Last update: August 21, 2010, 1:04 AM
‘Virtual’ ad agencies help the little guys compete
Updated: August 21, 2010, 1:04 AM
When Zack Schneider and Greg Neundorfer left the Crowley Webb and Associates ad agency in March, they wanted to start their own shop but knew they couldn’t compete on their own with the big agencies in town.
So the pair started a virtual agency, which aims to maximize the creative power of a group of independent contractors and specialists here and across the country.
The virtual agency has low costs because there are just two full-time employees, who work from home, and they say they can nimbly put together a team tailored to the needs of a client.
“Instead of having everybody in one building, they’re across the world now with a virtual agency model,” Schneider said.
Schneider and Neundorfer say this model is well-suited for a sluggish economy that is prompting companies to trim their advertising budgets, and it allows small firms in Buffalo and elsewhere to jointly compete for large clients.
The concept of a virtual agency has been around for a while, and there always have been freelancers and independents working in the business.
“Everybody these days is looking to save money, and certainly overhead is a huge expense for anybody,” said Shelley J. Stoeckl, past president of the Advertising Club of Buffalo and operations coordinator, marketing, for BlueCross Blue Shield of Western New York. “For the right clients, doing the right kinds of things, it probably makes sense.”
Executives at local ad agencies say they wish the duo well and they think there is a place for virtual agencies.
But they also say there’s a value to the kind of brand continuity that comes from a team at an agency working together with a client over time, and such agencies aren’t going the way of the dinosaur just yet.
“The virtual concept has been around for a while. I’ve yet to see one sustain itself,” said Jim Hettich, chairman and CEO of Crowley Webb. “In theory, it could work, but I think what you gain in cost savings you lose in accountability and control.”
Schneider and Neundorfer once worked for Crowley Webb, bolstering the agency’s digital offerings, but it didn’t work out. The two young men are talented and worked hard but never brought in enough business to meet the expectations of Crowly Webb management, said Hettich.
Schneider and Neundorfer, for their part, said they weren’t a good fit at a traditional agency and felt they wanted to strike out on their own.
The two left by mutual decision and started their virtual agency, 15 Fingers, whose name comes from the fact that Neundorfer has two hands but Schneider was born without a left hand.
Schneider and Neundorfer specialize in digital media strategies, such as social media and viral marketing, but they knew they had to get bigger to compete with larger ad agencies.
They said they built on their contacts in the business to pull together a stable of about 100 freelancers, boutique agencies and other specialists to work on projects for clients.
One such subcontractor, IBC Digital of Buffalo, specializes in video and animation work and has worked with Schneider in the past on advertising projects.
“I think it’s a growing trend in what’s going on in advertising today,” said Ben Porcari, IBC Digital’s president. “The model is strategic relationships offering cutting-edge services at a cost-effective price.”
About one-fourth of the subcontractors are in Buffalo and the rest are scattered across the country, including the blog software company Six Apart in California and Blue Ribbon Digital in New York City.
“They can be more flexible dealing with clients and putting together teams quickly,” said Charles Lindsey, an assistant professor of marketing at the University at Buffalo, referring in general to virtual agencies.
Fifteen Fingers has signed up six clients so far, including Bradford, Pa.-based lighter maker Zippo Manufacturing Co., for which the agency is designing a Facebook application.
“We don’t do anything except strategy and overseeing the creative [process],” Schneider said. “Except you can do it with two people instead of 40. And, unlike an ad agency, we’re not limited to the people we have on staff.”
Can this concept work? In Missouri, Caledon Virtual has a full-time staff of one, Nelly Roach, who works with her consultant husband to oversee work for a roster of clients.
Most are organizations whose board members already are spread out so they don’t mind working with an ad agency whose 168 subcontractors also are dispersed geographically.
The system keeps costs very low, and the firm keeps $75 in profits out of every $100 in revenue, Roach said.
“My role in that is creating the teams, and I am the voice of the client,” she said. “I may have a programmer in Nebraska and a designer in Florida.”
But a virtual agency might not be for everyone. Some clients prefer a longer-term relationship with an agency that ensures continuity for the client and its brand, Tod Martin said.
Martin left the Wolf Group and started his own firm, the Martin Group, in 2001. For the first year, Martin worked with a series of partners as he ran the virtual firm alone.
“It was called the Martin Group and my friends used to bust my chops and call me and ask where’s the rest of the group?” Martin said.
He put together a team to win a coveted client, Greater Buffalo Savings Bank, but he said he realized he would need to build a more comprehensive firm to win larger clients.
Today, the Martin Group has 25 employees and clients such as New Era Cap and Dick’s Sporting Goods, and Martin said he thought his initial success was rooted in the track record he had in advertising.
Executives with traditional agencies said they believe the virtual agency concept can succeed but they don’t view virtual firms as serious competition.
They said they battle with other traditional agencies for new business from companies that want an ongoing agency relationship, and the clients that would consider a virtual agency aren’t looking for that.
“That’s very common. It’s not in any way, shape or form a threat to us,” said William M. Collins, principal with the Travers Collins & Company agency.
And, at the other end, Web sites such as
www.designbay.com
allow prospective clients to seek proposal pitches and low-cost quotes from a legion of vendors without dealing with a live person, at least at first. Still, Schneider and Neundorfer think they are well-positioned to win penny-pinching clients in these dark economic times.
“They’re looking to outsource to India, but it’s cheaper to outsource to Buffalo,” Schneider said.
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