Running an Agency In a Down Economy

I’m the guy at Archer that keeps the lights on, dims them at times, or tells everyone to turn them off when necessary.  My job is to stay out of the way – let the teams do what they love to do. The minute I get in the way is the minute I shoot myself in the foot. I try and find out what makes each personality perform at their peek creative potential – and make that happen. Externally, I am one of the four principals. Over the past five years, the agency has been running through my blood enough to know when things are good, when things are bad, and when drastic changes are needed.

Agency life has been around forever, but interactive is a different animal. This is a new business – and a new industry. This means operationally, I can’t just follow traditional advertising trends. I/A has been around for 10 years – but new mediums continue to develop and expand which means there’s not a lot of data to measure where we’ve been and where we are going. Social Media wasn’t here 10 years ago.

So how do I do it?  How do I operate an interactive agency in a down economy?  Here are a few things that I monitor on a daily basis to ensure I’m giving everything I can to ensure our team can stay ahead of our clients and make them look good.

The obvious:

  1. Are our clients happy? There is and never will be a stastical measure for this. This is on the ground listening (not talking) to the customers and those that work for the customers. A big part of this is also listening to our own team and those on the front lines – they are the ones that are interacting with our customers on a day-to-day basis. COO’s often forget to do this. Internally – our Chief Creative is the one with his ear to the ground. I listen to him religiously.
  2. Are our employees happy? Not rocket science here.  We may want to have the right people on the bus – but if they don’t have what they need to do their job, I am out of one. I try to grab informal lunches or dinners – and again, just listen – unless asked. A big piece of surviving the downturn is ensuring the team is happy. Trust their opinions – they have them for a reason.
  3. How are other businesses seeing things? I belong to a group known as “Vistage”. It’s like getting your MBA realtime with real life problems. I meet once a month with businesses that are similar in size to me, which are not competitors or customers. This allows me to open up about concerns I may have and hear others who are in my shoes perspective. The feedback I get from the other businesses is invaluable in understanding not only what’s going on in the industry right now – but also what others are doing to cope with current market conditions. Nothing can give you more confidence than voicing ideas to others that are in very similar situations as you.

The details:

Even with my gutt – I still need to monitor the numbers to keep me in tune. Like driving a car – you know you’re moving forward, and you feel like you’re moving fast – but without looking at the gages – you never know how fast you’re moving. Here are a few gauges I keep an eye on to maneuver in a down market:

  1. Financials – I have always monitored the cash we expect to get in and the expenses we see going out. I track how long we can keep our lights on based on these projections. This is based solely on past experiences on when a client typically pays and the budgets we put in place at the beginning of the year, or what we re-adjusted at the mid-year point.  Other financials I look at – Accounts Receivable, Profit & Loss to Budget, Income and expenses from on a 12/12 scale, and a few others. It’s really important in a down economy to follow all trends on a 12-month average so I can detect early on where elements of the economy and business are about to change.
  2. Resource Planning – We have one of the world’s smartest analytical project managers/coordinators this industry has seen. He dreams in numbers. We look at the current projects we have compared to what geniuses are required over the next six months. We do this once a month and it shows whether we need to hire or supplement with outside-specialized contractors. This is an important gauge that provides a big input into our business health.
  3. Industry – There are a few industry trends that I consider to ensure we’re on the right track. However, I put this through an optimistic filter since I believe interactive advertising is still largely part of a growth (and new) industry. One barometer is published by the Interactive Advertising Bureau (IAB/www.iab.net) – research provided by the Pricewaterhouse Coopers, eMarketer, and others. I am an avid reader of the Media & Marketing section of the WSJ as well.  Between these two and various others, I know that if the trend lines are moving down externally and so are ours, we need to think differently. If the trend lines are moving up, yet ours are not, I need to look internally and see what needs to be addressed (i.e. are we shooting ourselves in the foot?).
  4. Our Relationships – There is no more important relationship in these times than our accountant, our lawyer, and our banker. Whether you’re using your lines of credit or not – the most important thing to do at this time is let them know what’s on your mind, what is happening in your market place, what your gauges are showing you, etc. These individuals are the best champions for us in a down economy. We need to be completely open with these teams.

I always remember hearing about the worlds best golfer carrying a note card with him which would remind him what he’s supposed to do when he gets out on the links: keep you’re head down, follow through, etc.  Our most important tactic in operating in a down economy is to remind ourselves on a daily basis what we are to do on a daily basis. Our job is not about the tools we use, the pictures we paint, or the technology we use to implement, but rather are we helping our clients succeed in marketing their message to the world in a way that protects and promotes their brand efficiently and effectively. This needs to follow through to the way our team approaches each engagement. We need to remind ourselves more often to live up to our mission:  “Great People doing Great Work for Great Brands”

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