How a new agency licked the recession

It's been a successful first year for the agency that launched at the height of the recession last April on the outskirts of Birmingham. The Drum talks to Chapter MD Mike Rose to find out how the agency's new 'Sharper and Better' model is performing.

Needless to say it has been an interesting and challenging year for Chaper, but one which this week sees them celebrating their first year in business with a client list that now includes the likes of Triton showers, E.J. Gallo, Nissan, Sealine, The RAF Association, Yourfloors.co.uk, Metro Restaurant and Smart Accident Management.

A year down the line The Drum met up with MD Mike Rose to assess whether year one had panned out the way they had anticipated when the three founders had talked in a local pub some time ago now about launching a new agency model that would enable them to work much more closely with clients and offer clients big agency strategic thinking and creativity, but with small agency overheads, access and flexibility. Their vision was to create an agency capped in size to 30 people, with those people operating as 10-strong multi-disciplinary teams, or chapters, within the larger agency, which would be fully accessible at every level - from account handler to creative - to the client.

"We are celebrating more than just our first year," says Rose when he met The Drum at Metro Restaurant in Birmingham last week. "Considering we began with nothing and in the eye of the economic storm we are now working with a great line-up of clients, developing creative that's effective, getting results that are helping our clients perform in what are still challenging times. And obviously proud to be Agency to Watch 2010 courtesy of The Drum. The vision and structure for the agency is built around protecting closeness, understanding and efficiency. We are still 100% committed to capping the size of the agency at 30 people as we believe from previous experience that beyond this point our proposition will start to dilute. It's a core founding principal, not a launch gimmick. And it is genuinely part of shareholder's agreement."

Now numbering nine staff the first multi-disciplinary chapter is almost complete. Years two and three will see the completion of their 30-strong agency model. But has establishing a new agency offer and brand in an ultra-competitive marketplace during a recession been all plain sailing?

Rose says: "We have definitely worked a lot harder than we perhaps thought we would have had to to get things going. I think we were realistic about how hard we would have to work to get the agency off the ground, but there have been times when we have had real highs and lows and long weeks, so I think it's been a challenge around the energåy required to get things going the way we wanted. Beyond that the challenges have been the day to day cut and thrust of managing clients, doing the creative work, pitching, winning some clients and not others.

"Where we are at now is a direct result of the effort put in. The early mornings, the late nights and the weekends - you don't get a client list like ours without putting in some very hard work along the way. This is not a first year based on good luck, but bloody hard work. You get out what you put in and what we need to find going forward is to find the right mix of talent and effort. That is the key. What we don't want is a culture where its a sweatshop where everyone is expected to be in at 7am work till late, but what we do need are people who are prepared to roll their sleeves up and work hard when it's required. It is about give and take and we will reward people, no problem. Where we have got to, we are really pleased about it but we are not going to stop and slap each other on the back. We are going to continue to drive this thing forward."

The concept of actually capping the size of your business is an interesting one. To some in this industry, where size is often equated with success, this may seem odd, but Rose and his fellow directors have clearly put much thought into the associated benefits of their business structure.

"The reason for capping the size of the agency is that we think three multi-disciplinary teams will work really well. As soon as you start adding a fourth and a fifth team and so on you have to have all sorts of additional controls from a financial management perspective. At 30 people you can more than likely do the job of an agency with 40 or 50 people anyway. We want to avoid getting too big. The reason for capping it at 30 is that we think it is a more efficient ways of doing things, it gets our individuals really close to clients and we believe that once you have a massive overhead it means you have to go out there and chase every piece of business going just to keep feeding the machine. We have had a maximum of 30- people written into out shareholder agreement, that's how fiercely we believe in 30 as a size cap. It is a core founding principal and not a gimmick. The point is that we cannot blindly continue to grow and grow, should we ever want to it get bigger the agreement forces us to have the conversation and really consider our growth very carefully."

"There was some initially some cynicism from others at the start but the reality for us is that we believe in this model and from the first year clients have clearly bought into that and we are going to protect it."

As stated at the start of this article, The Drum was surprised to hear of a new launch in the depths of the recession, so how has the recession shaped the thinking behind Chapter and how will it ultimately define the agency's destiny?

Rose says: "I think at the start we knew what we had developed was a model that felt right for us and we spent along time developing that, not just for a recession but for clients ultimately. It is really about us adding lots of value and offering the creative and strategic flair of a larger agency but in s smaller agency environment with a lower cost base. The reality of the recession has been that clients are looking for a different way to do things. I don't think that is juts about the recession, but longer term clients are looking for different ways to work with agencies. Our model has resonated with some pretty big brands who also buy into our view. So, I think the backdrop of the recession helped us as it prompted clients to look for something different, but that said our model is there for the long term and not just for a recession."

In any relationship, be it business or personal, there is always a degree of disagreement. So, have the Rose, Boulter and Heffernan come to blows yet?

Rose laughs: "There have been no arguments as such, but what has been good about the relationship between the three of us is that if there has ever been any tension then we have always approached it from the point of view of what is good for the agency. We all have a view and we are all pretty passionate, but it is never personal. There are some heated debates, but it is always for the right reason."

"Having three people directors in the business is really good. Three is a nice number as you always have two other people to bounce ideas off and there is always more than just another point of view to your own on things. It also makes it much easier to take some time off knowing that there are two other people who are as passionate about the business as you are looking after things. You can actually enjoy your downtime more because you totally trust the people who are looking after things back at the ranch."

The agency has just this week released a new set of viral films for its client, leading shower maker Triton, and is promising more new business wins in the early part of its second year.

Rose concludes: "Naturally we will be consolidating our success. We are performing well against our plan for the business, but we won't be sitting back, anything but. As we grow it's vital that we recruit people that share our vision and help us stay sharper and better to continue our momentum. We are committed to keeping a tight team so every single person will matter."

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