1 of 6
Aaron Herrington and David Catalano
Aaron Herrington, David Catalano of Modea.
2 of 6
John Anstey: Mission changed by technology.
3 of 6
Katie Wallace: Her niche is design.
4 of 6
Sharon Rapoport: “Will ad agencies exist in 10 years?”
5 of 6
Thomas Becher: Striving to remain “full-service.”
6 of 6
Todd Marcum: “Lots of hacks in New York too.”
She has worked her way up and down the ladder of ad agency power and prestige, from nowhere land in 1980 as a fresh-faced University of Georgia graduate with big dreams to landing the classic major-market starting job five years later as a copywriter at Young and Rubicam in New York. On Madison Avenue, where annual revenues are counted in the hundreds of millions of dollars, she authored such memorable appeals as Pepsi’s “I’m Leaving You” campaign, in which that signature punch line was recited on national television by celebrities including Mick Jagger.
But in 2003, after a bout with breast cancer, Rapoport abandoned the high-octane world of Manhattan conference rooms where clever phrase-turning was long hailed as magic. She returned to her hometown of Roanoke, and set up a mom-and-pop ad agency called The Farm with her husband, John Anderson, in a modest one-room office above what is now The Cup coffee shop on Grandin Road.
From this obscure nook, she perseveres with such high-profile clients as Carilion Clinic, creating its recent campaign about recognizing the signs of stroke and heart attack: “Know the Five to Stay Alive.”
The Farm may seem hayseed by Madison Avenue standards; there’s no Don Draper, the fictional powerhouse of the hit TV series “Mad Men,” bringing clients to tears with the emotional appeal of his latest marketing slogan. “The old model – come in, we have the ideas and the answers – is passé,” Rapaport says.
Her appraisal of the industry sums up the shifting ground of media technology that has rocked not only ad agencies, but also the news and music industries. The ad agency mystique is weakening.
Big agencies and even boutiques such as Rapoport’s are finding that clients no longer take their creative wisdom for granted. “Clients are questioning everything,” she says. One reason is that the internet and social media allow clients to craft their ads for individual customers and change them quickly if the responses, which can be measured instantaneously as clicks on a Web site, aren’t positive. Today, Don Draper – hero of ‘60s brainstorming sessions – would find that some clients are forsaking traditional campaigns to write messages tailored to Facebook accounts rather than hiring an ad agency to buy television time or newspaper space.
Geotargeting of consumers is in some ways a dream-come-true for sellers of goods and services, but it’s a challenge for ad agencies because their manicured personal messages can sound hollow. Customers can delete them from iPads and mobile phones just as quickly as they fast-forward through the commercials in recorded television shows.
That leaves some ad pros wondering what their long-term role in social media will be. “Sometimes I wonder if ad agencies in their present form will even exist in 10 years,” Rapoport says.
Tony Mikes, a veteran consultant to ad agencies around the country, including some in Roanoke, is uncertain about how agencies will fit in with changing communications technology. Social media “needs to be natural,” he says, adding, “The question is, should agencies be content managers? I guess so but, by and large, it’s so viral that companies should really manage their own social communications because that’s where true honesty begins.”
His candor has an ominous ring of truth in a field that long thrived on the public’s acceptance of a certain amount of insincerity in advertising that was OK when it sponsored entertainment, sports events and news media. And Mikes’ dubious assessment of the ad industry’s role isn’t lost on Rapoport.
Of the 33 area agencies interviewed for this article, nearly half have downsized during the last decade and the employee level in most of the others is flat. The typical agency size is two or three people, but some have gradually shrunk from twice that many. Almost no one is hiring. There are more local agencies here than at the start of this century, but some have been opened by laid-off employees of established firms.
Their revenues have fallen since 2007 amid the recession, typically by about 20 percent, they say. And clients are routinely asking for discounts.
Agencies around the nation, including major markets, have reported similar troubles. Some say there’s little wrong with the advertising industry that wouldn’t be fixed by an overall economic recovery.
Says John Anstey, co-founder of the Anstey Hodge agency in Roanoke: “One thing I haven’t heard in the last two years is, ‘We have a large pot of money for advertising.’”
That means belt-tightening for most Roanoke ad agencies, which generally decline to disclose earnings but say privately they need in the range of $75,000 to $100,000 in revenue per employee to turn a profit. Although few local agencies disclose financial data, some say hushedly that their normal margins of 20 percent in the black have given way to barely break-even.
According to figures supplied to The Roanoker by ad agencies in this metro area, including Blacksburg, their employee total would have declined by 20 percent to about 120 since 2006, (supported by about the same number of freelance photographers, videographers, Web designers, graphics artists and other specialists), if not for the emergence of an upstart firm whose success underscores what some say is the prototype in its field.
That would be Modea, based in Blacksburg. Founded in 2006 by two Virginia Tech grads with online marketing backgrounds, the firm has largely ignored print and broadcast media to focus on digital advertising platforms including social media. Modea has exploded in size to 73 employees – about five times larger than any other agency in Southwest Virginia – and revenue of about $6.7 million in 2010.
David Catalano, president of Modea, says his client list includes some familiar local names such as Advance Auto Parts, and distant giants including T Mobile and Lennox Tools.
But in a microcosm of the ad industry nationally, Modea is among the vast majority of agencies in this area that rely on dozens or even hundreds of clients for occasional projects as part of overall marketing campaigns. Such relatively tenuous relationships have largely replaced the archetype in which a client company hired a single ad agency to handle everything from drawing logos to penning jingles and choosing which television programs to sponsor in campaigns that might last for years.
Catalano’s approach to advertising contrasts with his industry’s historic method – now passing into history. No longer “can I just blare my message on one of the TV channels where I have a high percentage of market penetration and hope it will eventually stick. What we spend more time on now is helping brands figure out how to craft personalized messages – even the tone of voice they should take.”
Rather than persuade clients they’ll always need Modea to be their interpreter, Catalano’s company prepares them to go their own way: “We’ll tell them about the manpower they’ll need to properly run a Facebook or Twitter account, because you can’t have one of these and not update it.”
Further, Modea’s client list, which includes dozens of companies in other states, illustrates a plus for local agencies resulting from the internet: Finding and hiring them is easier for far-flung clients who are shopping for fresh approaches and lower agency fees than they may find in larger markets.
Yet Roanoke area agencies are well aware that internet access and approachability works both ways: Local clients can contact ad pros in New York, Chicago and Los Angeles without getting on a plane. The celebrity reputation of big-city agencies rankles Todd Marcum, co-founder of Access, a 14-person agency located in a refurbished auto showroom on downtown Roanoke’s West End.
“People say there’s more talent in New York than anywhere else,” he says. “That’s true, but there are also more hacks in New York than anywhere else.”
The pluses and minuses of advancing technology make Catalano’s full embrance of it uncommon among area ad agencies. He unabashedly describes Modea as a “digital agency,” a label which much of the Roanoke area advertising establishment refers to somewhat dismissively as a niche business.
Meanwhile, conventional players such as The Becher Agency in downtown Roanoke, with nine employees, insist on remaining what Thomas Becher, its president, calls “full service.” That means that Becher, whose clients include the Hotel Roanoke and Conference Center and a share of the Roanoke Regional Partnership’s promotions, is structured in much the same way as agencies were in the roaring ‘60s of “Mad Men.”
His staff includes such formal titles as creative director, an art director and an accounts supervisor, and they work in assembly-line fashion to produce ads for everything from newspapers and brochures to billboards. To be sure, Becher is gradually adjusting to the popularity of online media, giving one staffer responsibility as “interactive designer” and forming a stable of freelancers who specialize in social media and other internet avenues.
Yet like some other agencies in Roanoke – and typical of many big-city counterparts – Becher clings to a romantic model of the ad agency he sees as “coming up with neat ideas that the clients haven’t thought of.”
But the hyper-personal world of interactive messaging is encroaching on Becher’s favorite part of the advertising game – the brainstorming and creativity that let his staffers show “we are the experts” who can work what he affectionately refers to as “magic.”
That cultivated alchemy is threatened throughout the ad universe by the advance of digital shortcuts such as an increasingly popular process called “crowd sourcing.” It dethrones ad pros who long enjoyed an image of inspired creative nobility.
Crowd sourcing starts with clients who already have the idea for an ad campaign. Rather than sitting down at a conference table to kick around their plan in the presence of ad agency genius, they simply test it by sending out thousands of personal messages on the likes of Facebook. Thus they don’t pay ad agencies to form focus groups or do formal market research.
But crowd sourcing stabs at the heart of the traditional agency culture that Becher enjoys: the cultivating of personal relationships between clients and agencies that can translate into long-lasting business bonds.
“I try to fill appointments over meals with clients about three times a week,” Becher says. “Meals provide an opportunity to get to know a person and the business.”
Paradoxically, ad agency socializing with clients is becoming less important at a time when those patrons are striving for more personal contact with consumers.
The days of three-martini lunches depicted on “Mad Men,” if they ever really existed, are long gone. “I wish it was more like ‘Mad Men,’ more fun,” says Catalano. He says the show’s characters “never seem to do any work.”
Still, the Roanoke area ad agency scene projects a laid-back atmosphere. There’s little intrigue involving raids by agencies on competitors’ client lists. Agencies typically say they can’t recall a major client abruptly switching to a competitor.
Of course that peaceful existence owes in part to the fragmentation of clients’ ad budgets. Most big advertisers parcel out work to several agencies. Some “partner” with others on projects. One reason is the niche specialties on which some agencies focus. For example, Katie Wallace, owner of The Wallace Agency in Southwest Roanoke, is best known for her skills and background as a graphic designer with a penchant for originating company logos. She sometimes works on a campaign in which the internet-related work is done elsewhere.
Not that clients don’t occasionally change horses, but usually not without plenty of advance warning. Wallace says, “If something is going wrong between you and a client, they’re going to turn up the heat on you long before firing the agency.”
Yet sometimes, in a media era that’s evolving at such high speed, a client’s request can leap ahead of an agency’s skill set. John Anstey, whose five-person firm operates in a converted Sunoco gas station near Hotel Roanoke, recalls a watershed moment in 2007 when a retirement home asked him to “develop an app.”
“It was a wake-up call,” says Anstey, who knew generally what applications for mobile phones are – add ons or extra bits of data unrelated to making a call that essentially make cellphones more like computers. But he didn’t have anyone on staff who could create the app desired by the prospective client, which wanted to enable retirement home residents’ loved ones to keep in touch by downloading personal news.
Anstey didn’t pursue that project, even though he could have hired a freelance specialist to do it. And while Anstey’s company still doesn’t do apps, he says the request “drove home how important changing technology is becoming to agency missions. We have moved much further into web design and other digital forms of advertising.”
He says personalized messages on Facebook and other social media now represent about 25 percent of his company’s revenue, up from 5 percent when it was founded in 2003.
While online communiqués are all the rage, old fashioned publicity is still requested on occasion. Access recently drew what might seem at first glance to be an antiquated assignment: organize a bus tour. Marcum, Access president, says insurance giant American General Life and Accident, based in Nashville, Tenn., hired his agency to plan a 20-city employee-recruiting trip for the insurer’s human resources staffers and generate attention from – surprise – common media outlets such as newspapers, television and radio. He says the bus tour drew hundreds of job applicants, many of whom were hired by the insurer on the spot.
Mikes, the consultant to several Roanoke ad agencies over the years, agrees there’s still plenty of use for offline media. “Let’s say you have a sale coming up on Saturday, you might want to prepare customers with Facebook. But to move those carpets, (or other products) you better get that message out on TV and radio.”
Old ways die hard, even among ad pros who recognize there’s little choice but to change. For example, even though Rapoport acknowledges a new era of advertising, and communicates with clients mainly via email and phone, rather than in person, she can’t quite give up one vestige of the past.
Her agency maintains not only its Grandin Road cubby hole of an office, but also an address in Manhattan that she admits is partly for “prestige.”
But that office is largely a pose for letterheads and business cards. It isn’t staffed, and it’s also a mail drop for several other small businesses. Rapoport’s tactic captures the essence of the strategy many ad clients demand: Skyline imagery on a down-to-earth budget.