Turning Silver Into Gold
At McCann-Erickson's burgeoning office in San Francisco, Penny Baldwin-Spear is sometimes referred to as the shop's "secret weapon." A crusader for integrated communications programs for a wide variety of clients, she has a knack for growing limited projects into full-blown client relationships.
Energetic and quick, with a no-nonsense manner, Baldwin-Spear is a self-described "jock" who thrives on competition. When she blew out her knee skiing a while back, the 39-year-old executive hobbled to agency and client meetings in a cast.
She was promoted to one of three executive group director positions last May. In three years at the agency, she has woven her integrated approach to advertising and marketing into the fabric of the account management department. Account people at McCann, Baldwin-Spear says, "start talking about integrated marketing possibilities with the client right from the start," even if the agency is only handling a small piece of business. The strategy is paying off.
According to general manager Ron Benza, Baldwin-Spear and her fellow managers boosted the shop's revenue by 40 percent last year to $225 million-making it the fastest-growing office in McCann's U.S. network.
Baldwin-Spear's success showcases one approach to a problem that, surprisingly, vexes many agencies-how to increase work from existing clients when so much agency effort is directed at winning new clients. The topic has gained prominence as reviews grow more expensive and competitive, and as client turnover increases.
The aim might seem obvious: Almost all self-respecting, revenue-hungry agency leaders say they want to draw more income from their hard-won clients. Talk is cheap. In fact, agencies often run up against a stubborn and inherent conflict. By nature, executives seem to love the competition of a review, the thrill of the chase and the climactic victory of landing an account that other shops covet. At the same time, they need to cultivate an environment in which the agency can focus more intensively on growing revenue from the inside out.
Brendan Ryan, chairman and chief executive of Foote, Cone & Belding Worldwide in New York, says growing existing accounts can be the simplest and most profitable way to increase an agency's revenue. With existing clients, an agency has already "gone through all the pain to get [its] nose in the door," he says, further citing "efficiencies in staffing and infrastructure."
It's no accident that some agencies succeed more than others in building on existing client relationships; it takes a particular strategic vision. Behind all the strategies are account managers and senior executives who know how to nurture a high level of trust with their clients, convincing them that the agency can solve their business problems.
"The client needs to know from the beginning that you are not hiding anything," explains Robert Riccardi, partner and account director at Goodby, Silverstein & Partners in San Francisco. "We try to disarm" the company's wariness and skepticism of agencies. Instead of directly going after more ad spending, "we show them that we share their business, so they know and feel that they can come to us when they need help."
Agencies that have found the right formula have brought in a ton of new revenue-without the expense, hassles and uncertainties of a full-blown review.
¥ At McCann, the clients that have felt Baldwin-Spear's green thumb include AT&T Wireless
Services, which started in early 1996 as a retail advertising account with estimated billings of $40-60 million. It has since grown to include image ads, direct marketing and the launch of a new entry-level product. Ad spending has nearly doubled, to about
$80-100 million, according to sources. Another client, Pacific Gas & Electric Co., was so moved by the agency's combination of branding and direct response work that it recently handed the shop an estimated $10-15 million account for a new PG&E national power subsidiary, without a review.
¥ GSD&M in Austin, Texas, moved beyond its advertising role in the early 1990s to help client Southwest Airlines create the "Friends fly free" promotion to tie into the company's "Freedom" ad theme. The promotion is still used off and on to drum up ticket sales, and earlier this year the airline consolidated at GSD&M the creative work for its entire $90-100 million account.
¥ Research by Goodby, Silverstein prompted client SBC Communications earlier this year to create a new telemarketing policy for SBC subsidiary Southwestern Bell. The agency stepped back from the company's product-oriented approach to study customers' pet peeves about the phone industry. The result was a ban on dinnertime sales calls-and Southwestern Bell's first image campaign, created by Goodby, Silverstein, that bragged about its customer-friendly policies. The work has also helped bring the agency $40-80 million in potential new billings from another, newly acquired SBC subsidiary, Pacific Bell.
¥ Last year, San Francisco's Winkler Advertising broke away from contemporary home-computer imagery with an unusual, futuristic print campaign for Sony Corp. of America's new line of personal computers. The memorable approach prompted the company's first TV campaign for the designer-styled equipment and helped the agency land business from other Sony divisions.
When it is particularly well done, an attempt to grow a client's advertising and marketing can lead to a major initiative that reorients the entire organization-in turn, feeding a bigger ad effort later on. Goodby, Silverstein's $25 million "Got milk?" campaign for the California Milk Processor Board is one example. In addition to the award-winning ads, the advertising tagline is used on shopping-cart signs, checkout-stand dividers and coupons. The statewide work was picked up nationally last year and is effectively redefining milk as a hip, essential comfort food.
While various agencies have their own ways of turning a smattering of assignments into a mountain of billings, certain practices and attitudes tend to be shared by both big players and scrappy up-and-comers.
FCB's Ryan brings his senior account managers into his office at the end of the year for a brief review. "I ask if the creative work for their accounts is great or not; I ask if revenue from the accounts is up or down," he says. "And I ask who from their staff has left and who have they attracted to join the agency." He says growing existing accounts is the "heart and the key of the agency."
Under Ryan's tutelage, FCB's New York office swelled from about $500 million in billings in 1991 to about $1.3 billion 1996, while actually reducing the number of clients-from 26 to 19, he says.
Indeed, top management must be committed. It is up to senior-level bosses to convince the troops that growth of existing accounts, as opposed to growth of the client base, is a crucial indicator of the agency's health.
Agnieszka Winkler, the president of technology-oriented Winkler Advertising, has reinvented her agency to bolster business from current clients. As a result, Winkler Advertising has nearly doubled billings, broken into broadcast work and attracted a sizable minority investment from Grey Advertising.
Winkler Advertising's growth has come largely through its ability to build on a pair of blue chip advertisers: Hewlett-Packard Computers and Sony. Both companies initially hired the agency to do small, business-to-business assignments and then gradually increased their business into full-fledged print and broadcast accounts that now dominate the $60-80 million agency's client roster.
Boosting business from existing clients also means overcoming the common agency addiction to the excitement of winning a review-any review.
"How many times has a good, steady client called an agency and found that everyone is unavailable because they are working night and day on this huge pitch?" asks one account director.
Adds Winkler, "Advertising agencies [love to] celebrate winning reviews; there are parties and lots of strokes from the industry and the media. On the other hand, getting more work from a regular client isn't usually hailed as a big achievement by those on the inside or the outside."
In Austin, Texas, GSD&M has had to learn from past mistakes "to be able [sometimes] to say 'no' to money" and celebrate new business from old clients as well as new clients, says Roy Spence, the agency's president.
The choices can be tough. Within the last year, Winkler says her 70-person Winkler Advertising chose to pass on the high-profile $10-20 million Charles Schwab & Co. review as well as the $10 million Sybase pitch to focus its energy on additional assignments from Sony and Hewlett-Packard.
To expand existing business means that account directors must put time and energy into understanding the client's organization and industry, not just the personal tastes of the company's marketing staff. At FCB, for instance, account managers are expected to be "walking the halls" of the client, "talking to the divisions that the agency doesn't work for, as well as the divisions we do," says Ryan. Along with being visible and helpful, the account people "should know what brands are in trouble" and have ideas on how to help, he adds.
Account managers "have a fiduciary role to be champions for the client's return on investment," says Spence of GSD&M. They are the ones who can see the business opportunities before anyone else. "They sell vision to help build the client's business faster," he says. Many of GSD&M's key accounts-including Southwest Airlines, Wal-Mart and Doubletree Hotels-started relatively small and ballooned because, as the companies grew, the agency's marketing concepts were able to contribute and keep pace.
Spence says he looks for certain attributes in his agency's account directors: "We want people who are visionary, restless, endlessly curious and love the thrill of building business."
At Winkler Advertising, the emphasis is on account staffers who are highly collaborative, within the agency and on the client side. Winkler even hires instructors to teach employees how to improve their collaborative skills. Account people at Winkler are expected to continually participate with other departments in group discussions, decision making and brainstorming. The shop also holds "client summits" two times a year in which the interdepartmental account teams seek ideas for improving clients' businesses.
Account directors can do wonders by making it easier for the client to understand how a concept can work beyond the advertising, says Goodby, Silverstein's Riccardi. They can take a new ad idea to the agency's design group and discuss ways to use it in packaging, in-store displays and promotions.
"Then you can show the marketing execs how the ad idea can evolve and be adapted; you can help the client connect the dots," Riccardi says. Such ammunition "helps them get the advertising concept accepted through all the constituencies in their own organization," he adds.
For Haggar Apparel Co., Goodby, Silverstein's design group used the advertising themeline, "Stuff you can wear," and developed packaging, in-store displays and posters reflecting the look and sound of the ads. An average Haggar campaign consisting of between six and 10 print and TV ads also included about 75 posters, says Paul Curtin, co-director of the design group. When the agency won business from Nike, conflicts forced it to resign the Haggar account, but sources say the design group intends to use the same nonadvertising ammunition in its relationship with Nike.
The final part of the inside-growth equation is perhaps the most obvious, and yet the most difficult: Identify and win clients that are worth the agency's business-boosting efforts, companies with the infrastructure and talent to lead in their industry.
At GSD&M, says Spence, "we look at what category we need to be in, then seek out [companies in that category that are] warriors, that have the passion to win. We tell them we will take something small, anything; we'll pay our dues."
Wal-Mart, the nation's largest retailer, was on GSD&M's radar for years before the company even responded to the agency's letters. Last year, billings topped $145 million, according to Competitive Media Reporting. Another client, Doubletree Hotels, boosted its ad spending to an estimated $14-19 million when it went on a buying spree.
"It comes down to choosing the right client from the beginning," agrees FCB's Ryan. "Our position is, we are not taking the crumbs. Picking winners is central to the success of the agency." As an illustration, Ryan points to the drug company Merck & Co., which hired the agency two years ago to advertise a single product. Other products and new marketing responsibilities have followed, more than doubling FCB's billings. Sources say the account now bills an estimated $100 million.
The waiting game may be profitable, but not necessarily easy, notes Spence. "Ours is an industry that delights in a sense of urgency," he says. Wooing the right clients, on the other hand, "takes real patience. But every time our agency takes on a new client, we are betting the farm they want [our kinds of] ideas, because that's what we have to sell."
So while it may not be as sexy as scooping up a victory in the latest high-profile review, landing new chunks of business from an existing client can be even sweeter for the account director who makes it happen.
"Golf's fine [to woo clients]," says Riccardi, the partner and account director at Goodby, Silverstein, "but imagine taking a great ad idea that starts small and getting the client's whole organization behind it, to the point where the idea permeates how the company identifies itself and how it functions." For a savvy account manager, that's a hole in one.