Cote’s Colorado: Advertising agencies join the media dinosaurs

Pasquale “Pocky” Marranzino thought he was edging toward retirement. He and his partners had sold Karsh & Hagan, the Denver advertising firm he co-founded and led for more than 25 years, to Omnicom Group. And he was down to working a few days a week for the agency.

But when Karsh & Hagan lost its seven-state, 16-year-old McDonald’s account in 2007, it no longer made sense for Omnicom to include the agency in its portfolio. Suddenly, Marranzino found himself considering an offer to buy back the agency from the national holding company.

“Frankly, I was getting a little bored,” Marranzino said during an interview at the Karsh & Hagan offices in the ballpark neighborhood. “I was working three days a week, and I was playing two or three rounds of golf and taking my dog for walks and things like that. My golf game wasn’t getting any better. I decided to come back.”

The Denver native didn’t return alone. He coaxed Kathy Hagan Brown, daughter of retired co-founder Thomas P. Hagan, to serve as co-president with him – after she rebuffed his offer to serve as president by herself. Keith Roberts, who worked for the company for 20 years, also is part of the new ownership and came back as chief financial officer and vice president of finance.

“I really came back because I felt Karsh & Hagan had a great reputation in the community, that it had waned, and that I could contribute to the future of the organization,” Brown said.

That future comes with a much different media landscape and company structure. At about 30 employees, Karsh & Hagan is two-thirds smaller than it was a couple of years ago. And the advertising business has become much more client-driven. In fact, Karsh & Hagan now bills itself as a “media arts firm.”

“Agencies used to build their brands around television, and there are still agencies doing that. And they’re good at it,” Brown said. “But I think the customer is now demanding that you build a relationship on their terms. So we need to help our clients provide the right tactics and mechanisms to have that relationship with the customer. So it might be the Web, it might be mobile. There will still be television, but there’s just a larger sense of integration.”

That means companies like Karsh & Hagan need to rethink their mission.

“We’re retooling the company, and we’re really going to be a market-driven, marketing company as opposed to an ad agency,” Marranzino said. “Advertising agencies are really dinosaurs.”

And with Colorado having fewer large corporations headquartered here than in years past, clients will tend to be smaller companies.

“Denver is not a huge advertising town in terms of giant Fortune 500 accounts. Denver has always been an island,” Marranzino said. “We have about 3 million people living on the Front Range. And then after you get outside that Front Range, there’s nothing for 500 miles. But there are a lot of quality businesses here … and there are some pretty savvy advertisers even if they don’t have large budgets.”

Last year, Karsh & Hagen had $35 million in billings. Its key clients include American Crew, Pinnacle Bank, TD Ameritrade and Visit Denver. Like many companies battling this recessionary climate, the firm is focused right now on survival.

“Our goal is to get through 2009 and not lose money,” Marranzino said. “As Warren Buffet says, he’s in for the long term, and Kathy and I are in for the long term. Warren Buffet also said that a good time to buy a farm is during the drought. … The silver lining here is that some companies will gain some efficiencies by this because you always do.”

Editor’s note: Watch video of Mike Cote’s interview with Hagan Brown and Marranzino, part 1 and part 2. And look for a guest column from Pasquale “Pocky” Marranzino in the June issue of ColoradoBiz. It will kick off a series of monthly columns that will appear at and occasionally in print.

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