branded entities that we're not getting enough value for the product we're putting out. Everybody has to be careful they're getting paid adequately for the service they're providing. I know some of the prices charged by other media agencies: People are losing money on business for public relations and for the sake of staying entrenched with the client, because they don't want anybody else to get into the tent. A lot [of the global media agencies] have big creative resources. The business has to be able to operate profitably on its own without taking into consideration creative implications.
Another challenge out there today—we are on information overload. There's so much new technology—consumer information, ratings information, purchase information, Internet usage—a big challenge is digesting all of that data then filtering out [the superfluous stuff] so you can clearly explain to a client what's happening and provide a clear road map.
ADWEEK: Let's talk about talent.
KOENIGSBERG: Good. It's an old cliché—everyone says they have the best people, [but] the results are on the scoreboard. There are examples of teams that have the best talent but a lousy coach and they don't win. You attract talent by building a great environment in the workplace. We give health-club memberships to everybody in our company and a clothing allowance, $500 an employee, after a period of time. It's all part of being marketing-driven.
ADWEEK: Five years from now, what's going to be the most surprising aspect of the media business?
KOENIGSBERG: Many people are predicting the death of the 30-second spot. I don't think we're anywhere near that point. Thirty-second advertising is still effective—we prove it every day of the week. But 10 years from now, based on new technology, it may be a different issue.
I also don't think online advertising is going to show the explosive growth people are predicting. One part of the media equation is the fragmentation on Internet sites. It's enormous, and the amount of money that sites will get for the advertising is not going to be what's predicted today.
ADWEEK: Not trillions of dollars by 2005?
KOENIGSBERG: Not trillions of dollars by 2005, but we will see some dollars migrate to the online side.
ADWEEK: What about interactive?
KOENIGSBERG: I think the privacy issues have to be sorted out. What kind of data access are corporations going to have? I do believe the use of the phone will be more prevalent. I do believe there will be a big growth in that, which I think is unexpected. I also think we are going to see a tremendous rise in creative boutiques in this country.
ADWEEK: Many media agency executives tell us that. Why?
KOENIGSBERG: For the same reason that a company like mine can flourish. That $5 million to $30 million client wants top-level thinking and attention on their business. The choices are becoming fewer and fewer. Pretty soon, some entrepreneurial agency creative guys are going to say, "We've had enough of this and want to go back to the basics of working on clients' business."
ADWEEK: We're not just talking about unbundling now. We're talking about dismantling.
KOENIGSBERG: Yeah. And you know, we've already seen it with a lot of agencies setting up these little offshoots, little sub-divisions.
ADWEEK: Large media agencies are talking about creating a new kind of media person. It sounds a little like your account people, a hybrid of marketing and media talent with all of these new skill sets.
KOENIGSBERG: I find it ironic and funny that these big media agency holding companies are trying to build new and different and unique specialties. I'm wondering what they were doing for their clients before they became media specialists.
ADWEEK: They were buyers.
KOENIGSBERG: They certainly claimed to do a great job before. So what were they not doing then that they are doing now? Do I think other disciplines will come into the media fold? Yes, I do, because media interacts and touches people in many different ways, and those touch points are going to continue to grow and to change. You certainly need predictors, people to help you pave the way.
The marketing and media functions are definitely more integrated today … [but] most of these companies are old agency media departments with different brand names. Same planners, same buyers, different moniker. They did that to compete with the media independents. That's exactly what happened. They didn't wake up one day and say, "Media specialty is a good thing." They woke up because media independents were gaining on them and they said, "You know what? We fought it long enough and we can't fight it anymore. We have to become a media specialist, too."
Now they want to take it a step beyond. They're going to have a dentist on board soon.