Media That Works proves that with a little ingenuity, small media outfits can still prosper.
CINCINNATI-Don't confuse the lack of pretension at the offices of Media That Works with a lack of sophistication. Sure, there's no mistaking the small-town roots of MTW and its staff. The walls of the century-old former schoolhouse are covered with dozens of rainbow-colored quilts that give the place a homey feel compared to the corporate austerity of its big East and West Coast competitors. That's not by chance. "A quilt is a wonderful piece of art composed of many individual pieces, sewn by teamwork," said Bill Price, the president of MTW. "The quilts have become the icon for the company."
That's not as off the wall as it sounds at first. And it would be a big mistake to write off MTW because of its executive's insistently low-key approach to business. The company expects to place more than $500 million worth of media in 1998. While that's small beer compared to the billings posted by Zenith, TeleVest, Carat and Starcom, it's more than double MTW's 1997 results. What's more, the firm has averaged 55 percent annual growth since its founding 13 years ago.
It has racked up that impressive performance with a niche strategy which targets companies often too small to register on giant agency radar screens. It handles Steak 'n' Shake, not McDonald's; Bush Beans, not Kraft Foods; Frank's Nursery & Crafts, not Kmart. (To be sure, there are also big household names among MTW's client roster: Andrew Jergens Co., Glaxo Wellcome, Heinz, Kroger, Sheraton and StarKist.)
That's not the only way MTW has set itself apart from the competition. While the top-tier agencies have sought growth through acquisitions, MTW has chosen to focus upon a series of strategic alliances with midsize agency networks, newspaper and infomercial buyers and strategic research companies to deepen its marketing expertise. It also has recently established a West Coast office, where its "small is beautiful" approach to business development is reaping rewards. A New York outpost could be next. While its owners never intend to rival TeleVest in size, its record proves it's still possible for a small shop to prosper in a field increasingly dominated by giants.
Admittedly, some outsiders insist MTW cannot swim against the tide of media consolidation forever. "It is going to be increasingly difficult for smaller agencies to compete with the tools and efficiencies of scale that major buyers can bring to bear," said Susan Rowe, vice president and general manager of the Chicago office of competitor Carat/ICG. "For MTW and smaller buyers, it's only going to get tougher down the road."
While the firm now employs 105, MTW began with one employee, a desk and phone. Bill and Mary Beth Price, it's husband-and-wife principals, met while working at Leo Burnett in Chicago: Bill was in account management; Mary Beth was in media. They moved to Cincinnati when Mary Beth joined Procter & Gamble and Bill worked for Taft Broadcasting. During her two separate stints at P&G, Mary Beth was part of the team involved in cable TV account buying as well as programming.
After a few years working at the packaged goods company, Mary Beth began to feel the urge to strike out on her own. The opportunity came one Christmas season in a call from Dean Butler, a P&G alumnus who ran a small optical company called LensCrafters. Would she consider leaving P&G to handle media for his firm? Butler asked. She immediately signed on and MTW was born; during its first weeks the upstart agency operated out of the Prices' home. A buying assignment from the Jimmy Dean division of Sara Lee followed, and other work soon rolled in. Bill, who was then employed as executive director of the Greater Cincinnati Chamber of Commerce, joined the fledgling company in 1986.
MTW grew with plenty of hard work and a commitment to the lessons the Prices had absorbed while at Burnett and P&G: provide your clients with first-class service and provide your employees the power to build careers. "We give folks here a lot of responsibility," said partner Lynne Veil, who joined MTW in 1987 after 10 years at P&G. "Mary Beth likes to say we're training people to run their own businesses, and we are. They have profit-and-loss responsibilities on their accounts." It's a casebook study in business development that Mary Beth could use in her new job; she recently stepped down as MTW chairman to become professor at the Page Center for Entrepreneurship at Miami University in nearby Oxford, Ohio.
As a matter of principle, MTW managers place a premium upon accountability and disclosure. "We have no secrets with clients or with staff. All the books are open and everyone understands the basis from which we're operating," Veil said. "It's a wonderful position from which to operate. You never have to stop and think, 'Now, what should I share or not share with this client or supplier or colleague?' It's all there."
That attitude helped MTW strike a key alliance that has fueled its growth. Worldwide Partners, a Denver-based network of more than 100 midsize independent agencies, was seeking ways for its members to improve their media buying and planning capabilities. It initiated talks with several media agencies about a possible alliance. "We had two priorities in seeking a media partner," said Fiske, Worldwide Partners' president. "The first was full disclosure; the second was that we be able to absolutely trust the people" behind the company, she said. MTW fit both requirements.
Unfortunately, the proposed joint venture with Worldwide Partners, under which MTW would have become de facto media buyer for most of the network's members, never managed to get off the ground. "Frankly, it was just ahead of its time," Fiske said. "I don't think Worldwide Partners' members were ready to disperse their media, and MTW wasn't ready to disperse itself to 50 branch offices." While the joint venture collapsed, the informal relationship with Worldwide Partners remains key to MTW's operations.
While the MTW does not publicly breakout its income from media placement and other services, Price said the firm receives "substantial" revenues from providing media and marketing services to members of the Worldwide Partners network. At least two agencies use MTW as their media department, while others retain it for buying, planning and marketing help as needed. Young & Laramore in Indianapolis, for example, selected MTW after conducting a search for a media buyer for client Steak 'n' Shake, which wanted to unbundle creative and media. The Cincinnati company, in turn, can use Worldwide Partners member agencies overseas as an international buying resource for its clients.
Price and company are serious about expanding the range of tools they offer to analyze the impact that changes in media allocation have on clients' bottom lines. Last year, MTW formed an alliance with the Hudson River Group, a Valhalla, N.Y.-based research company. The official name of the joint venture is Stratalytics, but Price has informally dubbed it "the Holy Grail." Stratalytics is actually an optimizer, a proprietary tool that allows media planners to manipulate real-time audience data to find the most cost-effective buy. By combining the New York organization's computer modeling technology with its in-house media and marketing expertise, MTW hopes the new joint venture will further distinguish itself from pure media buyers and leverage its preferred role as a media strategist. The advertisers with which MTW works frequently have small or inexperienced marketing and media departments and often request assistance beyond buying efficiencies.
"Clients often ask us to take a leadership position in their strategic marketing planning," said Veil. "Stratalytics allows us to answer questions about marketing plans and the effectiveness of various components. How does promotion affect sales or profits? What effect does couponing versus advertising versus spending on TV or magazines have?"
The Hudson River Group alliance "is right on strategy with what we want to do," explained Price. "And that's to add marketing expertise to the media expertise. Our understanding of our clients' businesses sets us apart."
That understanding has to pay off in increased sales for clients, not just in media efficiency, said Susan Bentzinger, MTW's P&G-trained head of strategic development and steward of the Stratalytics venture. "You don't want to buy the wrong plan cheaply," she said. "You need smart planning from the beginning, and that's where Stratalytics and other optimizers come in. Their value is not just in the process but in their being able to be tailored to the needs of each client."
The most unlikely alliance MTW has struck so far has also proven to be one of its most rewarding. It has joined the agency's buttoned-down Midwestern office on the Ohio River with a group of rollerblading rainmakers who solicit clients from a laidback San Diego beach house within sight of the Pacific.
Tim Hahnke and his team of business generators left TBS Media Management in late 1996, looking to hook up with a media company that offered more than buying efficiency to clients he brought in. Over two months, Hahnke and partner John O'Connor talked with 20 prospective employers on both sides of the Atlantic and had narrowed their list to five big agencies.
MTW wasn't even on it. "Then Billy Price called up and said, 'Hi. remember me?'" Hahnke recalled. "I did because I competed with them when I handled Pearle Optical and they handled LensCrafters. Pearle was losing market share and LensCrafters was gaining an equal amount. And LensCrafters didn't even have an outside creative agency. MTW was just giving them good marketing and media advice."
Price asked whether Hahnke and O'Connor would come to Cincinnati and include MTW in their deliberations. "'Only if you send me an airline ticket,'" Hahnke said. "If he was willing to spend the money, I was willing to go." Hahnke and O'Connor ended up huddling with the Cincinnati executive for two hours.
After the meeting, MTW moved to the top of Hahnke's list. Though MTW was smaller than most other media firms they were considering (and Cincinnati "was a drawback, to be honest," admitted Hahnke), the firm nonetheless had several advantages over others. "If you look at the classified ads, the positions which are open are account planners. And that's where MTW had more depth than anyone else we talked to. When John and I saw the quilts on the walls, we thought they were old-fashioned. But they were the only company that showed us a multimedia presentation about themselves, so we knew they were up to speed on the technology side. And only one other company even alluded to optimizers," he said. MTW has four.
After Hahnke & Co. merged with MTW last year, Hahnke became the firm's newest executive vice president. Although Bill Price "has been trying to convince us to come back [to Cincinnati] since day one," Hahnke said, he and his team have remained on the West Coast, opening MTW's first office in Los Angeles and maintaining an informal beachfront office in San Diego, from which they jet around the country courting new business. In less than a year, the West Coast team has landed 17 new clients. The new additions are typical of the small to midsize companies that constitute MTW's bread and butter: retailers like Beverages & More, Musicland and Stanley Steemer, and project work for Coco's restaurants, GTE Wireless and QLube.
Hahnke also engineered the creation of MTW Media Group, an alliance that joins MTW's broadcast strengths with daily newspaper specialist The Newspaper Network in Sacramento, Calif., and Williams Worldwide in Santa Monica, Calif., which Hahnke said has one of the largest inventories of infomercial time in the country. The three alliance partners solicit clients independently, then share them to fulfill needs in broadcast, newspaper and long-form advertising.
What's next? In January, MTW was close to pulling the trigger on a deal that would open their first New York office. But management decided at the last moment to step back. "The timing wasn't right," Hahnke said. "We said, 'Let's manage what we have now. The Los Angeles office has grown much faster than we expected. We can't let service drop off.'" Though plans to open a New York office have been placed on hold, Price remains interested in launching an office there given the right terms.
When so many media companies are units of agencies tied to certain multinational clients, MTW's management believes that its independence is an asset to be preserved. Price has been approached over the years by "all the majors" to see whether he had any interest in cashing out of the firm. So far, the answer has always been the same: no sale. "We feel the course we're pursuing is the most prudent course at this time," he said.
Nor does Price display any worries that his company might be squeezed out by the industry big boys. "Consolidation will continue, but we believe that we're well positioned now. There is great opportunity now among midtier advertisers that want to work with an independent media company," free from ties to the major ad agencies, he said.
Nonetheless, Price recently decided it was time to give MTW's folksy office a facelift. An interior designer has been wandering around the ex-schoolhouse, preparing to give it a more modern decor. The quilts may be de-emphasized, but the careful, considered attititude the MTW crew brings to its work will remain. "We don't like to do wild and crazy things," Price explained. After all, there's no reason to unravel the threads of MTW's success.