These firms are in a unique position in the current economic climate. Tanya Lewis reports on how some are handling the situation
Though they might seem vulnerable in the current business climate, in many ways, boutique firms are well positioned to weather the storm. In fact, these agencies typically possess many qualities – including flexibility and access to senior counsel – helping them in these volatile economic times.
Kwittken & Co. president and partner Jason Schlossberg describes the generalist agency as “the anti-boutique boutique.” He admits that when the firm was founded three years ago, some PR pros thought its generalist approach was risky. Yet, the agency's ability to provide experts in multiple practice areas, including consumer, b-to-b, corporate, and IR, is helping it land big accounts, such as the relaunch of The Shaper Image brand.
“Businesses have multiple constituencies and communications objectives, and it's sometimes hard for one boutique to service all those needs,” Schlossberg notes. “In [the] last six months, clients have told us... that we won their business because... we could reach multiple constituencies with one account team.”
The next level
Expanding capabilities is a priority for many boutiques. For example, Schlossberg says Kwittken is increasing events work, and he'd like to increase social media capabilities via a “strategic partnership with other boutiques.”
Over the past 13 years, Sharon Linhart, managing partner of Linhart PR, has helped the agency weather several economic downturns. She notes that “a couple” of clients have asked to move off contracts to project work, and she's happy to accommodate them and help maximize budgets. At the same time, business has grown with other existing clients, including those involved in renewable energy and organic and natural foods. The firm has also won new clients, such as Solix Biofuels and SolaRover. Still, Linhart is considering ways to expand offerings via Worldcom network partners, and she's touting media training services to prospective clients.
In November, JS2 Communications announced a new, project-based business model that CEO Jeff Smith says was “born out of the need to create a strategy that works in this economy.” The agency is already up for new b-to-b work and a consumer launch.
“In the past, we preferred a six-month minimum on retainer,” Smith explains. “Now... [we] can take on a one-, two-, or three-month project, launch, event, or one-off initiative. The model affords us the opportunity... to take on project [work] even though it means accepting less security as it relates to forecasting.”
In general, boutiques offer senior level counsel and flexibility, both of which are particularly advantageous now, as clients need more for less.
“We're smaller ships with much shorter turnaround, and we're just as powerful as larger agencies,” Smith says. “We have all the tools larger agencies have.”
Linhart notes that boutiques are entrepreneurial by nature, and that it's a great advantage in tough economic times. “[Entrepreneurial agencies are] confident... and see opportunity even in adversity,” she says. “We can adjust quickly and effectively to economic conditions and client needs. As a boutique, we're accustomed to executing on tight budgets. As an independent, we don't have financial obligations to a holding company, so we can invest in key client relationships and share profits with staff.”
Great client service is a priority for all three firms. Linhart also thinks it's important to be “even more aggressive” about new business now.
“When competitors might be hunkering down, laying people off, or being distracted, you can go at it even harder... and get some business they ignore or don't see,” she adds.
Open, regular communication with employees is also critical to agencies in the current climate. Linhart's staff increased this year from 18 to 25, and she plans to hire more later this year.
“You can't give employees too much information or reassurance,” Linhart says. “We're very open, candid, and honest with staff about the firm's financial situation. It's very important to keep people informed and help them... not get worried... because we're doing fine.
“We have a monthly staff meeting where we literally show our profit and loss statement for the month and the year-to-date,” she adds. “It gives... a very clear, honest picture of where we are and how we're doing. We also pay a quarterly cash bonus to all staff based on profitability. They see what the bonus pool looks like on a monthly basis.”
JS2's headcount is 14, which is down by two – one VP, who won't be replaced, and one administrative person – though neither were laid off. Smith says the agency's “number one priority is to keep people employed.” He and president Jill Sandin have assured employees that margins are good and the agency is “doing fine,” though it's prepared for a “harsh first and second quarter.” They also announced cost-cutting measures, including asking employees to make insurance co-payments and suspending a green transportation allowance and monthly metro passes in New York. Smith will consider other measures to protect jobs, such as job sharing, if necessary. He says that internal polls indicate employees are positive and understanding.
Schlossberg says Kwittken has about 20 employees, and there's currently an account supervisor opening. He notes that being able to “get everyone around a table and have a conversation” is a big benefit of boutique agencies.
“We're communicating that it's an uncertain market... and that we're committed to servicing current clients and bringing in new clients,” he says. “We're trying to be responsible in terms of expenses, and our employees respect that.”
Schlossberg thinks it's wise to resist the temptation to take on new business, regardless of cost to the agency. “The risk is everybody on the client side looking for a potential deal,” he says. “Agencies have to be careful... because our costs aren't going down. We [must] have the courage to maintain quality.”
How boutiques can survive the downturn
Make it a priority to provide excellent service to existing clients
Approach new business aggressively and creatively, and also consider offering new services
Tout expertise to clients, and be confident, decisive, and bold
Focus on the agency's culture and communicate regularly and openly with all employees