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RIDING THE UPS AND DOWNS
AGENCY EXECS WEATHER STORMS IN THE AG INDUSTRY
Editor's Note: The agriculture industry, and the marketing communications agencies that serve it, has seen many challenges in the last year. Agri Marketing talked with executives from the top seven agriculture agencies to gain insight on how to stay on top in turbulent times. The executives include:

• Steve Barr, Osborn & Barr Communications, St. Louis

• Phil Johnson, Colle + McVoy, Minneapolis

• Jamie Greenheck, Fleishman-Hillard, Inc., Kansas City, Mo.

• Greg Leaf, Miller Meester Advertising, Minneapolis

• Greg Nickerson, Bader Rutter & Associates, Inc., Kansas City, Mo.

• Steve Rhea, Rhea & Kaiser Marketing Communications, Naperville, Ill.

• Max Wenck, Morgan&Myers, Inc., Jefferson, Wis.


The agriculture industry is seeing some tough times. How is your agency handling this?

Barr: Osborn & Barr is actively creating and presenting new and innovative communications options to our current ag clients. We are also aggressively seeking new client opportunities within and outside the agricultural sector. However, this is not a new strategy adopted to deal with the current ag economy. This is a successful strategy Osborn & Barr has pursued for several years.

Johnson: We've answered these tough times with a tough-minded response: In late 2001, we recommitted to agribusiness by reorganizing around core capabilities and a few primary industries, including ag. We've seen the ups and downs occur over and over again, but the fact remains that agribusiness and food production are vital industries - we don't intend to walk away from that. That said, we've worked harder to put tools and resources in place that help our clients move the market. ROI has become a much stronger focus for all of us and we continue to explore new ways to effectively measure it.

By doubling our efforts to provide fresh thinking and approaches to these changing audiences and markets, we're uncovering a wealth of opportunities in agribusiness. In many cases, our ag clients are benefiting from ideas we've already used with success in non-ag industries. This is where our diverse customer base and integrated approach show their true value. Great thinking transcends category.

Greenheck: Fleishman-Hillard was the first major communications firm to form a food and agribusiness practice more than 20 years ago, so we have seen good and bad times in agriculture. We have structured ourselves to help clients through the difficult times by bringing the best resources to bear on the challenges they face. We have positioned our food and agribusiness capabilities in the context of our complete service offering of marketing, corporate, issues, and 'change' communications support. This global practice group approach gives our clients access to the best communications experts across a wide range of industries and disciplines.

Leaf: Miller Meester has always built its business on innovation appropriate for the times. We have been fortunate to have clients as our partners that are innovative themselves. Our role in Harvest Partners and Harvest Partners Network for BASF are examples of how we continue to respond to market changes.

Nickerson: Since our inception, agribusiness has been one of the primary industries we serve. Throughout our nearly 30 years in business, we've witnessed many 'cycles.' Regardless of the economic environment, we've stayed focused on delivering what we do best - strategic counsel and creative execution. We've also adjusted accordingly, whether that means adding services or prioritizing resources. In addition, we're proud to work with clients who respect and value the roles branding and communications play in the marketing mix. Despite the current down cycle, we feel fortunate to have held steady from a revenue perspective.

Rhea: Like everyone else, we're seeing the effects of client mergers, buyouts and reduced budgets. We have maintained a philosophy of being flexible, adjusting our business to meet our clients' needs and constantly replenishing declining business with new business. We've been very cautious about making new capital investments and expenditures, but we have managed to continue to grow our business in this down economy by adding clients who view marketing communications as an essential business.

Wenck: Our long-term ag clients are looking to us for a wider range of services, resulting in steady organic growth - the best kind. This allows us to be more strategic, more efficient and ultimately provide greater value. Also, issues like biotechnology, the environment and food security are forcing traditional production ag clients to come to grips with needs at the consumer end of the food chain and vice versa.

How is your agency responding to consolidation in the ag industry?

Barr: We look at consolidations as potential opportunities for obtaining new business in non-competing sectors where Osborn & Barr is currently not a player. Fortunately, most of our ag-related clients are the leaders in their respective industry categories. While not immune to consolidation, these aggressive companies or organizations are in strong enough positions to weather the current economic storms.

Johnson: We certainly appreciate our ag clients who continue to stand strong through consolidation, and we're doing everything we can to support them. In terms of new business, the advice to stay in touch with people is highly pertinent in agribusiness. Many of our former clients and associates have remained in or returned to ag, although in different capacities. Staying connected at all levels is more important than ever.

To find new opportunities for our current clients and our agency, we continue to look for ways to stretch the definition of 'agriculture,' using current knowledge and successes to search out related, but new audiences and markets. We see this industry as providers of food, fiber and lifestyle inputs.

Greenheck: As a worldwide communications firm, we are able to team our agribusiness experts with the communication industry's best 'change' specialists to help ag companies navigate the external and internal issues brought about by spin-offs, mergers, and acquisitions. Clients value our ability to understand their business and help them apply best practices from other industries as they deal with consolidation. Industry consolidation also has meant increased attention to global issues, so we are seeing more clients look to our worldwide network of 83 offices to help with everything from corporate positioning to issues management to marketing communications.

Leaf: In this retracted market, clients are buying ideas, not agencies.

Nickerson: We constantly monitor the landscape and look for opportunities to expand our services with existing clients. We are also adding new clients that appear to have a bright future. From an internal perspective, we are managing our own business as efficiently as possible. That allows us to keep our billing rates fair and competitive.

Rhea: We feel there are only going to be a few agencies large enough to offer totally integrated services and strategic thinking, along with a good understanding of the agricultural markets for the larger clients who will remain in business. We intend to be one of those agencies. We are working to offer our remaining ag clients the critical mass and confidence of financial strength that these companies need. Our integrated approach focuses on our clients' needs, not whether our business comes specifically from mass media, event marketing, PR, interactive or database marketing. We feel the only way to manage these tough times is to reinvent ourselves and stay slightly ahead of our clients' needs.
Wenck: Consolidation and associated issues are creating greater interdependence between agriculture and food stakeholders. As a result, we're helping food companies and ag companies with constructive engagement on shared issues.

Our package goods food and beverage accounts value Morgan&Myers' ag insights and are calling on us frequently for counsel on the consumer end of the food chain. There is plenty of room for growth in the food industry.

As you gaze into your crystal ball, where is the ag industry going? Where will the opportunity be? Have you developed new clients in non-traditional areas of agriculture?

Barr: Osborn & Barr is bullish on the future of agriculture. Our agency's heritage is agriculture. However, we've also been taking aggressive steps over the past five years to diversify our client portfolio to include those ag and non-ag segments in which we don't currently have clients. We've also established additional services to bridge the gap between traditional advertising needs and account planning.

Johnson: I wish I had a crystal ball to tell us where this business was headed. Short of that, we think it's clear that agribusiness is stepping back to look at the larger picture. Markets outside this country, audiences far removed from production agriculture and information sources from all over the world have an enormous impact on what our clients do, what they decide and, consequently, on our business. We see opportunities in plying our specific knowledge in mature markets, health care, and channel education and communication, both inside traditional ag and in related businesses.

Greenheck: We are at the cusp of yet another revolution in agriculture. Science and biotechnology are in their infancy as far as application. Their growth will guide momentous change - mostly positive - in our industry over the next few decades. We will continue to see our food supply lose its anonymity, as biotechnology will eventually allow us to trace the steak bought at the market back to the ranch it came from and, potentially, even what it was fed. This revolution creates increasing opportunities for agencies that understand pharma as well as farming and have worked with every link in the food chain.

Leaf: The agricultural community is contracting and expanding at the same time. Commodity-based agriculture continues to consolidate into larger, more sophisticated entities. At the same time, there is desire to create an 'ag lifestyle,' as evidenced by rural population growth. We see both of these trends as opportunities for our agency. The new rural consumer is a real marketplace as they close ranks with their city cousins.

Nickerson: The pressure for creating even greater efficiencies will continue. Margins for marketers have compressed as products go off patent and generic competition heats up. However, we believe there will be greater opportunities for marketers to partner with producers. Customized commodities are one potential area for growth.

Rhea: As we go forward, all must recognize that the consolidation we see today is the norm and not the exception. Large companies will continue to merge and consolidate, but there will still be opportunities for small niche companies that identify growth opportunities. The same thing is true in the agency business. To survive this market downturn, we: 1) Continue to focus on serving our ag clients; 2) Continue to diversify in non-ag areas with financially strong clients in categories where we have strong core competencies; and 3) Carefully watch our receivables to assure a strong financial position that serves both our future and helps ensure our clients' of a solid long-term agency partner.

Wenck: Because of their approach to business, 'CEO farmers' are demanding more from their traditional ag suppliers regarding how technology, service and information adds to their bottom line. And they are listening more closely to consumers than ever before. 'CEO farmers' are paying more attention to shared issues like food safety and security, biotechnology, the environment, consumer education and renewable fuels.

The opportunity for us is to help ag and food companies engage with thought-leader 'CEO farmers' in ways that build their corporate brands, relationships and reputations. An example of this is our work with Philip Morris Companies on their Shared Solutions agricultural outreach initiative.

Have you noticed that the issues or advertising objectives of your clients have changed in the past year?

Barr: Absolutely. Our clients not only want increased brand awareness among their client base, they want greater market share - for the same or, in many cases, a reduced investment in product communications. Companies are not requesting value-added services, they're demanding them not only from their agency, but also from the media vehicles we employ to deliver the product messages.

Johnson: We have seen and encouraged considerable movement toward creating and supporting stronger brands. Clients with both established brands and new brands have a greater sense of urgency about differentiating themselves

in the marketplace. This movement really isn't surprising, given the huge number of mergers and acquisitions this industry has endured. There's significant potential for confusion every time a new company is formed.

Also fueling the drive toward stronger branding is the increasing need for companies to show rapid results with new products and to support quarterly profitability goals. Whether or not clients are publicly held, financial results for key stakeholders are playing a larger role in marketing decisions than ever.

The arena of product and food safety and corporate image have also risen on many company's agendas. In these days of Enron and terrorism, trust is a precious commodity. We encourage our clients to pay considerable attention to preserving the trusting relationships they've built with customers and trade channel partners.

Greenheck: We relish the increasing pressure to link communication programs more directly to our client organizations' performance. We are spending more time with clients to clearly articulate meaningful and measurable objectives, then developing systems to measure program outputs and outcomes, as well as overall behavioral impact.

Leaf: Read the book Blown to Bits, by Philip Evans and Thomas S. Wurster. It explains how existing business models are facing deconstruction, but thankfully not destruction. This book helps explain why many existing media models are irrelevant to most clients. They no longer are expecting traditional media to solve their branding issues.

Nickerson: Prioritization is taking center stage. Our clients are placing more focus on the brands or businesses with the greatest growth potential. In addition, measurement has always been a focal point of our brand planning model. But today, we are finding even greater interest in ROI for marketing communications. Both of these trends are the result of scrutiny on every dollar from the "cost" side of the ledger.

Rhea: Our clients, like most companies, are focusing on shareholder value and making their sales projections for the quarter, the month and the week. But this trend is not new. Clients expect accountability and measurements of success in everything we do, which makes perfect sense to us. We have to ask tough questions of ourselves before we make a communication's recommendation. We must be sure that we are delivering our best thinking and a good return on investment. And, we can't be afraid to ask our clients tough questions to make sure they are addressing the right issues in their marketing communications.

Wenck: We are focusing more on high level outcomes (desired behaviors) and less on outputs. As a consequence, we're doing more in-depth study and measurement, and using our Behavioral Map™ to help clients determine what they want the audience to know, think, feel or do. The result is precise targeting with multiple communications approaches to drive a single behavior.

Have the services that you offer changed? Do you see shifts from traditional ag media?

Barr: In December, we launched our Avant Marketing Group to provide additional brand management, account planning and strategic communications planning services to both current and potential clients. Osborn & Barr firmly believes this is the path down which companies seeking results-oriented communications assistance are headed or will be headed in the near future. While traditional media services are still vital in the execution phase, we want to position our company as a provider of upfront strategic planning to assist a company when determining the direction they or their brands need to go to better penetrate the marketplace.

Johnson: We have not changed our mix of services, but we are putting additional emphasis on strategic business planning. We've had formalized account planning capabilities for nearly two years and are thrilled with the deeper insights and direction that comes from working through that process. Every client and every discipline within the agency benefits from what we're learning about audiences and markets.

Every year, there are new media options, whether they're delivered through traditional means or with brand-new technologies. That trend has been occurring since the advent of television and direct marketing, although it certainly was accelerated by electronic communications. While there are more choices for sending messages, we approach the decision-making process just as we always have: How can we reach our audiences most effectively?

Greenheck:Clients once looked to us to carry out marketing plans. Now, we are increasingly charged with helping companies navigate the business, customer and employee landscape. We are seeing a shift from representation to navigation and planning, as companies realize they need to take a 360-degree view of communications. We have expanded our services to help them think about how they communicate with their customers, distributors, partners, investors, analysts, employees and influencer audiences. We have counseled clients for a decade that The Wall Street Journal is as important as Farm Journal, and NPR is equally important as "U.S. Farm Report."

Leaf: Customer-centric marketing is now our focus. This allows us to move close to the customer and individualize programs to deliver true one-to-one marketing - like a dealer marketing directly to a single customer. Our term for this concept is "local up." Traditional ag media is recognizing this trend and is adapting to it. Market segmentation has as much relevance as how many hamburgers McDonald's sold today. Clients know it, agencies sense it, and media is feeling it.

Nickerson: We are seeing growth in our localized marketing services group, which supports clients who need to add a regional or local dimension to their programs. Electronic media and the Internet have added depth to the traditional media. They haven't replaced the traditional vehicles but rather added another means of delivering messages to the marketplace.

Rhea: We see clients expecting recommendations that include totally integrated marketing communications. Brand advertising continues to be very important particularly for new products or products early in their life cycle. However, we are becoming more focused on developing communications that segment customer groups and talking to them individually about the way they farm and how they use our clients' products. Equally important, clients look to us as extensions of their marketing team, where we work side-by-side with them to develop sales and marketing strategies that include integrated marketing communications.

Wenck: We've significantly expanded our creative, digital and research services. Our frequent work in biotechnology and food safety and security has enhanced both our ag and food expertise in recent years.

Regarding traditional ag media, we anticipate a much tighter focus on thought leaders, reaching them via their organizations and directly through personal relationship-building efforts. Print continues to have a role, and broadcast, particularly radio, will have to start delivering ag in its business coverage. AM


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