Ad companies go all out

As competition for advertising dollars heats up, agencies find novel ways to market themselves

To set itself apart from other agencies competing for the state aquariums' marketing account, Morrisville ad agency MSA produced a mockumentary showing staffers in a variety of work situations while dressed up as lobsters, mermaids and other aquatic creatures.

Made in February, the six-minute video -- not including the bloopers at the end -- aimed to show "we really immerse ourselves in our clients' business," said Jan Johnson, vice president at the 48-employee agency.

This mockumentary had a real-life payoff. MSA, formerly MarketSmart Advertising, won the account awarded by the N.C. Aquarium Society, a nonprofit group that supports the state's aquariums. MSA will be paid $200,000 over three years; the total amount that will be spent on marketing hasn't been determined.

"The video gave MSA another dimension and showed us the personality of MSA and how they approach things," said David Griffin, director of the N.C. Aquariums. "That added a lot of weight to their selection."

Winning new business is always essential to an agency's growth but the current economic downturn has made the stakes even higher. Nationwide, spending on advertising stagnated in 2007 and the first quarter of this year, according to TNS Media Intelligence. Companies not increasing their advertising budgets can mean less work to spread around.

Given that existing clients' ad budgets aren't growing, agencies competing for new accounts have more incentive than ever to push the envelope in showcasing their strategic thinking, creative chops and ability to grab your attention by the throat.

These winner-take-all competitions, which typically climax with the finalists making an in-person presentation to the prospective client, consume inordinate amounts of an agency's resources. Moreover, the odds they face are daunting since three or more agencies typically make it to the finalist stage.

"It's stressful because you can't control it," said Reji Puthenveetil of Group Newhouse, a Raleigh firm that helps clients select ad agencies. "There's another group of creative folks thinking about the same things you are -- and they're trying to beat you."

Jennings, a 17-employee Chapel Hill agency, is fond of using props when pitching new accounts.

When the agency hosted Time Warner Cable executives in early 2002 -- the company wanted to promote movies on demand -- Jennings turned its lobby into a movie theater, complete with popcorn and soda machines. When executives with Volvo Trucks visited they found one of their vehicles in the agency's parking lot bearing a sign: "The Truck Stops Here."

"It sets a tone," said Paige Zinn, chief operating officer at Jennings, which won both accounts. "It shows people that details are important."

When Howard, Merrell & Partners pitched the state lottery account, the Raleigh ad agency submitted its proposal in boxes designed to look like a "Lottery" board game. The box-top called it "the game where you pick the perfect ad agency and run a successful lottery!"

The 50-employee agency initially won the competition but ultimately withdrew because its then-corporate parent was unwilling to post a $500,000 performance bond required by the N.C. Education Lottery Commission.

A pitch can cost $250,000

When large agencies become finalists for a major account, their investment -- in time and money -- can be enormous. Some of the largest clients will defray a portion of those costs by offering stipends up to $50,000.

Durham-based McKinney, which at 180 employees is by far the Triangle's largest ad agency, typically invests anywhere between $25,000 and $250,000 to formulate a pitch, said CEO Brad Brinegar.

Such expenses include outlays for travel, researching a client's competitive position and marketing challenges and, in many cases, formulating a strategy and/or producing "speculative creative." That's a proposal for an ad campaign that may include a rough-cut version of a TV commercial.

Those dollar outlays don't include staff time, which at McKinney can range from nearly 1,700 hours to more than 6,500 hours.

"For any single pitch, there are probably 50 people involved in one way or another," Brinegar said.

Even for much smaller agencies, the expenditure of staff time means lots of nights and weekend duty. Jennings once devoted 1,300 staff hours to a pitch over two-and-a-half months, said Zinn.

With that kind of investment at stake, losing can sting.

"It's a hard thing to digest," said Zinn. She said she and Jennings' president, Dan Dunlop, have a rule that "we can be mad for 24 hours ... and then it's time to move on."

Another day, another pitch.