The campaign is a window into how advertising agencies in the Washington region, like countless other services providers, are changing the way they do business. It is a transformation all too familiar to the 650 who gathered last week for the DC Ad Club’s annual Ad Week DC festivities.
SmithGifford, a 20-person advertising and branding firm founded in 2002, landed the account by impressing Inova chief executive Knox Singleton two years earlier with a small radio campaign it created for the health system. That two-month project went over so well that Inova went back to the agency to design a broader broadcast and social media branding effort that culminated with the “Thank You Flowers” blitz.
That pattern — using the success of a short-term project to win future business from the same client — is becoming the norm, Riordan said.
“The biggest change I’ve seen in two years in our book of business is that clients are interested in a project,” said Riordan, president of SmithGifford. “It may be a six-month engagement that’s more similar to a consultancy engagement that Booz Allen [Hamilton] or Accenture may have. Then the project is over.
“The old style of, ‘Let’s sign on with an ad agency and be together for 20 years,’ is really not the way clients and agencies are working with each other anymore,” Riordan said.
Advertising executives said the need to hustle for project-based business is more pressing, now that some Washington agencies — which were cushioned from the 2008 economic downturn that hit New York, Chicago and Boston firms — are feeling the effects of the pullback in federal spending.
When the Great Recession hit nationally, agencies outside Washington “just started reducing head count immediately,” said Riordan, who joined SmithGifford in 2011 after spending much of her career at Boston-based ad giant Arnold Worldwide. “In Washington, it was different. Many agencies had good years in 2008-2010. As an industry, we are feeling the recession a little more in 2012 and 2013. Some of that is due to sequestration.”
Anthony Pappas, founder of Arlington-based strategy and branding firm Pappas Group, said the shift to project-based work is also being driven by the growing number of channels that deliver branding messaging. What used to be just television, radio and print has exploded into online and social media, and companies are often dividing up their marketing budgets accordingly.
“[Clients’] budgets are getting split 10 different ways rather than one way,” said Pappas, whose firm has grown revenue consistently for the past several years. “The reason for project work is everything is based on data. They’re testing and learning and seeing if they can create impact. Agencies are held accountable — if you can’t create impact and deliver results, they’ll try someone else.”
There are signs the market is picking up. Total billings for the Washington offices of advertising firms grew from an average $18.5 million in 2010 to $22.8 million in 2012, according to a recent survey of 25 advertising agencies commissioned by the DC Ad Club. More than 80 percent of those agencies expect to be doing “somewhat better” or “significantly better” in 2014, and 76 percent said they expect their staffing needs to increase within the next year, the survey found.
“Initially, a lot of agencies did see a decline in spending and new business pitches were slowed or stopped, and some clients pulled back on their marketing budgets,” said Sherri Green, director of business development at Arlington-based LM&O Advertising. “But I think it’s tipping the other direction. I don’t know if we’ve skyrocketed back to where we were in 2007, but I do believe we’ve all started to see a tick upward.”