$137.8B U.S. ad spend for top 200 advertisers
KBS+'s entry into the beauty industry began in an elevator. "What is that [nail polish] color?" one girl asked another on their way down to the lobby. "I mixed it myself and you can't have it," the other responded playfully. Chief Creative and President Ed Brojerdi and CEO Lori Senecal overheard.
A little less than a year later, the MDC-owned shop is working with a factory in Italy to invent a color-custom nail polish product it the hopes that it will inspire creativity and generate revenue.
Product development and invention is far from new for adland -- evidence Anomaly's EOS lip balm now infiltrating drug stores, and the many shops with booze and condom brands. But their ranks are expected to swell. Given the new affordability of 3-D printers and agencies hiring more non-traditional staffers like engineers, it's a lot easier for agencies to use their creative juices for more than 30-second spots, creating intellectual property as an alternative revenue stream.
"It's a byproduct of being a modern integrated agency with a diverse fulltime skillset," said Mr. Brojerdi. "We're having to explore so many nuances of a business and so many sides. We had to build out and design e-commerce platforms and work with factories in Asia to ship sneakers and make sure the product was in boxes."
After asking a small team of research executives to look into a custom-color nail polish concept, Mr. Brojerdi and Ms. Senecal inked a deal with an Italian factory, one of the few with the technology and open-mindedness to take on the challenge. Most factories didn't want to deal with building the technology to print different colors down to the individual unit, and most were skeptical about working with an ad agency, said Mr. Brojerdi. From that skepticism was born the interim brand name Acme, a placeholder website and business cards meant to prove that the shop was serious.
A group of digital executives and engineers used 3-D printers to prototype small, single-application bottles in different shapes and do their own color testing. "We were ordering pigments and base layers of chemicals and paint [from China]," he said. Some folks manually mixed the pigments and applying different polish mixtures to provide feedback.
"There is a democratization of a lot of the tools and even people," he said. "If we had these ideas four years we might not have had the equipment or skillset in-house to even be able to make a case for it," said Mr. Brojerdi. 3-D printers now cost a fraction of the $15,000 to $30,000 they used to and they're much better quality, he said.
A summer intern acted as the liaison between the agency and factory. As the creative and digital executives mixed, tested and researched, Mr. Brojerdi and Ms. Senecal put a team of the shop's operational and account-oriented executives to the most crucial task: making money. "We're responsible for delivering on a P&L," he said.
There are currently three business scenarios the shop is considering: Approach a bricks-and-mortar retailer with the option to buy and brand the product; sell part of, or all of the product to a large beauty company; or create its own brand from scratch – market, promote and put media money behind it -- with support and investment from the holding company, among others.
As the group considers the options, it's working on patenting the invention, which could go beyond nail polish. "If we're able to make custom colors on demand, we feel there's opportunity outside of just nail polish," said Mr. Brojerdi. "One area is food services."
KBS+ is hoping that stream doesn't end with nail polis -- which still does not have a final name. The shop is recruiting for new, in-house sales roles tasked with "exploring the marketing and commercial value of the agency's creations," such as a product called iPad Wall which was initially meant to serve as a retail kiosk with iPad use and games. "We're already concepting internally how that could benefit schools and teachers, or be used in hospitals," he said. "We want to build once and sell more than once and license."
Alternative revenue isn't the only goal here. Mr. Brojerdi brings the initiative back to the shop's core services. "Imagine going into a future new-business pitch and say: 'Three years ago we worked on another company similar to yours; this is how we came up with the branding and handled distributiond.'"
NOTEWORTHY PRODUCTS FROM OTHER SHOPS
Two Fingers Brewing Co., Karmarama, 2014
Seven colleagues from London agency Karmarama, bonded by their love of craft beer and a desire to raise money for charity, recently formed this brewery. Their first product, Aurelio (an Italian boy's name meaning "gold"), launched last month in 200 branches of Britain's biggest supermarket, Tesco, as well as online at Tesco.com. Aurelio costs $3 for a 330 ml. bottle and is sold as "a beer for man kind." All profits go to charity Prostate Cancer U.K.
Papa's Pilar rum and Angel's Envy bourbon, CP&B, 2013
Papa's Pilar launched in March 2013 and is already available in 10 states in the U.S. In 2014, the MDC & Partners shop plans to break ground on a Papa's Pilar Rum Distillery & Experience Center in Key West, Florida. For Angel's Envy, which is currently available in 22 states, the shop is building a new distillery in downtown Louisville, Ky., which will be the first distillery operating on Main Street in 100 years.
Sir Richard's Condom Co., TDA Boulder, 2011
TDA Boulder's Jonathan Schoenberg spearheaded the launch of an all-natural condom brand called Sir Richards. The company, housed within the agency, would donate a condom to a developing country for every condom purchased. To date, Sir Richards has donated 2.5 million condoms; it experienced triple-digit growth and increased store locations from 1,500 to 10,000 last yeer. CVS is now carrying the brand in its new all-natural family planning department and the brand recently inked a deal with Bono's Red initiative. While the agency continues to support the brand's marketing, it no longer houses the P&L.
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CORRECTION: An earlier version of this story had a photo credit in place of the caption. Tony Xie took the photo of Matt Richard. Also, the iPad Wall was incorrectly referred to as an iTag Wall.