Small firms unite for big jobs.
Keith Reed, Baltimore Business Journal 7.01.02
When Karen Sutter started her career in graphic design two decades ago, computers weren't essential, consolidation among advertising agencies and related firms hadn't happened yet, and a small, suburban design firm like hers could still scratch out a living for itself.
Times have changed. Over the years, Sutter, president of Sutter Communication Design in Lanham, has abandoned antiquated typesetting equipment in favor of a fleet of Macintosh desktops. She's partnered with larger agencies to bid for big contracts, and grown her firm from a one-woman shop to include eight employees.
Along the way, Sutter noticed that the full-service agencies had a definite edge in going after lucrative accounts -- an observation that has spawned a desire to expand her firm. The only problem is, she can't quite figure out how.
"I'm not a business major; business is not my strong suit," Sutter said.
"It seems as if agencies come about when partners leave and take some clients with them. There's no one here that has that experience. We don't know what it takes to be an agency."
Sutter is facing a quandary that many small design and media buying firms have experienced. As clients' needs grow beyond the firm's capabilities, the smaller company is likely to be abandoned in favor of a big ad agency.
Like Sutter, many firms want to reach agency status by picking up a staff of account executives, "creatives" and new- business hounds, but managing that growth is tough for an entrepreneur whose skill set is limited.
"A lot of design shops don't have the capabilities to be an agency on their own," said Michael Diliberto, president of Baltimore design shop Diliberto Inc.
Last year, Diliberto partnered his firm (http://www.diliberto.com) with media buying agency Davis Media Group (now part of Chess Communications Inc.), and mounted a coup by winning a $25 million account with Best Western Hotels.
Diliberto said partnering with other firms that can bring a separate set of strengths to the table can help small firms bring in clients. But he cautioned that such partnerships are difficult to sustain.
"I think it's tough," Diliberto said. "I had it easy, because I'd worked with my partner before at other agencies. But you're mixing cultures, you're mixing agency philosophies. It's a marriage."
Andy Spangler, a partner in two-year-old multimedia design firm NoInc (http://www.noinc.com), said his company has also considered expanding its services to look more like a full-service ad agency. But the firm, which employs eight, is taking a slow growth track.
"Coming from us being in Web development, we've watched a lot of other firms go down with the dot-coms," Spangler said. "We're a lot more sensitive about how fast we grow. We never expected to be an 80-person agency."
Sutter said she has been searching for experienced executives from other ad agencies as potential partners. Specifically, she said she was talking to a partner in a Washington, D.C., advertising firm who is leaving that company to start a boutique firm in Northern Virginia. She would not disclose his identity.
But Sutter will have to decide how much control she would be willing to give up to grow. Potential partners, especially those who would bring clients to the table, will want some equity, she knows.
"If there was someone that left an agency and they could bring some [clients] with them, then I would feel that they deserved to have some equity in the business," she said.
Once a partner is found and a deal is done, one more issue remains to be settled: where to locate. Lanham is conveniently located to both Baltimore and Washington. But Sutter considers her firm much more a part of Baltimore's business community.
"I probably won't move, but I've thought about it," she said. "I guess when we expand, I'll try to hire account execs that can go after business in both markets."