Ryan Abbate runs the biggest advertising agency in Orange County—yet he has a chip on his shoulder.
Pacific Communications of Costa Mesa has grown from a “skunkworks project” in the early 1990s to racking up $381.1 million in 2012 capitalized billings and $55 million in revenue, up 11% from 2011.
And it would likely be bigger if it wasn’t for what Abbate says is the healthcare industry’s skewed perception of where to get the best advertising.
There’s the chip.
“I think the bar is higher for us to succeed,” Abbate said. “If you were to ask, ‘Where would you go to hire your medical [ad] agency,’ they wouldn’t first say Southern California or even California. They’d say New York or Chicago. And here we are on the [West] Coast offering everything they can get on the East Coast and maybe better in many cases. So do we have a chip on our shoulder? Absolutely.”
It’s no surprise that Abbate takes things to heart—he was the catalyst behind the agency’s inception. In 1993, his employer, Irvine-based drug maker Allergan Inc., was about to dissolve its in-house advertising department.
“Having a vested interest in avoiding the elimination of that group and my role as well, we came to them with a concept of separating from the company and living or dying by virtue of our ability to generate revenue,” he said. “I had done a fair amount of due diligence assessing the marketplace out here, and there were no [healthcare] agencies on the West Coast to speak of. We were able to convince Allergan of that.”
The risk paid off, and the agency started taking work from outside clients, as well as from Allergan.
“I don’t think anyone really expected it to succeed,” Abbate said. “It was an experiment that worked very well. If you had told me back in 1993, ’95 that we’d be over 200 people and one of the largest agencies in the country in 2013, I’m not sure that would have scored with reality at the time.”
Allergan still owns Pacific Communications and accounts for the majority of its business.
“We’re a little bit like a country,” Abbate said. “We’re a separate entity that reports to them with our own business objectives that we have to perform against.”
But being a subsidiary doesn’t mean much when it comes to bidding time—Pacific Communications has to compete for Allergan business just like any outside agency would.
Natrelle Win
Its recent wins include the Natrelle 410 silicone breast implant, which was previously handled by Ogilvy Commonwealth Worldwide, a New Jersey-based unit of Ogilvy & Mather in New York, as well as Latisse prescription treatment for eyelashes, taken over from New York-based Saatchi & Saatchi Wellness. Both are Allergan products.
Salma Jutt, a senior director of marketing at Allergan’s SkinMedica division, said Abbate approaches the work as a “true business partner” who cares about the brand’s success. She said he also stays closely engaged with the client and ensures that he and his team are responsive to business needs, all of which she said factored heavily into Allergan’s decision to award direct-to-consumer Latisse work to Pacific Communications last month, she said. “He has respect for the client’s culture and processes and adapts his team’s approach to it,” Jutt said. “He doesn’t force the client to adjust to the agency’s.”
Accounts Pacific Communications has with other drug makers and medical device manufacturers include Bausch + Lomb Surgical’s enVista Intraocular Lens, Thoratec Corp.’s HeartMate II, and the ON-Q pain pump by Kimberly-Clark Corp.’s I-FLOW division.
Abbate’s strategy to compete with the Saatchis and Ogilvys of the healthcare advertising world is fairly simple—hire the best people and resist the urge to “hover over them and manage every last detail of their jobs.”
His other advantage is the “ability to play both sides of the fence,” to take into consideration the client’s needs, as well as his agency’s, according to Peter Siegel, Pacific Communications’ executive vice president and creative director.
“He’s expert at navigating between these two temperaments,” Siegel said. “He makes sure creative people like me are cognizant of what budget restrictions are but gives us a free reign to come up with exceptional product.”
Abbate characterizes his management style as “extremely calculated.” He allows his employees to “flourish within a very well-controlled, organized system.”
“It’s harder to grow on the West Coast, so you have to be extremely selective about clients you go after and people you hire,” he said, “because there is much less margin for error.”
Another challenge is getting the talent to move to Costa Mesa—some worry about the fact that if their stint at Pacific Communications doesn’t work out, there are few other local healthcare advertising agencies to turn to.
“We’re an island out here,” Abbate said.
Abbate considered opening an office on the East Coast to better serve the agency’s clients there. But observing other agencies fail to get a foothold in California helped him make a strategic decision to focus more on his home front.
“We learned from what they did and why they failed, and that’s really how we established our own model and our own philosophy, which did in fact succeed,” he said.
The biggest problem for East Coast agencies trying to get a foothold here is providing service in real time, which can be tricky when working in different time zones.
Another lesson learned from others is avoiding growth beyond means, Abbate said. During the latest economic downturn, “other agencies ended up imploding on themselves” because they couldn’t sustain their staffing levels.
Benchmarking industry trends also prompted the agency to become a one-stop shop for its healthcare clients, to provide ad content for highly technical and Food and Drug Administration-regulated products and to take on creative ad execution, be it in digital or traditional form, Abbate said. The same feat may not be possible for a mainstream digital agency, he said.
While those agencies are good at ad execution, such as creating a promotional website, they typically don’t have experts familiar with the technical features of the product and the FDA requirements in order to craft wording for ads, as the client’s agency of record does, Abbate said.
Pacific Communications established a digital group and added direct-to-consumer marketing services in the past two years, hoping to shed its image as a professional-only agency whose target audience is the medical community. Its digital offerings include production of digital sales aids and videos, as well as website development. The agency is treading very careful with social media, though, Abbate said, since it represents FDA-regulated products.
“There is a certain loss of control with social media,” he said. “How do you control media that you can’t control, yet you’re obliged to control it?”
The agency has roughly 20 clients, which range from startups to sophisticated medical manufacturers with multimillion-dollar products. It represents 40 brands, three of which earned more than $500 million in sales last year.
60% Win Rate
Abbate’s team goes after five or six projects a year, and he said it achieves a 60% win rate. In 2012, it won four accounts and lost one: digital work for Botox Migraine. Pacific Communications is still the agency of record for the brand.
For some accounts, such as Allergan dry-eye treatment Restasis, the agency bid multiple times before it won the business.
Abbate said it is hard to understand what makes clients pick one agency over another.
“Usually it’s not dependent on price. … a lot of it is relationships, and our expertise,” he said.
