Marketing agencies feel mixed effects from current economic downturn

The economic slowdown has caused some uneven effects in the Treasure Valley marketing industry, with many agencies holding steady and others laying off employees and working under clients’ shrinking budgets.

Oliver Russell, a Boise agency that now employs 16 people, has laid off eight people this year – four in May and four in September, said President Russ Stoddard. He said the firm experienced a significant drop-off in business starting in February and continuing throughout the year.
“It’s not a question of losing clients. It’s a question of everyone tightening their belts, and in some cases, it’s going from a size 38 to a size 28,” he said. “Typically, when they do that, it’s not a phased approach. It’s the spigot’s turned off now.”
The layoffs at Oliver Russell may be one of the more noteworthy effects of the national economic slowdown on the Treasure Valley marketing industry. Organizers of the Winter Games of Idaho, an annual event running since 1990, also announced on Nov. 5 that the games would be canceled for the first time because of a lack of sponsors, KTVB reported.
Other firms report a cutback in some clients’ budgets, though a number of agencies say that business has held steady or even increased this year.
Jamie Cooper, CEO of Drake Cooper, one of the state’s largest agencies with about 40 people, said his firm has remained stable, with its biggest clients continuing to aggressively market.
Cooper noted that there are tremendous opportunities for companies in a downturn. For example, client CBH Homes sold 77 houses between Oct. 23 and 26 as part of its “Deal of a Lifetime” promotion, which offered significant discounts for buyers and made heavy use of social media tools like Twitter and blogs.
The firm has even added some accounts and hired several people over the last few months, though Cooper said he worries about what could happen if consumer confidence continues to plummet after a weak winter retail season and poor corporate quarterly earnings reports. So far, his agency has been marketing based on clients’ budgets from last year – before the downturn started to hit hard this summer and fall.
“We’re very tuned into what’s going on out there,” he said. “For now, we haven’t seen much impact to date.”
That’s also been the case at Marketing Media Group LLC, whose largest account is the University of Idaho, said president and owner Edward Moore.
“It really depends on your client mix,” he said. “For us, we have a mix of clients that are for the most part recession proof.”
However, he said some clients have cut back. One company slashed its budget for the last quarter of the year, and Moore said his firm has placed a heavier emphasis on promotional advertising than on brand development for that business. That means trying to drive more traffic with tools like direct mail, direct consumer contacts and sales staff support; it means less emphasis on billboards, event advertising and TV ads.
Davies Rourke Marketing Communications has also been making similar adjustments in strategy for its clients after budget cutbacks started this summer, said Jeff Nielsen, president and CEO. But that has meant a closer relationship with existing customers who “really want to pinpoint what they’re doing.” The agency is being extra careful with clients’ budgets these days, and taking fewer risks, he said. Rather than placing a media buy a quarter or half a year in advance, the agency is now doing it month-by-month for some companies.
“Spending is down from some of our clients, but most of them understand the conventional wisdom of maintaining a presence and visibility even during economic downtimes,” he said. “I like to use the example of a ship at sea. If you stop feeding the boiler and come to a coasting stop, it takes twice as much coal to get going again.”
Another firm reporting an increase in business is Guy Rome & Associates. President Tereasa Guy said her five-person agency may be partly benefiting from the downturn, with out-of-state clients turning to the Boise firm because of its lower costs compared to competitors in bigger markets. Guy Rome, in business since 1986, also has a diversified business – from design work to internal communications and product development.
“Some of it has just been good timing,” she said. “There are just certain situations that bring business to your door, relationships cultivated over the years. We’ve been in business for 22 years, and you hope in times like these, that’s when it pays off.”
Stoddard, at Oliver Russell, said the two separate decisions to layoff employees were “tremendously painful,” though he said he wanted to take action at the beginning of the downturn to make it easier for his employees to find work. He offered severance packages ranging from two weeks to three months pay, and has been helping employees line up new employment.
“You see the writing on the wall, and your entrepreneurial bones tell you what’s going on, it’s better to make those decisions sooner rather than later,” he said. “It’s tough as hell for all concerned. First and foremost for the affected person, with everything from families to mortgages, to the fact that you’re not only colleagues, you’re friends with these folks.”
However, Stoddard also said, “We’ve got the right amount of work right now for our agency to keep busy and occupied.”