With baby boomers reaching the ripe old age of 60, agency owners in increasing numbers are looking to cash out. That presents some great opportunities for small-agency execs such as Eric Mower.
His agency, Eric Mower & Associates, just bought 20-year-old Mark Russell & Associates, with offices in Syracuse, N.Y., and Atlanta. The combined operation does business in seven markets, has estimated billings over $220 million and about 260 employees. In addition, Mower is in active discussion to buy two more agencies on the East Coast; Eric also wants to set up shop in New York, Washington and Boston.
Eric's endgame is to build an agency network in a controlled geography. He wants to operate all his offices in one time-zone so he can deploy his troops to any office quickly and efficiently.
Key to understanding his strategy is that he operates his offices with a consolidated bottom line to "eliminate the forces of nonintegration," as he nicely puts it. "When everyone in an agency organization realized that their interests -- and those of their clients -- are best served through collaboration, integration becomes the behavior of choice. Our seven offices, multiple practice groups and numerous client teams all know that individual rewards are based on: value delivered to clients, productivity and collaboration." The agency, of course, tracks the P&L of each of his seven offices, but employees are rewarded on how the entire operation does.
Not only does Eric not want his various offices pitching the same account, he doesn't want one of them trying to sell a client on, say PR, when top management wants another office to go after the same client's ad account. But since the office managers and account people aren't rewarded on billings they bring in but how they work together, he avoids the kind of turf wars that cause mischief at most other agencies.
Eric controls 100% of the voting stock but 30 partners have non-voting stock and dividends are paid on a pro-rata basis to all stockholders. He said eight members of his top management team decide on bonuses based on a profit pool each year. Allocations depend on the performance (value to client, productivity, collaboration) of each employee.
Mower groups its offices by marketing discipline: business-to- business; brand promotion (which Eric defines as advertising with sales promotion urgency); PR and public affairs; and consumer advertising. Atlanta and Buffalo, for instance, are the brand-promotion experts. Syracuse, where Eric has his office, is the b-to-b center. Rochester, which was acquired from BBDO, supports Syracuse. Other offices are in Albany, Atlanta and Charlotte.
I asked Eric if his consolidated-bottom-line philosophy, with "no silos, no turf, no barriers," would work in bigger agencies. It could, he said, "depending on the kind of culture that exists and the kind of economic model they believe in.
"Remember the old Theory X and Theory Y school of management? X equals a carrot and stick and makes for a motivated employee, with compensation based on individual or micro-group outcomes. Y equals a belief that people want to work in a place where they can excel, collaborate, self-actualize, with compensation based on macro outcomes for the entire organization."
Many agencies (both big and small) are Theory X shops, he noted. Some are Theory Y, and only a few "truly embrace" a consolidated bottom line.
Eric says, "It has taken us some years of constant, deliberate, disciplined behavior to cause our population to not only understand what we intend with a consolidated bottom line, but also why the business result is exponential [regardless of how difficult it may be with many offices, practice areas and client relationships]."