Are Indies Virtually Recession-Proof?


Imagine having a team of hands-on, seasoned professionals on your account - none with fewer than seven years' experience - and being billed at junior level rates. This is the sales proposition Aimee Quemuel floats to prospective clients of Ventaja Communications, the virtual agency she founded three years ago in San Francisco. Ventaja sports the Web site and collateral of your standard high-tech agency, but actually represents a network of independent subcontractors, all of whom are brick-and-mortar agency veterans. Because the firm has no physical office space, nor full-time employees, there's little overhead expense to pass on to clients. "We are all consultants. There's no junior staff on our accounts, which has traditionally been a big issue for clients," says Quemuel, who previously worked at Cunningham Communications. "Thus, there's no 'bait and switch' situation where you have the power team that comes in to pitch your business and then you find out later that your actual account team looks different." [Read: fresh outta college.] The virtual consultant model has been especially tasty for tech companies that were either brushed off by the big PR firms before the stock market meltdown, or relegated to the bottom rung on the totem pole of their agency's priorities. Both Accrue Software and AuctionWatch - players in the e-commerce space - abandoned traditional agency searches last year after hearing about Ventaja through the grapevine. "One of the best aspects of working with a virtual agency is flexibility," says Millie Lee, director of PR at AuctionWatch. "Our needs may be greater one month and then not so big the next. They can ramp up and down with us." Yet, the account team remains consistent because the virtual network is impervious to the attrition, promotions and layoffs that typically plague big agency account configurations. Quemuel wagers that hers is a recession-proof model. Whereas traditional agencies often lose business in bear markets when clients can no longer afford their minimum retainer fees, the virtual structure is more organic. For the client, this might mean not having to move business to a smaller shop or revisiting the orientation process every time budgets are cut. Hybrids Among Us Independent consultants, or "indies," have always been an integral part of the PR ecosystem but changes in technology and our societal fabric (i.e., how we define work and workplace) have prompted the traditional freelance model to swiftly evolve into hybrid PR practitioners. Kate Perrin, president of PRofessional Solutions, a DC-based temp firm specializing in PR talent, estimates that 60% of the "associates" in her database are independent by choice (i.e., not seeking permanent employment). "We also have a number of independents who have worked with us [to find project work] but then become clients when they get busy and need to hire subcontractors," she says. "We're now seeing a lot less dependency on traditional employment models, giving way to more flexible work groups." Sole proprietors who once subsisted on piecemeal projects and agency cast-off work are now banding together (whether formally or informally) to win sizeable chunks of business. Katherine Hutt, president of Nautilus Communications in Vienna, Va., recently wrapped up a two-year $250,000 federal agency contract to create a series of planning materials for a national drunk-driving prevention campaign. In this case, Hutt served as copywriter and project manager but pulled together a virtual team of three other contractors to handle design. Now she's one of several subcontractors collaborating on an 18-month project for the Navy League of the U.S., a contract worth nearly $250,000. (DC-area maestro Lisa Fox, who specializes in hand picking marketing communications and advertising teams, is orchestrating the project.) Nautilus's Hutt, who's got 20 years of experience under her belt, estimates that her billable rate is about half of what you'd pay for the same talent at a large PR firm. "Most of my clients can't afford the $20,000 monthly retainer required by big firms like H&K," she says. "And even the smaller agencies cap at $7,500 per month." Following the norm, Hutt has established her own retainer and fee requirements, though they're much lower than those commonly found in the industry. If there's a niche between one-person shops and boutique agencies, she's filling the void. Sizing Up Virtual PR agencies come with their own set of limitations. Most tend to focus heavily on media relations and executive communications programs with a distinct de-emphasis on internal communications and crisis management. And virtual networks can only scale up so much, meaning they usually don't make good fits for Fortune 500-sized clients with global- scale needs. On the other hand, virtual networks are proving they can handle bigger pieces of the communications pie than some might expect. Lisa Fox, the aforementioned ringleader on Hutt's Navy League project, last year garnered $1.2 million worth of business from Whitten Laser Eye Associates, the DC-based vision correction specialists who've fixed the eyes of Tiger Woods, Gus Frerotte and other celebrity athletes. For Whitten, Fox amassed a virtual team to cook up an integrated program that included marketing, advertising, PR and event planning. In Atlanta, Claudia D'Avanzo, founder of a virtual firm called Creative Communications Consulting, beat out two New York shops last year to become the PR agency of record for a major candy company. Her first order of business was a major launch event and a national media relations push to food editors, including a radio news release, satellite media tour and press kit mailing. "We had six months to pull it off and I think our nimbleness and size helped. We were able to turn on a dime," says D'Avanzo who worked in Fleishman- Hillard's Atlanta office for seven years before she launched her own business. Although D'Avanzo's model is undoubtedly giving brick-and-mortar agencies a run for their money on some level, she doesn't see her role as adversarial. "I don't really compete with those guys," she says "We're really two different things. Sometimes a client's budget just doesn't match up to what the agency needs to be able to fully serve that client. We offer, on a micro level, the same level of services, high caliber work and a great team." She adds, "I want to do great work and take pride in my clients, but I'm not out to grow and grow and grow. That's not necessarily everyone's game." Hey, if the IPOs, big agency roll-ups and subsequent shakeouts of late have taught us anything, it's certainly that bigger isn't always better. The biggest gains to be found in the communications business in 2001 may well be at the grassroots level. (Aimee Quemuel, Ventaja Communications, 415/751-5014, http://www.ventajacom.com; Millie Lee, AuctionWatch, 650/808-5814; Claudia D'Avanzo, Creative Communications Consulting, 404/898-0423, http://www.creativecomminc.com; Kate Perrin, PRofessional Solutions, 202/333-5636, http://www.prstaffing.com; Katherine Hutt, Nautilus Communications, 703/938-4540, http://www.nautiluscommunications.com; Lisa Fox, 703/464-0655)Finders Keepers The home office/small office universe is expected to swell to more than 51 million by next year, according to IDC Research and WorkingSolo. com. The most common home-based businesses include marketing, advertising, business consulting, graphics/visual arts, PR and writing. Industry associations are recognizing this growth and are beginning to provide more formal programming for independents, according to Paige McMahon, an independent consultant in Bethesda, Md. who is championing the effort at PRSA's national level. The big question for clients: How and where do you find these virtual denizens? Most virtual networks tend to gel and prosper through word-of-mouth referrals and pre-existing relationships - and hence aren't readily searchable via directories or Web portals. Ironically, there's still a lot to be said for "who you know." Millie Lee, PR director for AuctionWatch in San Bruno, Calif. (who works with the virtual network Ventaja) says the best resources for finding "indies" are likely to be people on your regular gab list: fellow members of professional associations, vendors, colleagues, executive recruiters and temp agency heads. (Paige McMahon, McMahon Communications, 301/320-8053; Millie Lee, AuctionWatch, 650/808-5814)

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