Orange County’s multimedia production companies buckled down in the past year to weather a tough economy.
And they’re doing more of the same in 2008.
“Things are tough,” said Mike Strauss, producer at Vision Star Media in Irvine. “There are a lot of people losing their jobs. There are a lot of people going under.”
Many of the 53 agencies on the Business Journal’s multimedia directory, which is listed alphabetically, tapped freelancers or just kept their staffs small to keep costs down.
The number of workers at the companies was flat for the year, growing by seven people, or 1%, to 640.
Most of the shops,26,had flat employment. Eight saw declines and 11 posted increases. Eight were Business Journal estimates.
“It’s a constantly fluctuating market,” Strauss said. “Things are going to be tough for a while. People are still going to be careful about how they spend their money.”
The pressure is on multimedia shops, which offer online, video and other marketing services, to be innovative and cheap.
Many clients pinched by rising operating costs, slow retail sales and the housing slump are looking for ways to cut back.
They often slice advertising first.
“Marketing from the CEO’s perspective is the fluff division,” said Michael Beresford, chief executive of NetScope Inc. in Laguna Beach.
To keep projects rolling in, shops have to do good work, stay competitive in pricing and build strong relationships with companies, Strauss said.
“So much comes down to those relationships,” he said.
Most multimedia shops are expecting more changes to play out this year.
Brian Schraff, chief executive at 949 Web Presence Management in Lake Forest, which has 14 workers, said companies these days are “looking for programs that can immediately impact their bottom line.”
That means an uptick in online searches and pay-per-click advertising and a drop in print and broadcast campaigns, Schraff said.
The same has played out at ChopShop Entertainment Inc. in Irvine. Ken Anderson, vice president, said his clients have pulled back from creating TV spots that just promote their name to focusing on ads that sell a specific product.
“Clients are scrutinizing budgets, demanding greater accountability and assessing return on investment much more closely,” Anderson said.
They also are “expecting more” but keeping spending the same, he said.
“With additional platforms, clients want to repurpose content for the Web, mobile and other applications,” Anderson said.
ChopShop, which has 10 workers and taps freelancers, invested in technology and took on additional office space to offer more services.
The agency said it plans to hire more graphic artists and broadcast producers this year.
Tech Savvy
ChopShop is not alone when it comes to investing in technology to keep clients happy.
Most shops say it’s critical they stay ahead of the latest strategies being used on the Web to keep competitive.
John Cecil, partner at Costa Mesa-based Innovate Media Group, which focuses on online video production, said he’s continually “coming up with new products” to try to bring in more work.
One of those products is 3-D Web effects, where the shop shoots a person on a green screen and superimposes the image on a client’s Web site.
“That particular product has given us an identity,” Cecil said. “Any big campaign we do, we get phone calls.”
As a result, Innovate Media hired three workers in sales and production to bring its total staff to 13.
Nick Singer, chief executive of Hyperdisk Marketing Inc. in Irvine, said he’s watched clients shift more dollars to online advertising mostly because “of the ability to see the tracking and reports that have specific information on what’s working and what’s not.”
“It’s very real time marketing,” Singer said. The shop has 20 workers, up two from last year.
That ability to hand clients detailed data also is helping NetScope keep business, said Beresford.
The shop downsized this year after some homebuilder clients slowed their interactive marketing budgets, he said. NetScope has 17 workers, down from 24.
The shop subleased its 7,500-square-foot office in Irvine and took on a smaller office in Laguna Beach to save on costs and let employees work from home.
Beresford said he wouldn’t be surprised if more consolidation played out among OC’s multimedia agencies.
Some traditional advertising shops, which don’t have multimedia departments, are reportedly hunting around for possible buys, he said.
“It seems like a natural migration for a full-service agency to do everything instead of leaving money on the table and not having continuity in campaigns,” Beresford said.
