In Tough Times, It Pays to Stay Home
About a year ago--when the advertising industry in Los Angeles was beginning to free fall--Rob Frankel had five employees, a fat lease expiring on his Van Nuys office space and a baseball-size knot in his stomach.
Today, working out of his Encino home, Frankel’s only paid employee is himself. And the knot in his stomach is gone.
“You have no idea what kind of waste goes on at an agency,” said Frankel, whose unpaid associates at Frankel & Anderson are two collies and a German shepherd. (Anderson is a former partner who Frankel bought out.) “Once you make the decision to go literally ‘in house,’ you cut all the overhead and all the waste.”
With the recession hobbling the advertising industry and forcing yet more layoffs, a growing number of people who have lost or quit their agency jobs are operating competitive agencies out of their homes. By one estimate, up to three dozen such residential ad agencies are now fully functional in the Los Angeles market.
Five years ago, this would have been thought virtually impossible. But vastly improved technology has led to a spurt of home-based agencies as displaced professionals find ways to get through the bad times. High-tech equipment such as Macintosh computers produce ads as good as those produced in big offices, and fax machines help to keep professionals working at home in touch with clients.
“This is what people do in desperate situations,” said Laura Murphy, president of the Beverly Hills-based ad industry headhunting firm Baeder/Murphy. “You’ll probably see more of this.”
While some may have set up shop at home in desperation, many who have worked at home for a while say it would be very difficult to return to big agencies again. “You get to do the work you love in the environment you love doing it in,” said Frankel, who has created ads for the men’s clothing retailer Paul Jardin and for Evans Rents Furniture.
The way Frankel figures it, he can charge about 50% less than an agency with lots of overhead. For example, he recently created two TV commercials and two radio spots for a client for $30,000. Most major agencies would charge more than three times that amount.
About a year ago, Marilyn Wallar moved her agency from a six-person Irvine office to her Dana Point home. But she rents a 200-square-foot cubicle in a San Clemente office--mostly for cosmetic and storage purposes.
“Clients have some hesitation about working with someone out of their home,” explained Wallar, whose agency, the Wallar Group, has created billboard ads and promotional brochures for the Soup Plantation restaurant chain and the grocery chain Bristol Farms. “I almost always meet clients at their offices.”
Billy Kelley has been operating his firm, Kelley Advertising & Marketing, out of his Beverly Hills home since 1987. He said home-based agencies don’t automatically turn off clients.
“I used to be embarrassed to say I work out of my home,” said Kelley, who figures he spent only $8,000 to start his agency after he quit his job as a management supervisor at Keye/Donna/Pearlstein. “Now, I don’t hesitate to say it. It appeals to clients who believe their suppliers should be lean.” Current clients include Automotion, a Santa Clara Porsche parts retailer, and Quarterdeck Office Systems, a Santa Monica software firm.
Consumer Group Targets Studios
Some of Hollywood’s big film studios are about to take it on the chin from the Washington-based consumer advocacy group, Center for the Study of Commercialism.
On Thursday, the organization plans to deliver a petition to the Federal Trade Commission designed to shake up the subtle advertising of products in movies through the practice of taking fees from marketers to show name-brand products in movie scenes. The group wants movie makers to be required to announce on screen what products have been placed in the movie and by what advertiser. The petition will focus on five yet-to-be-revealed movie studios.
Briefly . . .
L.A. Gear has contacted a number of firms about handling its $70-million media-buying business. . . . Jenny Craig, the weight-loss company, has hired Irvine-based Wakeman & deForrest to handle its direct-mail advertising. . . . Stein Robaire Helm has been awarded the $3-million to $4-million advertising business of Canoga Park-based Redken Laboratories. . . . Los Angeles-based Poindexter/Osaki/Nissman has won the $500,000 account for Himco Security Products. . . . One of the nation’s largest point-of-sale video merchandising firms, Oregon-based AdVision, has been purchased by the Beverly Hills firm Royal Venture. . . . Despite industry reports to the contrary, it is the New York office of Chiat/Day/Mojo--not its Venice office--that is vying for Michelob’s $40-million ad business.
