Ad Agencies Are Finding Ways To Cope

3/6/2009
Philadelphia Business Journal

With the recession in full swing, businesses have a tight grip on marketing dollars.

That may have put a crimp on some of the region’s advertising agencies, but a random survey of local agencies found that recessionary solutions are becoming as creative as some of the advertising.

“Price has become a bigger issue for clients, and that’s not surprising. Everyone has pressure to reduce expenses across the board, and marketing is not immune,” said Marc Brownstein, president of the Brownstein Group, a full-service agency in Center City.

Holton Sentivan & Gury, an Ambler ad agency, put together a self-branding campaign earlier this winter called, “No recession for me,” as a grassroots marketing effort to build awareness of the agency. In tough times, the agency is also taking client relations seriously: its Web site lists a 24-hour “client hotline,” a cell number.

“It isn’t a joke. It’s my cell phone and occasionally I do get calls. Email is great, but if clients want to be able to talk about their business or there’s some sort of fire, I want to be available. Hey, we’re in a service business. No abuse to report so far,” said John P.H. “Jack” Holton, CEO.

The recession has meant a white-knuckle ride for many businesses, and some are weathering it better than others.

“Everyday is a new challenge and you never know what to expect. It’s volatile and exciting all at the same time,” David Neff, president of Neff + Associates in Old City, said. “Some clients are scared and cutting back on advertising budgets or procrastinating. … All decisions are taking longer. Some clients are cutting back on PR while other accounts are reducing advertising spends and committing more resources to PR. Clients’ media budgets have never gone further. TV, radio, print and outdoor are all softer than I’ve ever seen in the 20-plus years I’ve been in business. Cash is king.”

“It’s hard not to be somewhat preoccupied with the current economic situation. All of us are feeling the effects and each of us is challenged with the task of figuring out what to do about them,” said Bradley Gast, president and CEO of Mangos Inc. in Malvern. He’s telling clients: “See the economic downturn for what it really is – a ‘reflation.’ It’s like adjusting the air pressure in your tires, in gradual increments searching for a smoother ride and better handling over the long haul.”

In addition to the recession, agencies are also grappling with fundamental changes in how consumers make buying decisions – be it from advertising through television, radio, print, outdoor, point-of-purchase displays, Web sites, micro-sites and so on.

“The age of the traditional agency model is dead, and Philadelphia is pretty reflective of that trend. The single-shop megaliths of days of yore have all but been replaced by specialty shops, whether it be media, digital or branding,” said Steve Merino, partner and creative director at Seventy7 Advertising Inc. in Center City. “Oh, and print is dead. So whoever is keeping up with the latest trends in online advertising, branding and marketing will survive.”

LevLane, a Center City agency, has been building on old-reliable clients, most recently KFC Corp. This week, LevLane won another piece of that business, handling media and promotions for a co-op of 10 KFC restaurants in Vermont and upstate New York. LevLane now handles KFC co-op accounts in six markets, stretching from Vermont to Florida.

“This is a gratifying vote of confidence from one of our most important clients, some of whose franchisees we’ve been working with for over 20 years,” said Chris Ponzio, account director at LevLane.

“In this climate, where a sale is more difficult and the bottom line is more sacred, brand loyalty is paramount,” said LevLane President David Lane. “Adding ‘velocity’ to the sales process and getting existing customers to return again and again is critical.”

Some smaller agencies still have their hands full.

Rhonda Serkes, president of the Penn Valley agency Help Me Rhonda, still sees “lots of opportunity out there.”

“What recession? Mind set,” Serkes said in a text message. “I tell clients, ‘Are you going to hunker down or keep your name out there through advertising?’ Studies have shown companies that advertise during down times have sales up during good times. This will pass.”

Not every client has that kind of constitution. Some are having trouble paying their bills.

“Regarding receivables, our larger clients are not a problem,” Brownstein said. “We have had to keep an eye on collections with a couple of smaller clients, but even those got paid. I will tell you that we are not extending credit to new companies that we do not have a track record with.”

“Most clients are still paying,” Neff added, “but a bit slower than before.”

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