A mix of wine, appetizers and sketches on a napkin sparked a merger between Costa Mesa-based advertising agencies Sunday Brunch and Irvine-based Gigasavvy.
The firms kept the deal quiet for two months until two weeks ago, when Gigasavvy named Sunday Brunch founder Rachel Svoboda partner and senior vice president.
Svoboda and Gigasavvy President Kyle Johnston said they needed time to test their napkin-sketched strategy for their new business model.
“How could two different companies service not only the big clients that had these giant budgets but also the small boutique clients here in Orange County?” Svoboda said. “We started diagramming how this could work. I thought the sweet spot would be if we could do both under one roof.”
So far, the merger has proved successful. Gigasavvy has been able to sign companies it would have previously turned away because of their smaller marketing budgets—a common practice of large agencies preferring a hefty minimum spend from clients.
In one month, Gigasavvy closed more than $200,000 in new business by adding clients such as Santa Ana-based nonprofit Orangewood Foundation and Costa Mesa-based interior design and merchandising firm Ver Designs. It’s in talks to add clients in retail, professional services, and the lifestyle and restaurant industries. It declined to disclose the financial terms of the merger.
Irvine-based Gigasavvy is ranked No. 18 on the Business Journal’s list of advertising agencies, with $16.4 million in revenue last year, a 2% increase from 2016. Svoboda started her agency last year in Huntington Beach.
Susan Franceschini, executive director of ad industry trade group ThinkLA, said advertisers are increasingly asking for project-based relationships, citing Procter & Gamble’s announcement last month to hand out more projects to a roster of agencies while keeping an agency-of-record on retainer for major creative work.
She said the industry shift has many agencies scrambling to reformulate a business model that’s traditionally been favorable to big agencies with Fortune 50 clients that often stick around for over 20 years.
“[Gigasavvy is] smart to say we can help small businesses, too, because they’re not turning away business,” Franceschini said. “Being nimble is key, and it’s harder for large shops to pivot like that.”
Tailor-Made
Johnston said budget and staffing constraints make it difficult for agencies like Gigasavvy to help emerging brands that often need a custom approach.
The 10-year-old creative agency, known for its digital work, has 32 employees and built its business with high-profile clients, such as Toshiba, Chapman University, Wahoo’s Fish Taco and Molina Healthcare.
“You get a brand that is great for your portfolio or for the company in other ways but for whatever reason just doesn’t meet your minimum threshold,” he said. “Agencies make exceptions, but sometimes it’s not the best move because you’re still trying to take the same people that are working on big brand X to then work on some of these smaller accounts that need a very custom approach.”
Svoboda said the framework for the new division was modeled after her own firm, whose clients include Costa Mesa-based companies b.spoke and Creative Window Designs.
Sunday Brunch would custom-build teams based on each client’s needs, and the work was typically project-based. It allowed the agency to swim in an ocean of clients, and more importantly, help emerging brands in OC.
“You talk about big agencies, small agencies, but ultimately it’s about building up the reputation that Orange County is a destination market,” she said. “This is a hub for advertising, and the conversation just hasn’t been elevated yet to tell everybody that there’s great talent here, there’s great work coming out of Orange County, and we want to lead that charge.”
But Franceschini warns that the key to sustaining the model will depend on keeping larger clients happy.
“If you’ve got some agency-of-record clients then overlay it by saying, ‘OK, 50% is AOR and 50% is project-driven,’ then it can likely happen, but that’s a luxury,” she said. “If you don’t have a steady stream of cash flow how do you support employees and benefits?”
All Aboard
Johnston admits that it took “lots of whiteboarding” to figure out a way to make the division sustainable, and quick demand from interested brands has shown it can work.
One organization it signed on last month was the Orangewood Foundation following a conversation between Johnston and Orangewood Chief Executive Chris Simonsen.
Sara Bazant, Orangewood’s director of marketing, said it was the first time the nonprofit partnered with an agency of Gigasavvy’s size.
“Honestly, we had not been seeking out a marketing agency. Our budgets are limited, but we worked with them on what a contract might look like,” she said. “Our board was willing to make an investment, which is something we hadn’t really done with marketing for a number of years.”
Companies lacking the ability to invest heavily in marketing campaigns will manage its advertising in-house or hire freelancers, Johnston said.
Svoboda, who also serves as president of the OC chapter of the American Advertising Federation, added that Gigasavvy helps organizations create a cohesive marketing strategy that tells a consistent brand story—something difficult to do when hiring multiple, independent freelancers to work on separate projects.
“They’re able to come to us and get a high-end solution to their business that really makes a huge impact,” she said. “Not only do we want to help them grow their business, but we’re growing and supporting businesses in Orange County—for it to grow here and thrive, which helps us retain our talent and grow the economy here.”
And it keeps Gigasavvy healthy enough to fend off a potential acquisition from large holding companies like WPP, Johnston said.
“When we sat down as leadership and talked about the end goal of the company, [it was] to build this up to be one of the larger independent shops, which is definitely a challenge, but this [merger], in our mind, was one of the steps to get there.”
