Climb Into the Capsule Before Boosting a Client Into Space

Why Small Agencies Should Grab Equity

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Anthony DelMonte
Anthony Del Monte
Today it is tough to find any business owner who isn't concerned about shrinking revenue, rising costs and the overall state of the economy. As a small agency, it is especially crucial to think about the assets you have, the potential all around you and making moves that are outside your comfort level.

This week, Squeaky launched a site for new client Sheffa Foods (this is not a plug; read on). Now, as a small agency this is always an exciting happening, but this launch is particularly special for us. Why? Because we have skin in the game. We own an equity stake in the company, so helping it position its brand digitally is more than a matter of providing quality service -- it's personal.

I came across a new product in a local store earlier this year that I genuinely enjoyed and wanted to know more about it. Doing a quick search, I realized that this product had little if any marketing exposure. This observation -- coupled with our desire to bring in new business -- made me pick up the phone (always be closing) and schedule a meeting with the brand. We loved the product offering and felt aligned with the owners' philosophy, but the company didn't have the funds necessary for a big digital push while growing distribution. The solution: Get married.

Getting into the capsule
Being a small agency positions you at the ground floor of many emerging companies and entrepreneurial endeavors. Typically budgets mandate that a young company or brand work with a smaller firm that is more service-oriented and can be much more aggressive with budgets. For Squeaky we have been a rocket booster for quite a few. SoBe Beverages -- we worked with the founders from day one, and it went on to become part of Pepsi. Bear Naked -- bought by Kellogg. Chelsea Premium Outlets -- acquired by Simon. Etc., etc., etc.

As a service-oriented company we were excited to see our clients' brands grow exponentially. Their success, after all, means our success. At the same time, as entrepreneurs we couldn't help but feel like we should have jumped into the capsule with them instead of watching it shoot into space.

Our hard work and marketing helped moved the brands forward. But in the end, the client/vendor relationships limited the potential payout for our company beyond work for hire.

These experiences fostered a thought that if the time was ever right again, we would make an equity play, and we felt Sheffa presented the right play. For other agencies, this method has led to the development of a record label (Anomaly), coffee ( Rockfish Interactive) and many others.

Now, this was not a decision made lightly. The recipe had to be right. We have had many different opportunities in the past to partner (via equity) with startups, growing brands and crazy people (seriously), but it just never felt right. Either the company founders didn't click with us, there was not a solid enough base or the product wasn't where we wanted to be, among other things. Ask any VC or angel investor; there are many more people with bad ideas out there than there are people with good ideas. So the recipe is important to the opportunity.

The Sheffa recipe was: A.) We loved the product; B.) We thought that the product category (healthy snack food) was growing; C.) We had a ton of experience in breaking consumer packaged-good brands; and D.) A staff chomping at the bit for some new client work. Sprinkle in the brand's efforts to date -- specifically, products on the shelves in supermarkets, grocery stores and recently distribution on JetBlue, Alaskan Airways and HSN.

For us this meant that the founders were concerned with the same things we were (growing the brand nationally, marketing, etc) and had already done the heavy lifting to get the product out there. So we met with Sheffa, clicked instantly and worked out the details within a week.

It's the economy, stupid
It would be folly for me to not address the fact that (from my vantage point) the economy still sucks. The last two years have been pretty brutal for companies big and small with unemployment numbers being the only steady growth. Although our agency has been able to grow, it is very apparent when you are on the front lines that there's a lot of hurt out there on the street right now.

Being a business owner, I know it's imperative to keep my team challenged, busy and -- most importantly -- employed. Specifically for us, and possibly for you, we have witnessed the volatility of new-business wins and shrinking client budgets. With a dearth of new client work during the first half of this year, we looked into ways to generate revenue on our own so as to best maintain the staff's energy and (duh) employment. Our joint venture with achieved this while enabling us to continue to do the exciting client branding work that our staff was deft at.

In essence, the state of the economy, while scary, also provides an opportunity to consider partnerships, equity deals that can not only add to your revenue stream in the present, but also grow your company exponentially down the line.

Now, I know that Squeaky's experience is not representative of every small agency out there, but hopefully this column got you thinking about the assets you have and the potential all around you to get where you need to be. Wherever that is. Bet on yourself and get some skin in the game.

ABOUT THE AUTHOR
Anthony Del Monte is founder and president of Squeaky Wheel Media, New York.
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