It’s all white on the night - Whitespace MBO

The reason? Apparently agency bosses hang around too long and don’t know when it’s time to depart and allow fresh thinkers to take the reigns.

But this was not the case at Edinburgh design and digital agency Whitespace, which this month saw the departure of two of its founders – MD Don Galloway and design director Carol Coulter – who founded the agency alongside Russell Stout in January 1997.

Stout remains at the agency in the role of digital media director, but has chosen to sell part of his shares to ensure that each of the four new owners, who personally funded the deal without any corporate assistance, hold an equal share in the company. The financial cost of the deal has not been disclosed. However, this has not been a knee-jerk move.

The directors had been in conversation with their budding entrepreneurial staff over the last two years, working with clients too to smooth the transition period, explains Stout, as The Drum caught up with him and creative director Iain Valentine.

fanfare

The lack of any fanfare – apart from a short film in which Galloway and Coulter said their farewells to staff clad only in bathrobes (visit www.whitespacers.com/blog to watch the film) – has been due to the openness in which the buy out negotiations took place. The MBO sees Valentine and Stout take equal ownership alongside Emma Jardine, client services director and Phillip Lockwood-Holmes, the agency’s head of digital.

Valentine explains that the process started when he joined from Navyblue in 2003 and began to build the creative team, while Jardine, who joined from The Leith Agency, built the account management team.

What might come as a surprise, though, is the subsequent moves made by the departing co-founders. Galloway has launched a company focusing on R&D tax credits – for which Whitespace has created the identity and marketing materials – while Coulter has opened a framing business.

As part of the transition, the team has been restructured to better suit its mix of brand identity, print design, web design and build and the increasing drive towards online marketing and online advertising.

As a result the agency now includes a content team, consisting of a senior writer, search specialist, digital media producer, flash animator and full time proofreader and works alongside the existing account management, creative, artwork and digital production teams.

“All of the staff knew from Christmas last year when we told them at the Christmas party and the majority of them could see how we would reshape the business,” continues Valentine.

“It really wasn’t a big surprise. The biggest change has been the loss of the physical and emotional presence of having Don and Carol here. They’re big personalities, and everyone else needs to pull together to fill that void.

“From a client perspective, they were all informed six months ago. It has marked a big change in terms of the team that we’ve taken on and restructured. Five years ago there were sixteen or seventeen ‘Whitespacers’, there are now 28 in total. So, there’s not been a huge growth year-on-year but there’s been steady progression. Now, we don’t aspire to be any bigger than we are at the moment because we have the right team in place. We’re big enough to handle the big contracts but we’re not so big that we’ve forgotten who everybody is.”

Proof of the continued growth of the agency comes with its 13.8% financial increase in the last year, with a turnover of £1.6m and a gross profit earning of £1.3m.

Government

A large amount of that has come from The Scottish Government, for which the agency’s digital workload has grown to the extent that it has created the digital platforms for most of the high-profile campaigns in the last year – including the online side of its recent flu and Alcohol Awareness Week campaigns.

In fact, public sector work – including the Government – now accounts for half of all the work undertaken by Whitespace. With the Government currently in the procurement process of rebuilding its creative roster, Whitespace is waiting (along with seemingly the rest of the Scottish industry) to find out whether it will make the list once again. It seems likely, but when asked whether this had any bearing on the deal, both deny that it had.

“Ironically, if the Government’s process had followed its initial timetable we would have known prior to the deal,” states Valentine, who explains that the original announcement of the roster was to have been in October, which would have been ahead of the conclusion of the MBO at the end of the agency’s financial year.

“Either way we still followed through on the trust of the succession plan.”

When asked how confident the agency is that it will be retained by the Government, Stout says diplomatically that they are not being complacent about their chances.

“We’ve had to put some real work into the tender to make sure that it was as good as possible, that way we have as a good a chance as anybody else.”

But this is not a one client agency though, Valentine continues, with an equal split between public sector clients (such as the Government and NHS Scotland) and private sector (through Belhaven Pubs, Russell Europe and whisky brand Glenmorangie). It recently lost client Zoom Airlines, which went into liquidation, but the agency has had to swallow that loss and get on with business.

“We’ve always had a healthy split, which is good. We’ve always had the split of traditional brand identity and print work and the online work too.

“Different people have different perceptions of Whitespace but we really are a creative agency working on and offline. More and more of our work is moving into the digital sphere, but with the people and resources we have, we’ve been ideally placed to take that on.”

Stout is keen to point out that digital services do not just mean the creation of websites for clients any more: “Online marketing elements are vital to hook across all areas online and off. As such, we do a lot of rich media, in-game banner advertising, we have good relationships with the media buyers Mediacom and Feather Brooksbank, which helps. Then there is paid for search and natural search elements which are crucial now for branding and advertising campaigns too.”

Reputation

Valentine insists that the reputation of the agency and the work done by Whitespace are the most important factors in continuing to build the agency and that most of its work will continue to come through word of mouth rather than any real business drive.

“People in the design community are not very good at talking to each other, yet 95% of our new business comes from recommendations,” he says. “We’ve worked a lot recently with (ad agency) Mightysmall and we’ve built a good relationship. We’ve also worked a lot with Uservision and Mediacom.

“We were very keen on building good partnerships in Scotland to try and lift what we do up here, because the next thing we’ll need to do is to compete on a UK level. We have seen that more and more this year.

“We had a pitch earlier in the year against AKQA and Agency.com which was pretty crazy. And we’ve pitched against another London agency recently too.”

As to what the future holds for the agency following the MBO, both insist that there will be no knee jerk changes, especially during such uncertain economic times.

“Everyone in the industry will be talking about consolidation and keeping the team that they have in place,” continues Valentine.

“We now feel that over the last six months we’ve put the ideal team in place to take Whitespace’s offering forward so I don’t anticipate that there will be any great changes. The change will come in being involved in even bigger and better work.”

So despite a wealth of young(-ish) talent taking over the reigns at the Edinburgh-based agency, it seems that sensible, old heads sit on these youthful shoulders.