How To Manage An Advertising Agency

Peter Levitan & Co. The New Business of Advertising.
peter@peterlevitan.com | 1.541.419.2309 | www.peterlevitan.com
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The 22 Most Valuable Lessons I learned While Running
An Advertising Agency
Iʼve been doing the advertising thing for a while. I spent sixteen years at Saatchi
& Saatchi Advertising Worldwide as Business Development Director North
America, General Manager Minneapolis, European Director in London and
Management Director in New York. I left advertising for seven years to be CEO of
two Internet publishing and technology startups. Microsoft bought one.
After my digital sojourn, I moved from New York to beautiful Bend, Oregon in
2002 to buy the advertising agency RalstonGroup. In the ten years that I ran the
agency, we bought the sports marketing agency Citrus, took their name, opened
a Portland office and added national clients like Harrahʼs, Legalzoom, Nike and
the U.N. This is what I learned during my tenure as an owner.
1. Have a three-year agency marketing plan. Our plan helped us grow the
agencyʼs valuation through a strategic acquisition, opening a second
office, the addition of Nike AOR business (which helped us gain even
more desirable clients like Dr. Martens and Legalzoom) and the
development of a high-energy new business program.
Note to the 45+ crowd. The plan also acted as a framework to begin to
position the agency for an eventual sale.
2. Create an agency brand positioning that differentiates your agency from
your competition. Right, youʼve heard this one before. More importantly,
have a true brand positioning – itʼs really a sales proposition -- that
actively attracts and stimulates interest from the right new clients. This is
the important part:
Just trying to find yet another new way to say “digital” or “full-
service” agency isnʼt good enough – and itʼs really difficult to find a
new way to say the same old, and generally non-competitive thing.
Instead, it might be time to think through some agency of the future
scenarios and business models that will more effectively get you to that
truly distinctive and compelling sales proposition.
3. You are a business first. Control all costs. This sounds obvious, but it is
critical in an increasingly low-margin service business like advertising. My
metric was that every dollar I paid to someone else was a dollar I couldnʼt
hand to my kids.

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4. Stare at your numbers – often. We advertising people are visual types so
Citrus used dashboards as a graphical agency management tool. We had
detailed monthly financial dashboards tied to our P&L, balance sheet,
accounts receivables and owner compensation (this one tended to focus
our business decisions.)
We also used a real-time agency SWOT assessment for all major agency
decisions like mergers and acquisitions, go no-go decisions on RFPʼs and
to help manage and assess existing accounts and staff.
5. Be concerned if any single client accounts for more than 25% of your
revenues. When we added two national Nike AOR assignments, I was
nervous in addition to elated and dialed up our new business programs to
add other accounts.
6. Learn how to say no to clients and prospects that want too much free
brainpower. Your brains, ideas and pixels are all you have to sell. Charge
like a lawyer or even SEO specialists that charge like lawyers. It is time for
our industry to exhibit some self-control. If you have to give too much
away for free, it might be time to examine the value of what you are selling
and the mindset of your client or prospect.
7. Think about an alternative to the notion that brainpower and creativity are
all you have to sell. Take some of that brainpower to find out how to create
a product or service that can easily be replicated and sold over and over.
Think like a “start up” and hey, letʼs build some IP can sound like an
obvious panacea. However, there is gold in them thar hills. There are
agencies teaming up with brewers to create new craft beer brands;
agencies moving into research and agencies like Wieden+Kennedy
becoming start-up incubators. I asked W+K why they are doing this. The
answer… they are investing their brains and experience to make more
money in a world that Mad Men couldnʼt have conceived. Need seed
money for a new venture? Try crowd funding.
Think big like the entrepreneur down the street. I bet your team could build
one of the more effective Kickstarter sites.
8. Hire only exceptional people – thatʼs what Google does so why not you?
Do not rush to fill a position. You will pay in the long run.
Once on the team, make sure to keep all employees in the loop via

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scheduled agency meetings and email agency updates. It takes more than
a foosball table to build a business building culture. CEOʼs need to talk it
up. I have always subscribed to Tom Peterʼs management concept of
MBWA. In fact, read lots of Tom Peters.
9. Reward only your best employees. You donʼt owe anyone anything. There
is no question that an exceptional employee partner is as valuable as two
marginal people. Does this sound harsh? This approach beats not having
investment capital for other needs or having to go out of business because
you were magnanimous.
10.Miscast or problem employees should be dealt with earlier rather than
later.
11.Grow your digital assets faster. Bring on more technologists to leapfrog
even early-adopter digital agencies. Pick a growth area. Itʼs not too late to
become the best mobile agency. Not even the big boys have mobile
figured out. However, it may be too late to be known as the best “social
media agency” given the sea of social experts. One more digital point, and
I know that you know this -- digital agencies have a higher multiple than
full-service agencies.
12.Provide exceptional client service. All AEʼs must know how to think like a
client in order to anticipate client needs and address any potential issues
before they materialize and metastasize. Consider sending your AEʼs to
an AE class. The worst type of call I ever got was a client telling me that
our account service sucked. Itʼs just to easy to fix. Fixing creativity is much
harder.
13.Create an agency work process that is dedicated to profitability. The ever-
elastic creative process must be tamed.
14.Manage meetings. Do the math -- lengthy over-staffed meetings can easily
cost thousands of staff-related dollars a month. Find a meeting
management system that will work within your culture. Keep attendee
numbers small, there is no reason to fill up the room. Clearly state the
meetingʼs objectives, select a meeting leader, donʼt hold up the meeting
for stragglers (it is disrespectful and we are all busy) and schedule a hard-
stop end time. Or better, get up and leave the room when youʼve
accomplished your primary objective.
15.Stay very hungry. Business development is a 24/7 priority that needs a
solid plan, an active approach and constant senior management attention.

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Did I say 24/7? Donʼt feel too bad if you do a bit of start / stop.. The
majority of agencies donʼt even have a plan.
16.Think niche. Even if you are a full-service agency, consider leading your
new business program with a high-interest niche service or product. We
used “invisible QR codes” (that happened to be developed by our client
Digimarc) to get us into companies like Nestle. We never would have
gotten the first meeting with a Fortune 500 prospect if we simply said that
we were yet another full-service shop.
17.Have an agency website that is sales-oriented. You may only have 20
seconds to entice a prospect to dig deeper. Having a me-too agency
website that doesnʼt sell is a critical missed opportunity. Iʼve reviewed
hundreds of agency websites (visit my Agency Website Directory at
www.pinterest.com/peterlevitan.com) and have very strong opinions about
what works and what doesnʼt. Frankly, I couldnʼt deliver my POV any
better than Mark O'Brien at Print.com.
"Many designers believe that their siteʼs central function is to show their
visitors how creative they are. I disagree. Certainly, a portion of the site
should serve this purpose, but this is not the primary purpose of the site.
The siteʼs key role is to generate business, and demonstrating creativity is
only part of what converts a visitor into a prospect."
18.Become known as a relevant and valuable thought-leader. Strategic
thought-leadership will position your agency as being smarter than the
next guy, drives agency awareness, delivers targeted traffic to your
website and can be extended to email programs, across social media
(from SlideShare to Pinterest), presentations, webcasts and speaking
engagements. Citrus had a monthly thought-leadership publishing
schedule and staff assignments – it worked. But, donʼt go social unless
you know that your agency can realistically sustain the program. Empty
Twitter feeds donʼt bread confidence.
19.Even if you love that sexy consumer work, think hard about working with
more B-to-B clients. I didnʼt despite having very compelling B-to-B client
case histories. Why B-to-B? It's a less crowded playing field; B-to-B clients
have on-going budgets; positive ROI drives incremental spending and
these clients will make you more digitally savvy. I am continually surprised
at how many agencies leave B-to-B work to so few.

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20.Consider dumping your current business model if it doesnʼt look like the
agency of the future – even the agency of 2015. Explore the benefits of
employing a leaner and meaner approach.
Act with a need for speed. Before my partner and I decided to sell Citrus, I
thought about renaming Citrus “Portland” (why not own this creative city?);
moving to a small core senior team and shifting the other employees to
freelance contractors managed by a symbiotic community system. The
goal was to create a highly intelligent and lower-cost ecosystem that
would be managed on a client-need basis. Too put it another way, we
thought through the process of creating a much more nimble, less FTE
dependent approach. I shoulda, coulda, woulda… but didnʼt.
21.Have smart partners who share your vision and are smarter than you.
Strive to not be the smartest guy in the room.
22.Hire a strategic agency business consultant that can offer fresh eyes,
new perspectives and savvy recommendations based on years of
experience. I did. And, now I am one.
One more thought…
What would I do if I started it all over?
Iʼd use strategic scenario planning and a SWOT analysis to plan an agency that's
built for the future – say three years out. Iʼd even do a bunch of client research to
help find out what they are really looking for in an agency. Guesswork can be
expensive.
I am sure that my new agency wouldnʼt look like my old one.
It would certainly have more digital chops (more engineers like I had at my
Internet companies) and it would run leaner. If you canʼt do a complete overhaul
(I wouldnʼt drag my feet too long), then at least begin to make real market-based
modifications to meet the accelerating changes happening in the business of
advertising, design and technology.
Frankly, this need for new thinking applies to all agencies. Even the digital
agencies that look good today could quickly be displaced. I am sure there are
brand new uber-technology-driven agency models being formulated in
someoneʼs backroom as I write.
I know thatʼs a lot to chew on. Leverage my experience. Letʼs talk and get going.

How To Manage An Advertising Agency

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