Sales Scare: Shrinking client budgets, changing media spur changes at Noble

The agency has returned an esteemed general manager and promoted two creative directors to share the role of executive creative director, in an effort to adapt to changing marketing techniques and decreasing client advertising budgets.

The decreases in ad spending are nearly across the board – an Aug. 21 survey by the Association of National Advertisers found that 53 percent of advertisers expect to see reduced ad budgets in the next six months, while another 38 percent expected budgets to be flat.

“There’s no question that many of our clients have cut back their traditional ad budgets,” said Keith Acuff, who rejoined Noble in mid-August as general manager after spending nearly three years as vice president of Carthage light fixture manufacturer H.E. Williams Inc. “(Advertising) is one of the first things to go – that and research, anything companies see as not revenue-generating.”

Capitalized billings – the number ad agencies use to estimate total ad spending – at Noble have been down in recent years. Noble posted 2007 billings of $178 million, down significantly from $260 million posted in 2005.

Company President Julie Tumy, however, pointed out that capitalized billings do not include money spent on research, planning and public relations; she said companies have shifted some of their spending to research because of tough economic conditions.

Staffing also is down at Noble. The agency employs about 200 now, down from a peak of 300 in 2005.

Tumy said that reduction is based on elimination of duplicate jobs following the company’s 2002 acquisition of Chicago-based BBDS Communications.

All about food

Company officials also say 2008 revenues remain basically unchanged from a year ago, though they declined to disclose specific year-to-date numbers.

The steady numbers, they say, are due in part to many of Noble’s bigger clients operating in the food industry – names such as Tyson Food Service, Otis Spunkmeyer and The J.M. Smucker Co. They say the wide range of products those companies offer – and the wide range of targeted customers – helps to buffer the businesses from economic fluctuations.

Noble also has added several new clients in recent months, including Aramark and Sam’s Club’s business-to-business division.

The story is similar across town at Marlin Co., where founder and CEO Dennis Marlin said company billings are up 14 percent so far this year, though he also declined to disclose specifics.

Marlin, whose list of clients includes Starbucks, Heinz and Mission, pointed to dining out as an example.

“The consumer may trade down to more mid-casual restaurants, so you may be seeing an upswing in sales in one category and a downturn in another,” Marlin said. “If a client is really tied to a segment that’s hit hard, they’ll feel the pinch of it. But eating out is so much a part of our lifestyle anymore.”

New media

The decreasing ad budgets are combined with a shift in client spending patterns. The ANA survey noted that 87 percent of companies are looking for cost savings in their ad spending. Of those, 67 percent are reducing budgets for production and 63 percent are asking ad agencies to identify cost reductions.

The answer for many is incorporating new ways of reaching potential customers – and being more targeted with the message. Marlin said that’s where new avenues – Internet advertising, blogs and viral street marketing – come into play.

“Sometimes, print media can be more mass appeal, whereas some of the online and other products can be more focused media to attack a specific audience,” Marlin said, noting that as much as 20 percent of some of his clients’ budgets are now going toward alternative media.

New media also is partly driving the promotion of Noble creative directors Steve Popp and Dan Stewart to share the executive creative director role, a first for the 39-year-old agency. The two are responsible for quality and creative control for all client campaigns.

Popp’s experience includes work for Pier 1 Imports, TGI Friday’s and Wyndham Hotels & Resorts, from time as art director at Richards Group in Dallas, while Stewart’s clients have included Schwan’s, Kellogg’s, Frito-Lay and Armour-Swift-Eckrich.

Noble veteran writers Sabrina Robb and Shawn Finger have been promoted to creative directors to fill the vacancies left by Popp and Stewart.

“Print work and old media have really fallen off in the last few years,” Stewart said, noting that some of Noble’s clients have moved as much as half of their spending into new media, including social networking and street-team marketing. “We want to take an idea into any media that is available, and the numbers show that.”

Popp, who says he comes from the “geeky” technical side of advertising, is excited about the new media – and challenged to keep his company relevant.

“A whole network of niche agencies have popped up to service those media,” Popp said. “One of our challenges here – and something I’ve been focused heavily on for the last eight months – is making sure we have those resources in-house.”

Noble is challenging those niche markets by shifting some in-house work to new media outlets. In January, Noble’s The Food Channel launched an interactive consumer site, www.foodchannel.com, offering food news, recipes and tips for client companies and their products.

The company also announced a partnership Sept. 3 with San Francisco-based FohBoh to connect to its social networking food site, www.fohboh.com, which lets restaurateurs write blogs and share ideas.

Marlin noted that online advertising is particularly effective, as it offers the advantage of being able to directly measure results, through click rates and page views.

“Online products are more measurable than print, and when you’re looking for accountability, measurement is important,” he said.

Weathering the storm

The key to weathering the economic storm, according to Tumy, is showing clients the importance of maintaining branding strength even in difficult conditions.

“Sure, our clients are having tough times, but even in tough times it’s our job to keep them well-positioned, so that when times turn around, they’re in a place to gain share,” Tumy said. “We really preach to our clients to make sure they keep their brand equity in position.”

Marlin agreed, comparing the idea to the time-tested financial investment strategy of buying more stock when the markets are weak.

“During downturns, if companies can keep their awareness strong and be able to stay focused on what they want to accomplish, it makes them stronger coming out the other side,” he said.

While economic weakness leads to reduced advertising budgets, it also makes companies more willing to shop around for the best value for their money – so marketers have to balance holding on to existing clients with trying to garner new business.

“We have to be smarter, and our clients have to be smarter,” said Noble GM Acuff, who handles the agency’s operations and financial offices. “In a good economy, the phone call comes to us. In an economy where it’s not as easy, we have to knock on their door and convince them – we have to show them that we can do things that are just as effective but maybe don’t cost as much, just to get the brand out there.”