A sign of better times?

September 8, 2003 by Strategy Staff

If the experience of Toronto-based ad agency Zig is any indication, marketers are starting to open their wallets again. ‘I think with most of our clients, there’s a sense of guarded optimism,’ says partner Andy Macaulay, who suggests recent reports indicating ‘signs of life in the U.S. economy’ is in part driving the trend.

According to New York research firm TNS Media Intelligence/CMR, ad spend in the U.S. jumped 6.8% in the first half of 2003. And the Department of Commerce recently announced that the economy grew at an annual rate of 3.1%, which was much faster than expected. As a result, analysts predict strong growth in the year ahead.

Here in Canada, Macaulay and his founding partners, Elspeth Lynn and Lorraine Tao, are definitely benefiting from a surge in ad spend this fall; the four-year-old agency broke eight TV campaigns between May and September, and another six are scheduled to hit the airwaves this fall. Over the last year, Zig has netted some significant business wins, such as Maple Leaf Foods, which have helped boost the shop’s revenue by about 25%.

While some of the current work is for non-profit organizations like The Heart & Stroke Foundation and the YWCA, there is also creative for larger companies, including packaged goods brands, on the go. They include a multimedia campaign for Toronto-based book retailer Indigo that will revolve around gift-giving, a branding spot for Maple Leaf (see below), and ads for LavaLife and Unilever brands Vim (below) and Lipton Sidekicks, plus creative for recently acquired clients New York Fries and Dare Foods, which is ‘in a process of revitalization.’

The shop has grown from three founders in 1999 to a current staff of 34, with eight employees added in the last year – and Macaulay attributes this growth to Zig’s ability to partner with the right clients.

‘The new business process is a two-way process – they are looking at us, but we’re looking at them to see if they are the kind of client with whom we can be successful,’ explains Macaulay. ‘We look for [marketers] that are committed to making their product the best it can be, because that will get us to a better place. At the end of the day, they are the companies most resistant to bad times and most able to capitalize on good times.’

And of course, finding marketers that are willing to ‘explore new places’ and ‘take intelligent risks’ helps the agency deliver consistent work and attract some attention – which leads to more clients.

The Zig crew recognizes that it’s sometimes a huge leap for marketers to take a chance on a young shop with their branding campaigns, so they invite project work, which gives them the opportunity to ‘earn [their] stripes.’ In fact, Macaulay says up to 40% of annual revenue tends to be project-based, with some assignments turning into bigger jobs. For instance, a project Zig handled for Corus Entertainment’s Toronto kid station YTV led to the full W campaign.

But while overall things are looking up, Macaulay says companies are still dealing with the repercussions from the likes of SARS and Mad Cow disease.

‘I think there are some real challenges’ in our clients’ business that are a function of the body blows the Canadian economy has taken over the last year.’