You opened just when the economy started to suffer. Did being small put your agency in a better position during a downturn?

Someone very wise told me, when the economy started to tailspin, that there was no better time to start a company than during a down market, because if you can survive a down market you can survive anything. We all knew the economy was on shaky legs but I had no idea it would shrink as quickly as it did. Had I known, I might have thought twice. But knock wood, the downturn hasn?t really hurt us. All of our clients come in and say, we want someone small, we want someone entrepreneurial.

There?s not a piece of business that comes through the door that Josh Rogers, our Strategy Director, and I don?t work on. Big agencies lose site of how important it is for senior people inside the agency to have constant contact with the people who are running business on the client side. It?s literally the first thing people say when they visit: ?We don?t want layers. We have to streamline this. We have to be inventive in our approach.? It?s a selling point to be able to say, Josh and I will run your business. In big agencies you have departments. Departments tend to have group heads, who have assistants, who marshal the resources. You have this layered organization that isn?t very efficient. Efficiency is the main thing to clients now. They want the work to be great, but they want every nickel they spend to be meaningful.

Advertising is said to be hit first and hardest and to recover last from a downswing. Is that the case with design?

In a good healthy economic time, clients tend to throw more money at advertising than they do design. In a down market, the first thing that gets cut is the ad budget, but they tend to keep spending money on the tools they need to run their business. Things that are going to help promote their brand in a more direct way?a new brochure, a stationery system, packaging, or point-of-sales materials. I wouldn?t say they don?t cut back on design, but clients feel it?s always important and it?s the last thing to be cut. You work on a project basis, as opposed to a retainer basis. Does that have anything to do with your size? With the bear market?

It?s very attractive to our clients to know that everything we do is a project. I understand why a retainer-based relationship is an attraction. They cut a contract for X amount of money and the agency can count it as a revenue stream. But agencies make the mistake of thinking the client will be there for that period of time. I can?t tell you how many times, for whatever reason and through no fault of the agency, the business dissipated. For a midsize and small agency a retainer relationship becomes difficult because you don?t always have the resources to handle the requests??I need a small ad by tomorrow?Can you put together this product overview??I need it bound for our investor by tomorrow.? It?s difficult for an agency on a retainer to say, no, we can?t do that. So they have to have small armies of people racking up hours to get these things done, and that?s when you start to lose money. In an economy like this, clients don?t know from month to month where the money?s coming from. Right now particularly clients are hesitant about getting into a long-term contract, even if they consider us their agency-of-record. The project relationship is very clear. It works.

You?ve talked a lot about the realities of integration?and the obstacles to doing it right. Is there any relationship between an agency?s capacity to integrate and the market?

Now is the time to be a small, integrated company. An economic downturn is when you want to integrate. Integration is about a single idea that can work across all types of communication. It?s a lot cheaper. Get rid of the creative department?they?re a commodity. That?s going to upset a lot of people, but when I say get rid of the creative department, I don?t mean you shouldn?t have creatives in your agency. I mean you should have people in your agency who can think in broad terms, and if you need a specialist, those people are out there. The problem with a lot of agencies is that they hire specialists rather than people who can think broadly.

We don?t want to be a freelance-for-hire shop. Over last 18 months we?ve established relationships with specialists who become partners. It?s not like someone sends their book in and we use them once. These are people we establish a relationship with. The freelance pool is filled with great people right now who, through no fault of their own find themselves out of a job, so it?s easy for us to find talented people with specific skills under their belt so we can bring in the appropriate people for a given project.

It?s a way to stay small. If I find myself in position where I need a TV spot, I know that there are very experienced people out there who can come on board, and at the end of the project, they?re not part of my overhead. What I?m going to test is how small can you stay and still be competitive. At a certain point size becomes an issue, because a client might say, you?re just a small agency and you couldn?t handle the workload. I know that?s not the case because we can be four people one day, and 10 people on a given project the next day. The ability to scale up or scale down from a personnel standpoint is what makes a profitable company.