Adland's New Era of Specialization

Earlier this year, Leslie Bradshaw, president-chief operating officer of Jess3, performed an experiment. For a few months, she pushed her Washington-based agency, which specializes in creating data visualizations, to branch out into such areas as training, business intelligence and production. "We did it, we survived," Ms. Bradshaw said. "But my team looked at me with an angry, exhausted look that said, 'Don't ever do that again.' " She agreed, for the most part. Though she won't totally rule out the possibility of expanding its services someday, Jess3 has refocused around the capability that has fueled its growth to $5 million in annual revenue, about 30 employees and a client list of prestige brands that includes Nike , Google and American Express. "Our success has come from being best-in-class at one thing as opposed to being good at a lot of things," said Ms. Bradshaw. "We don't want to lose that as we go forward. It's tempting as clients ask us to do things two or three degrees to the right or left." That's no longer as simple as being digital, because specializations are becoming much narrower. The last year alone saw the launch of Made, focused on brands with manufacturing operations in the U.S., and of Senior Creative People, whose concentration is older consumers. The development happened on the heel of an explosion of agencies dedicated to social media in general and Facebook in particular, as well as all forms of mobile marketing. And that 's just the startups. Winning clients such as Jiffy Lube, Dr Pepper and TGI Friday, and rebounding to an 80-plus workforce wouldn't have been possible if Sq1 had just rebranded as a digital agency, even though that 's its channel, Mr. Capobianco said. "The more specialized you are, the less competition you have -- by definition," he said. Like Jess3, Sq1 has grown without having to wade into the dreaded, costly RFP process that commodifies agencies. But specialization poses its own set of challenges. For one, operating in a niche makes it tougher to gain lead-agency relationships. But those are increasingly few and far between anyway, as many marketers are wary of giving a single shop so much power. Such relationships are sometimes less profitable, as well. Talent sourcing and retention is another challenge, as Midwestern agency Osborn Barr has discovered. Over the past two years, the shop has refined its emphasis to an often-overlooked group of businesses and consumers: U.S. farmers. That strategy shift has led to strong business results and a culture change, according to CEO Michael Turley. Developing smart strategies for clients takes precedence over "rock-star creative projects," Mr. Turley said.

Adland's New Era of Specialization

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