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FINDING THE RIGHT SIZE
In a world of merged ag companies, there's been a lot of pressure on ad agencies to follow suit. These large agencies have a tremendous capacity to meet the needs of their clients, with an extensive array of services and a powerful ability to recruit talented staff. Still, some people have made the choice to operate smaller communications enterprises and are showing that great things can also come in small packages.

The most important lesson many of these smaller agencies have learned is to right-size their operation to their clients. "When I started my business, I went after clients with ad budgets under $1 million and then grew with them," explains Rod Delahey of Heyday Communications. Based in Saskatoon, Saskatchewan, Heyday has a staff of five and has indeed grown. The agency now handles several major clients, including Monsanto's canola seed division. Formerly Limagrain, the canola business was acquired by Monsanto about three years ago, and Heyday followed the account. "We've been lucky enough to work with some companies that have been acquired by large multinationals." Heyday has then worked hard to retain the business, but Delahey is realistic. "To go after a large multinational in a pitch as a small agency is next to impossible. The large guys just don't see the resources (are in place)."

While it is true that agencies with a modest staff may not be able to handle the entire business of an agricultural giant, they certainly can handle portions of that business. David Buchholz has been in the business for 20 years, starting in the spare bedroom in his home in Hastings, Neb. Now he employs15 people at David & Associates, handling such clients as Cargill Animal Nutrition and the Nebraska Corn Board. Buchholz explains that he obtained a portion of Cargill's business through an existing relationship with a retailer for whom Cargill did a private-label brand of feed. Impressed with Buchholz's work for the retailer, a number of brand managers with Cargill Animal Nutrition decided to use David & Associates.

However, Buchholz is realistic that he and his team should focus on a limited number of brands in order to provide the level of service that clients deserve. "We have to find the right size of client we can service and ensure the best match between our strengths and the clients' objectives," says Buchholz. He is proud of the work he has done for many of his large clients but is cautious to ensure no one client overwhelms his business. "Never let a single client become an 800-pound gorilla on your roster. You have to constantly keep prospecting for new business in order to better manage the percentage of business that a large client represents within your agency."

To do that, Buchholz stresses customer satisfaction. "Most of the clients we've obtained in the past 20 years have been through vendor or current client referrals." That's a common theme among the agencies interviewed. Ron Scherer & Company was founded 10 years ago in Columbia, Ill., and has added some major players to their roster in this way. "The three clients we won during 2003 had heard great things about us from others, and we did not have to compete for their business. We're currently starting up with two more new clients, both of which came to us." The new business created a 40 percent increase in gross billings for Ron Scherer & Company last year.

For some firms, such growth comes through referrals combined with the attractive element of low overhead, making agency services more accessible to some businesses. Iris Meck Communications Inc. is based in Calgary, Alberta, with a staff of two. Like many of these smaller agencies, Iris Meck owns the business and built it after years of experience in other agencies. She wants her firm to "be recognized as good quality at a good value."

Harley House, vice president of retail at Brett-Young Seeds, is a client of Meck's and signed up based on this approach. "I thought it would be a good fit for us. She keeps it pretty lean and at the same time doesn't have any trouble bringing good talent for writing and design."

For her part, Meck is not interested in creating a large agency infrastructure. "We fill a niche. We are not looking for, and have no aspiration to go after, the large clients that large agencies go after." As she says, "Been there. Done that." She prefers to work with a selection of outsourcing partners to help her write, produce and design materials for clients. "I make sure they get to be justly rewarded for their work and to be involved with the client." She expects those suppliers to see themselves as part of a team driving success for everyone involved, including the client. Often their work is focused on the very foundation pieces of a business, such as letterhead, folders and fact sheets. Meck also works on special projects such as sponsorships and unique events to stretch clients' marketing dollars creatively.

Of course, when new clients come through the door, it does take some additional organizing time to make sure that the proper resources are aligned particularly if the agency has a dedication to keeping the same suppliers on the client team.

On the other hand, some small agencies prefer to use in-house resources and only go out of house for the kind of services agencies of almost any size would need, such as market research, videography, signage, printing and booth construction. Buchholz does very little outsourcing from David & Associates. He focuses on recruiting a great staff team with both strategic and creative talent a challenge for an agency of any size. He has also found it an added challenge to bring people to small-town Nebraska. For his clients, his firm's rural base is often an advantage, as the agency team remains close to farms and farmers, but his location means he must recruit staff from far afield and has recently added people from Colorado, Arizona, Illinois and Winnipeg, Manitoba. The effort is worth it though, as he believes: "An agency is defined by the people who work for it."

Scherer really drives that home, stressing the role of the senior staff. "Probably the best service we can offer is a guarantee that the client will always be working with an owner of the company. That's an immeasurable dedication to success on the account." Such personal service is a value to clients, and House acknowledges his long-standing working relationship with Meck helped him choose her firm when he came to Brett-Young. It is really a matter of getting on board with someone you like and steering the right course.

It has been said, "It is not the ship so much as the skillful sailing that assures the prosperous voyage." Certainly these agencies are on a prosperous voyage, not only to their own bottom line but also for their clients. Delahey is quick to point out that he must continually earn the right to keep accounts. His ability to sustain his role in the multinational portfolios is based on performance. In some ways, that is true for all clients, but those large accounts can be under particular pressure. Buchholz speaks from experience, "We have had clients a few times consolidate the whole business with another agency. Often those decisions are made by people who are not the ones we work with. The reality is things that happen in a boardroom are well beyond your control, and I can't afford to worry about anything other than doing the best job possible for the clients we serve." Instead he recommends staying focused. Rather than spending huge amounts of effort recruiting new clients, David & Associates "spends as much time thinking of new ideas for existing clients as we do looking for new clients."

The challenge, according to Delahey, is to sustain the intellectual capital to keep small clients growing and with their growth generally comes growth for the agency. He adds, "I think there will always be room for a little guy. Big agencies can't really serve smaller accounts." So right-sizing remains the key to find ag businesses that need services and build an agency sized to serve them. Such agencies also have a great opportunity to mine those existing clients for more business, both in terms of their growth and for referrals, to prove that it is indeed not the size of the ship, but the prosperity of that voyage. AM

Robynne M. Anderson is president of Issues Ink, an agricultural communications company that publishes Germination and Manure Matters, as well as several other titles.


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