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Diversity fosters growth in competitive climate

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Slack Barshinger & Partners Inc., a 14-year-old b-to-b marketing agency based in Chicago, was recently named agency of the year by the Business Marketing Association. Last year, when most agencies had revenue declines and some even shut their doors, Slack Barshinger grew its revenue by 12%, added nine new clients (including the Electronic Federal Tax Payment System and Johnson Wax Professional) and completed a merger with b-to-b agency USA Chicago.

Gary Slack, managing director of Slack Barshinger, spoke with BtoB about what contributed to the agency’s success in a tough year and where clients are spending and not spending their marketing dollars.

BtoB: What’s happening with your clients’ marketing budgets this year? Are they are coming back now?

Slack: There were cutbacks here and there. We grew 50% in 2000, so 12% growth [last year] is back to our historical average. One thing we saw in 2001, and we’re seeing a little this year, is some companies are cutting back on face-to-face marketing as exhibitors. A few have made major cutbacks. Trade shows can be the single largest item in a company’s marketing communications budget. It’s an easy target to go to first to save money.

BtoB: Are they putting trade show dollars somewhere else?

Slack: Some money is being re-allocated to more targeted direct mail and e-mail.

BtoB: What about traditional advertising, like print?

Slack: The lack of faith we see in the power of print advertising is downright scary. We encounter more and more marketers for whom print advertising is the last tool in the toolbox they would ever invest in. They’ve concluded, rightly or wrongly, that it is the least targeted, least interactive, least measurable and most wasteful marketing communications tool.

BtoB: So how do you advise your clients regarding print?

Slack: It’s hard to fight against. In some quarters, it has almost become a litmus test in hiring an agency. If you appear to be too pro-advertising, you can be viewed as not being sufficiently sophisticated or results-oriented, or old-fashioned.

BtoB: How does that affect your pitches for new business?

Slack: We try to focus on the critical role advertising plays in the buying process, especially for new products and the launch of new companies, as well as retention and reinforcing the purchase.

Before you invest, often heavily, in more direct tactics like direct mail, trade shows and even sales calls, you need to build a foundation of market familiarity for your products, services or companies.

Advertising is less likely than ever to directly lead to a sale. But it still has a very, very critical role in building market familiarity. So subsequent investments are more successful as you move through the buying process.

BtoB: What are some of the biggest challenges facing b-to-b ad agencies this year?

Slack: Competition for b-to-b marketing communications agencies has always been other b-to-b agencies, and in some cases b-to-c agencies. Also, in-house marketing departments that exist within most client organizations.

We are encountering a third form of competition—companies that are really resistant to the idea of entering into an agency relationship. Many companies got burned by agencies in 2000 and 2001. There were agencies that took a company’s money and didn’t produce a lot in the long term.

The whole marketing communications industry is going to have to work extra hard to demonstrate the value of partnering with an agency.

BtoB: What are some of your strategies for business growth?

Slack: The key thing is diversification. We diversify in three areas:

First, our firm is not dependent on traditional advertising. Advertising is about 10% to 15% of what we do. We work across the entire marketing communications spectrum—in trade show support, online marketing, PR and developing sales communications tools. When advertising is down, we will not be as affected as other agencies would be.

Another element of diversification is working in between eight and 10 industry segments, including logistics and distribution, packaging and food ingredients. Any of these industries may be suffering at any given time, but others may be going gangbusters.

On the third level, we work for large, medium and venture-backed start-ups. About 20% of our business is with small, emerging companies.

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