How to Start an Advertising Company
Company Dashboard: Concept Farm
Founders Griffin Stenger, 44 and Gregg Wasiak, 41
Location New York City
2008 Revenue $10 million
Start-up Year 1999
Start-up Costs: $86,000 annual rent, $26,000 for laptops and other technology, $44,000 for travel
Breakeven Year two on revenues of $1.2 million
Biggest expenses In 1999, office technology and Kinko's runs. In 2000, payroll.
Qualifications The two founding partners brought two decades of experience at giants like J Walter Thompson and TBWAChiatDay.
Red Tape Errors and Omissions insurance to protect against client lawsuits over mistakes in ads.
When Griffin Stenger, Gregg Wasiak, and Ray Mendez reunited in New York in 1999, they weren't exactly loving their industry. Wasiak and Mendez were coming off a year in the Amsterdam office of TBWAChiatDay. Stenger had just been laid off from N.W. Ayer. The three, who had once labored together in the fields of J Walter Thompson, had had it with advertising's pursuit of awards, cool, steely vibe, and limited arsenal (Throw TV at it! Throw radio at it!). "We wanted to connect the audience to the brand in every way possible," Stenger says. "We wanted to do everything -- production, post-production, Internet production -- from our own offices. And we wanted to do it with people who felt like family."
It was spring in dot-com America, so Mendez peeled off to burnish his digital creds at an Internet company. (He and four other old friends packing a variety of skills would ultimately become partners.) Wasiak, a writer, and Stenger, whose experience included everything from television production to bookkeeping, subleased 3,000 square feet of office space in midtown Manhattan. They built desks out of particleboard and purchased old tables, lamps, and wood stripped from barns at second-hand shops upstate. ("One of the great things about calling yourself a farm is that worn-out junk suddenly becomes cool," says Stenger.) For the first few months, Stenger's roughly $25,000 severance package paid the bills.
Many ad agencies are born when the founder lights out from an established shop with a large client in tow. The Concept Farm "started with nothing," Stenger says. Early jobs all came through friends: a meeting with its first client, Register.com, was wrangled by a member of that start-up's board. "Coincidentally, we'd been using Register.com to find a domain name that could be the same as the company name," Stenger says. "The marketing director asked, 'What do you know about my business?' I showed him my notebook with a dozen names crossed out and 'Concept Farm' circled in red. And he said, 'OK, you do know it."
Register.com wanted to order up a newspaper campaign -- exactly the sort of hammer-nail approach the farmers (as they call themselves) reject. "Instead, we presented them an entire integrated campaign, including television, radio, print, Web," Stenger recalls. "They had never seen their brand presented in such giant scope." Register.com hired Concept Farm, but on a far less ambitious, project-by-project basis. After three months that relationship morphed into a $30,000-a-month retainer.
In the very early days, Stenger says, figuring out what to charge presented the greatest challenge. Integrated campaigns were unusual at the time, and the creative, customized nature of the work made benchmarking tricky. And who knows how long it will take to produce a great idea? Five minutes? Five days? Five months? "At first we just guessed," he says. "We'd try to make it work and see if we lost money. Then we'd know whether to charge more the next time. (The company soon adopted the common formula: time + markup + profit.)
"A lot of [large] companies will say, 'Having my brand on your roster is worth more than me having you guys do my work. So you'll do it for less," Stenger says. "You take that for a while. Then you say, 'No. We'll be just fine."
By contrast, turning down jobs because they're small and unglamorous is a mistake. Concept Farm agreed to do promotional spots for ESPN and a low-budget ad for its spelling bee coverage -- the kind of work some ad shops disdain. In 2003, the farmers parlayed that relationship into a multimedia project called "The Season of the Fan." "Season," which accounted for $1.2 million of ESPN's $6 million 25th anniversary campaign, produced 1,700 hours of footage of sports fans rhapsodizing about their passions. It put Concept Farm on the map.
Like any creative company, Concept Farm's largest expense by far has been people. By 2000, payroll had reached $450,000 for three partners and six employees. The founders' biggest mistake, Stenger says, was not investing earlier in high-end digital staff. "We're now at the cutting edge, but for many years our entire interactive department was an intern who was a Flash guy," he says.
Despite the agricultural metaphor, the Concept Farm's smartest decision may have been to define itself as a content "machine" that applies the same techniques to creating products for clients and for itself. So, for example, when the farmers needed a calling card for TV production jobs, it produced "Cool in Your Code," a program that breaks down New York City happenings by zip codes. Concept Farm funded the show (including the purchase of airtime) as well as produced it. It has since sold sponsorships to Bank of New York and Pepsi, among others.
"The program gives us the ability to sell other television show ideas," Stenger says. "And it's like an early-detection system for what's going on out there."