By Category: New Business During a Recession

» New Business Strategy: Commercializing Your Own Products

Why shouldn't ad agencies or design firms launch their own brands?
by Todd Knutson  |   published on July 17, 2009


In a recent post I mention the opportunity to partner with upstart technology companies as a new business play. This month's Fast Company article titled "Selling Soap. Literally" shows how some innovative agencies and design firms are creating their own products to generate growth and, as a healthy by-product, increase business acumen.

You may be familiar with what Anomaly is doing, but how about Trumpet, Zag or Fuseproject?

Fusebox has created Y Water, a low-sugar beverage for kids, as well as the Jawbone wireless headset - both in partnership with startups. Trumpet was similarly involved with Naked Pizza. BBH Labs launched Zag, which has created and lla, while Anomaly has five projects in the process, including Avec Eric and eos.

Here are some take-aways from the article:

Ben Malbon, BBH Labs:

  • "By creating our own brands, we wanted to make ourselves recession-proof."
  • "Because it's your own money on the table. When it's literally off the bottom line, the best idea must win. You have to be open to people being more expert than you."
  • "You get exposure to the full gory detail of how clients make and lose money."
  • [employees] "will be able to have a much smarter conversation with a client's marketing director, or CFO."

Carl Johnson, Anomaly:

  • "If there is a client, they are in charge..."
  • "You have to embrace collaboration."
  • "You're much more commercially aware."
  • "You can do so much if you know what you're doing with product placement, sponsorship, digital PR. It's that whole "I haven't got any money, so I'll have to think." It makes you much better at grinding out media without paying."

Robbie Vitrano, Trumpet:

  • "It's exciting to figure out how to commercialize something that has real substance."

Bart Haney, Fuseproject:

  • "Either our ideas will make it or they won't. If a partner starts a business with the idea, we stay on as the creative segment of it. If it gets sold off or licensed, then we take our share."
  • "Clients start seeking us out because they absolutely know we understand the path to market and all of their challenges."

If these comments get your entrepreneurial juices flowing, go for it! Why not launch your own brand, either on your own or with a partner?

» New Business in a Media Decline

Reports point to continued decline, with opportunity on the horizon
by Todd Knutson  |   published on July 14, 2009


It feels so good to wake up to a headline like this: ...during a presentation this morning Brian Wiesner of Interpublic Group of Cos' Magna, said that the U.S. advertising economy will drop 14.5% this year...(as reported by AdAge).

This prediction is based on "a new forecasting model, which is no longer calculated on advertising expenditures, but instead on the advertising revenue generated by the media suppliers."

And then there's an article in Forbes magazine from last week, which says that the "ad collapse in television, radio and magazines isn't a passing dip, but a permanent drop." It cites a report from private equity fund Catalyst Investors that documents how spending as a percentage of gross domestic product declined from 2000-2007 due to the Internet.

The Internet broke "the oligopolistic pricing power that traditional media enjoyed in the 1980s and 1990s."

Catalyst predicts a further dip in ad spending as a percent of GDP over the next two to three years, with radio and magazine revenue bottoming out in 2009, but then enjoying a 5% increase in revenue in 2011.

So, what's the new business impact of all this gloom and doom?

  • The reports predict that the bottom of the decline in traditional media will be Q1 of this year - good news, the worst is over!  The bad news may be that overall spending levels may remain flat for a long time.
  • The Internet continues to change everything. However, clever entrepreneurs will continue to figure out ways to deliver ads to consumers. How can your agency take advantage of new technology to benefit your clients? Are there opportunities for you to partner with one of these new technology companies and share in their growth?
  • Traditional media may continue to decline, but it still delivers lots of eyeballs and listeners. How can you even further integrate and leverage the full range of traditional, new and emerging media to create a plan that delivers outstanding, measurable results?

Even though we're in a recession, we're also in a time of exciting change that offers new opportunities for those looking for them. The challenge is the recognize them when you see them; that's your new business opportunity.


» Confucius on Ad Agency CEOs Emerging Strong from the Recession

Think twice, then act decisively in pursuit of new business
by Todd Knutson  |   published on June 19, 2009

Chi Wan thought three times before taking action. When the Master was informed of it, he said, "Twice will do."

Shaun Rein writes about "Confucius' Three Keys to Successful Leadership" in a recent Forbes magazine article, making the case that too many executives either:

  • Act without thinking, or
  • Don't act at all.

Decisions made the first way may be rash and lead to unintended results, while avoiding decisions altogether often leads to failure, because doing nothing usually won't carry you through a crisis.

Instead, do as Confucius recommends: think twice before taking action, but then act boldly and take decisive steps.

Yesterday I wrote about an expected uptick in spending by marketers, which could represent the beginning of the end of the recession.This is a good time to think and carefully plan your "recession exit strategy", and then act boldly. Don't wait to ramp up your new business efforts.

In the Forbes article, Rein relates an example of a recent missed opportunity. "In 2007 hardly anyone knew what a netbook was. Looking at the market, people at companies like Asus and Acer noticed that laptop makers like Dell weren't giving consumers everything they wanted. They pounced on the unmet need and began selling inexpensive small computers that would provide the basic functions like Web surfing that most consumers demand. Major laptop makers held back, seeing netbooks as a low-margin fad not worth getting involved in. They didn't take the time to see the big picture. In 2008, sales of netbooks topped 11 million. Asus and Acer between them control 68% of a market that some estimate will reach 35 million units in 2009."

What new business opportunities do you see that no one else does? How might you reorganize your agency to pursue them? What new business tactics will you employ? When will you start your marketing campaigns?

Don't wait. Some say this recession represents the biggest new business opportunity of our lifetimes. How can you make it so for your agency?

» Organic Growth Drives Ad Agency New Business

Recession success proves the power of a well executed strategy
by Todd Knutson  |   published on June 09, 2009

Amid stories about client losses, staff cuts and reduced spending are powerful reminders that a well-executed organic growth strategy can be a powerful revenue-generator in good times as well as during the recession.

I've had some impromptu conversations with agency leaders recently about what's working in their drive for organic growth. Most recently it was with Nancy Katz Aresu of Lowe NY during our 25th college reunion (Trinity College class of 1984) this past weekend.

Nancy runs Lowe's Unilever business across North America and has 25 years experience in the agency business. She knows something about the subject and confirmed the three keys to organic growth that I've been hearing:

Build a relationship.This can only be acquired over time and requires that you:

  • Ask smart questions to learn your client's business. Know their goals, opportunities, and most importantly - what keeps them up at night.
  • Demonstrate your capabilities on the project or account you've been awarded.
  • Communicate daily - by phone. There is no substitute for direct, verbal communication. Find any excuse to call and talk.

If you've built your relationship well you will have developed a solid foundation based on mutual respect.

Develop an honest and trusting connection at the top. Assuming you've earned you're client's respect, you need to develop this level of communication with their key agency decision maker. You need to be able to talk openly about the good, the bad, and the ugly. If you're unable to speak this way, keep working on number one, above.

Ask for more. Once your agency proves itself on one piece of business, ask for more. Use what you've learned about your client's business to identify a problem or new opportunity, and then ask the agency decision maker for a shot at it. Note: if it's a large client don't get greedy; build your relationship one step (project, brand) at a time.

This is consultative sales at its best: you need to ask good questions, build trust and respect, prove your capabilities, and then ask for the sale.

A successful organic growth effort requires experienced, self-confident account executives with strong consultative sales ability. If you have these skills at your agency you can drive revenue growth, even in the recession (as Lowe is). If you don't, you might start thinking about either providing training to your account execs, or consider upgrading your agency's talent base.

» For Strong Ad Agency CEOs: How to Survive, Thrive, Dominate in the Recession

Take a page from Jack Welch's playbook
by Todd Knutson  |   published on May 29, 2009

Ad agencies must drive new business to grow. But then there's growth through acquisition. Or, perhaps "stealing" your way to growth. If you missed this from today's Vanity Fair/Bloomberg Panel, read on...

HUNT: Okay. The next question is directed - is from India, and it’s directed to Jack and Joe. And it says, “How does your perspective differ as a businessman versus an economist on the way any organization or firm should try to be proactive in an environment with as many uncertainties as we have today?”

WELCH: Well, Al, we have 11 companies in our private equity company. We meet with them every 30 days. Our objectives with them and our challenge to them were three things. One, cash is king. Get every drop of cash you can get and hold onto it. That is number one.

Number two is communicate like you’ve never communicated before to your people. They’re scared. They don’t know what’s happening. Every action you take must be understood by every employee in the place. If used to think you communicated a lot, communicate tenfold more now in every morning at businesses.

Get in the skin of every employee so they know everything that’s happening and they aren’t kept sitting out, wondering. They understand what the situation is.

And finally, the third one is if you’ve got the cash, you’ve communicated with everybody, you’ve taken care of your best, you’ve differentiated with your people, go out and buy or bury your competition.

And the idea is buy them because they might not have done what you did. Bury because they’re sitting around scared. Steal their employees. Steal their R&D people. Steal their salespeople. Bury them. Now is the time.

Now that's advice straight from the gut.

» In a Recession, Ad Agencies Should Put Everyone on New Business

Facing lack of new business growth? Loss of clients? This is what a recession feels like, so now's the time to rally your troops
by Todd Knutson  |   published on May 26, 2009

Ad agencies and other marketing services firms are perfectly positioned to get creative and inspire their marketing talent on behalf of the firm. reminds us that,

In a recession, everyone should be in marketing. Motivated employees contribute to creative thinking that can help retain current customers and identify new ones.

She suggests 5 tactics to employ now:

1. Increase customer contact and communication. Senior executives...should become personal ambassadors to major customers, thanking them for their business and making it clear that they want to help them succeed. But don't stop there. People throughout the ranks can reach out to customers - perhaps a personal note or a phone call to provide news or ask questions. Customers will know you care, you will be better informed, staff will feel more involved, and unexpected opportunities might arise.

2. Start looking for new markets now. Creative thinking can find opportunities to offset losses from current customers. Starting research now on less-familiar prepare managers to move quickly when conditions improve. This might involve sales calls...postings on Web sites targeting new areas or industry segments, sending more people to speak at industry conferences and cultivate relationships - good investments even if they seem like the first candidates for cutting. During slow times, employees who might otherwise be idle could be deployed to gather information by discussions with end users. If travel costs are too high, the telephone can be augmented by Internet research.

3. Invest in employee morale. When employees fear for their jobs, worries about family finances drain energy and increase the temptation to stay home on the slightest excuse. When morale is down, productivity and attention to customers suffer, right at the time that you most need...efficient teamwork and cheerful voices handling customer questions. Too many companies treat employees as costs to be cut, when they really should show employees how important they are. Managers can greet employees personally and thank them for their contributions. Small tokens of appreciation and enjoyment, such as a weekend outing with families or a food festival with employee contributions as a break during working hours, go a long way to keep people motivated to perform well.

4. Emphasize and reward small wins. Innovation is an on-going task, but turbulent times increase the need to get everyone involved in undertaking small improvements that can be easily and quickly implemented - to find a cost-saving efficiency or improve the work environment.

 A program that actively seeks...ideas and rewards them -- publicity, appreciation, or even a small portion of the cost-saving or revenue gains -- can strengthen the company immediately. Motivation increases, and customers see a company that is always ahead of the curve in terms of new thinking.

5. Stick with your values. There is always a temptation to cut corners when times are tough. Managers should avoid desperate moves that could damage them or the company later - no accounting tricks...and no compromises with ethics, such as "gifts" to a purchasing agent. Reminders about company values can reinforce solidarity and increase the confidence that customers have in the company.

Each of these can be employed to help you market your agency, drive organic growth, research new business opportunities, or proactively pursue new clients, all the while recognizing that the morale of your agency's team is critical to new business success.

What other ideas would you add to the list?

» If You Think Ad Agency New Business is Difficult, Try Living in Venezuela

But in any economy, clever entrepreneurs find opportunity where others see only problems
by Todd Knutson  |   published on May 25, 2009

Imagine running your agency while fearing imminent kidnapping of a family member.

I spent the Memorial Day weekend with family. We are quite a crew of different nationalities and cultures. One of my step-sisters brought along a cousin who lives in Venezuela. He's a very successful late thirty-something guy from a prominent family; let's call him call Juan (no real names - you'll see why in a moment).

Juan's life is quite different from ours. He can trust no one but himself and his wife because of the threat of kidnapping. Every family member has multiple body guards, and he must have different sets of guards at his country home and house in the city. He can never tell his guards where he's going in advance, because any routine or advance notification presents an opportunity for guerrillas or members of the government to infiltrate and grab a family member. He carries a revolver on his hip and an automatic pistol at his ankle. He sleeps with a hand grenade.

One of his wife's family members was kidnapped a few years ago and it took millions of dollars to get him released, fortunately alive.

You'd be right in thinking that doing business in a country like this is challenging. 50% inflation is one thing, kidnappings, government corruption and the threat of industry or company nationalization are altogether different. At the same time, instability can create opportunity.

We heard about a friend who builds houses for people related to the Chavez government. One customer insisted on a marble roof for his house (it formerly had dirt floors), despite the fact that the weight was impossible to support. This client paid in cash, with money stolen from the oil companies, which they pulled from bags containing bundles of wrapped $100 bills.

Juan told us a story about a some polo ponies he purchased on a trip outside the country. When they arrived in Venezuela, someone from the government was at the airport, suitcase in hand. He'd heard about the ponies' arrival and wanted one for himself. Recognizing that not selling one of the ponies to this guy was not an option, Juan suggested a price 60 times more than he paid a week before. The unsophisticated, newly wealthy 'gentleman' opened the suitcase and paid the asking price with hundreds of thousand of dollars in cash.

What dysfunction do you see in our current economy? Which of your clients or prospective clients are poised to take advantage of them - and might not even realize it? Could you bring a good idea to them or even create some intellectual property of your own to take advantage of an opportunity only you see?

» Ad Agency New Business Strategy: Employee Referrals

Push responsibility for new business throughout your entire agency
by Todd Knutson  |   published on May 04, 2009

I'm talking to more agencies and marketing services companies that are trying to enlist everyone in their companies to drive new business. Miriam Marcus wrote an article in Forbes magazine the other day (click here for the story) featuring Roundarch, a 175-person Chicago-based Web site and mobile application designer/developer.

Until 5 years ago Roundarch had a dedicated sales team. But then they decided to push responsibility for driving new business throughout the company. Here's what they did to kick off and maintain the program:

  • Offered a $5,000 bonus for any referral that leads to a project.
  • Agreed upon a 2 minute elevator pitch.
  • Encouraged employees to network with and through friends and family.
  • Initiated a weekly company-wide email that lists all leads and projects in the pipeline to solicit "who do you know" feedback from employees.
  • Held a company-wide sales meeting every month to share what's working and what's not.

New business from employee referrals is now a critical part of Roundarch's success, and some of the biggest projects in the last five years have come from junior staffers. And a peripheral benefit emerged: enhanced employee morale, as employees at all levels feel directly responsible for the success of the company.

Here are 4 recommendations that Roundarch recommends you keep in mind if you'd like to kick off a program like this:

  1. Hone your value statement. Make sure your employees know what the company can do, and can not do, and which clients are most worth targeting. Everyone should have a quick two-minute elevator-pitch on hand, should the right occasion arise.
  2. Be reasonable. Some employees are capable of setting up a meeting, while others can deliver a full-on pitch. Define upfront what is expected of people, and how they should follow through on potentially promising situations.
  3. Harness the Web. Any connection can lead to a sale--be it through alumni associations, community groups and now, especially, online via Facebook or LinkedIn. When Roundarch launched an iPhone application for Avis Rent A Car, nearly 30 employees posted links about it on their blogs and on their Twitter and Facebook accounts.
  4. Reward them. Salespeople crave commissions. At Roundarch, employees receive a $5,000 bonus for a referral that leads to a project. Positive reinforcement and peer recognition are great motivators, too. Even if a lead doesn't turn into a project, Roundarch highlights efforts at the company's monthly meetings, and asks the person to tell the group how they did it. "We gave the first junior employee to score us a lead a huge over-sized check," says Roundarch President, Jeff Maling.

If you set the right expectations, provide the necessary training, and establish and maintain the required communication and incentives, this can be an effective way to grow your new business pipeline.

Have you done something similar at your agency? I'm interested in hearing what's worked and what hasn't.


» Don’t Lose Ad Agency New Business Opportunity in the Recession

Create an agency culture that believes in and thrives on opportunity
by Todd Knutson  |   published on April 30, 2009

Karen Albritton's comments in AdAge's Small Agency Diary were right on the mark and are key to agency growth in any market, and particularly today.

Karen identifies 4 ways to maintain opportunity in your agency:

  • First, I believe agencies have to match their resources with the work they have to do now. No one welcomes the pain of layoffs, but being overstaffed reduces opportunities for everyone. In time, under-utilized employees will leave, and you won't be able to choose who does. If you take the initiative, you can increase your chances of hanging onto people with great potential.
  • Give people the chance to cross-train. Earlier in my career, during a downturn, I made the transition from media planning to client services. That lateral move created more opportunity for me than any new client win or promotion ever could. With the growth of digital, there has never been a greater opportunity - or business imperative - for agency people to learn new skills.
  • Go all-out on new business. Heaven knows most of us can use some new work. Use this time to enroll more people in your new-business efforts, from prospecting to pitching. We recently did spec work when it wasn't required. We were able to get more people involved in the pitch, and everyone was able to enjoy the satisfaction of winning.
  • Take this opportunity to freshen up your agency marketing. If you have the time and resources, consider a brand refresh, a new reel or perhaps even a new website.

Every downturn presents opportunities if you see them. These are four good ways to maintain your margins, grow your people, drive new business, and enhance your marketing.

» Hope is Not a Strategy for Ad Agency New Business

It's okay to hunker down during a violent storm, but not as the economy contracts
by Todd Knutson  |   published on April 21, 2009

Last fall, as we all started feeling the effects of the economic slow-down, agency CFOs started tightening controls over new business spending.

  • Individual employee spending limits were reduced or eliminated
  • Budgets were frozen
  • Vendors were cut
  • Travel was reduced or eliminated

Much of this was prudent, but the pendulum may have swung too far. Amid the dire economic news the media unrelentingly reports, companies are taking advantage of the downturn. Consider Beal Bank, as reported in the April 9, 2009 edition of Forbes magazine. Where quite a few banks are just trying to survive, they are taking advantage of "...the opportunity of my lifetime," and have "tripled in size in the last eight months".

What new business opportunities are out there for agencies to pursue? Rather than cutting new business spending, why not invest in it?

The encouraging news is that some agency presidents are doing exactly this by:

  • Aggressively pursuing organic growth with every one of their clients, and
  • Investing in proactive business development

We're seeing agencies invest time and money on the following new business tactics:

  • Nurturing referral networks
  • Building a social media presence (for help on this click here)
  • Email, telephone outreach to targeted prospects
  • Outsourcing prospecting

These are all positive, action-oriented steps to take, rather than trying to wait out the economic storm. As I said to our sales group recently, "what if 'normal' doesn't return?" Even if it does, who knows when it will be?

Don't wait, get aggressive about your new business efforts during the recession.

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