Orange County’s largest advertising agencies were on the up last year, but the disruption to business across industries from the coronavirus pandemic has firms in wait-and-see mode.
Clients, in some cases, are either tweaking existing creative or holding off on advertising altogether amid uncertainty, even with lawmakers last week working on a $2 trillion stimulus package that includes some $350 billion in small business loans and $500 billion in corporate aid.
Some agencies appear to be adjusting well to a temporary new normal: working from home and social distancing in public.
Casanova McCann President and CEO Ingrid Otero-Smart said her team has been keeping busy.
“Many of our clients are [consumer packaged goods] and those industries are not as affected as others,” she said, though other retail clients are affected.
“We are now working with clients on how to pivot,” she said. Nearly all are “open to new ideas, not just of how we move forward … but how they can help now.”
The Costa Mesa-based agency, part of Interpublic Group of Cos. (NYSE: IPG) is estimated to have closed on $25 million in business last year, bringing it into the top 10, at No. 7, on this year’s Business Journal list. Recent account wins include Vallarta Supermarkets, Häagen-Dazs and Outshine, plus a few more not yet made public.
“It’s an interesting time,” Otero-Smart said, “and I’ve seen everyone in the agency roll up their sleeves and demonstrate a lot of flexibility in trying times. We will need to adjust, but we will be fine. [I’m] rooting for everyone in OC.”
Fluid Strategy
Agencies here collectively capped last year with a 17% gain in revenue to $804.4 million. Local workforces grew by about 10% to nearly 1,650 OC employees as of March, from new work and client wins before the coronavirus changes.
That’s across 22 firms altogether, with the list reflecting a mix of traditional ad agencies drumming up creative and doing media buys for clients, alongside tech providers working in an omnichannel world.
Skiver Advertising Inc. CEO and founding partner Jeremy Skiver called the coronavirus situation “fluid” and is working with clients on messaging and strategy that isn’t “tone deaf to the current environment,” while also balancing longer term goals.
“It’s definitely going to affect our business and the industry,” Skiver said. “There will be some contraction and M&A activity over the next few months. At Skiver, we are in a good position to emerge from it with a diverse client roster and low overhead. If you consider that we opened our doors one week before 9/11, we’ve seen a lot in 20 years and are built to do more with less. We’ve had very little turnover, kept our expenses low, but continued to invest in our agency.”
Skiver said he’s “hopeful” the agency will be able to get back to work in the second quarter. The agency, at No. 14, jumped 12 spaces via a 50% rise in revenue last year to $12 million through a spike in project-based work, new business and more work from existing clients, the CEO said.
New Growth
Plenty of change occurred within the top 10 as Innocean USA claimed the No. 1 spot and Agency Ingram Micro, up 11% in revenue to $81.6 million, and Pacific Communications, up 11% to $59.2 million, also climbed up the list to the No. 2 and No.3 spots, respectively.
The three largest agencies generated more than half—$469 million—of the list’s overall revenue and 51% of the list’s combined total local workforce.
Innocean made its name with automotive accounts: Hyundai Motor America Inc. in Fountain Valley and Irvine-based Kia Motors America Inc., among them. As it turned 10 last year, it aggressively pursued new clients outside the auto sector. It’s landed locals including Irvine-based Habit Restaurants Inc., owned by Yum Brands Inc., and Wienerschnitzel, in Newport Beach, in addition to UC Davis Health, TaylorMade and LG Electronics’ Signature Kitchen Suite.
Executives think they’re in the catbird seat to continue the trajectory, with the agency’s expertise across a variety of service offerings.
“Let’s say you are coming into a restaurant for dinner and you can order your full-course meal from appetizer to dessert, or you can just order a dish of pasta or have coffee and leave,” CEO Steve Jun said in an interview with the Business Journal in late February. “We offer these new clients the whole variety of services with the flexibility they can choose. I think that’s finally being noticed by these new brands that we acquired last year.”
