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McClatchy-Tribune  05/12/2014 8:26 AM ET
High times for Austin's advertising sector [Austin American-Statesman :: ]

May 12--

An October day in 2007, in a staff meeting at advertising agency GSD&M's offices, might have been the darkest moment for Austin's advertising sector.

On the cusp of a national recession and having just lost AT&T, its biggest account, top executives of GSD&M -- Austin's largest ad agency -- were about to inform hundreds of workers they were losing their jobs.

The agency, which had started that year with nearly 900 workers, would shed 335 jobs by year's end.

"We experienced what I like to call our tsunami," recalls GSD&M CEO Duff Stewart. Losing the AT&T account "represented a sizable portion of our revenue. We needed to focus on rebuilding for the future."

For GSD&M and the rest of the Austin advertising sector, that future has arrived.

Emerging from the economic downturn, Austin ad agencies have seen their employment levels jump to the highest point in 10 years. In 2013, Austin had 2,296 ad agency workers, up 39 percent since 2003, according to Moscow, Idaho-based Economic Modeling Specialists International.

Perhaps more importantly, experts say, Austin's advertising sector is no longer laboring in the shadow of larger neighbors Dallas and Houston.

"Austin is the center of 'The Rise of the Creative Class,'" said Neal Burns, a University of Texas advertising professor, referencing the 2002 Richard Florida book on the creative community. "Austin has the right kind of petri dish for advertising and is able to flourish. It has the legacy and the history of advertising being successful in Austin, and that's important."

GSD&M has been in the middle of that history. The agency's painful cuts of 2007, while not forgotten, are a distant memory. Since 2009, the agency said, its business has boomed, with new clients now accounting for 73 percent of GSD&M's roster. The company now has 465 employees in Austin. In addition to longtime clients such as Southwest Airlines, the firm has added more than a dozen accounts in the past two years, including brands such as Zales, Walgreens, RadioShack and a few packaged goods products from Campbell's "innovation" line.

"The Austin advertising market is on an upward trajectory and poised for continued success," said GSD&M's Stewart. "We see more brands and agencies wanting to bring their business here as the city has an attractive creative culture, talent pool and provides ample opportunity for growth in areas like digital and mobile technology."

The surge in Austin's advertising sector is in line with what's happening around the nation. U.S. advertising agencies in 2013 reached their highest employment levels in at least 10 years, according to a new Ad Age study. U.S. advertising agency employment reached nearly 200,000 workers last year and is "on track for another year of moderate growth in 2014," according to the Ad Age DataCenter analysis, which detailed results for more than 900 agencies surveyed for the report.

"Back in the dark days of 2009, ad agencies in aggregate were cutting an average 41 jobs a day," the Ad Age report said. In 2013, "agencies added about 18 jobs a day."

In Austin, the sector's rebound hasn't been limited to GSD&M. Area firms such as LatinWorks, McGarrah Jessee, Tocquigny and T3 are also flourishing.

LatinWorks, which has 160 workers and specializes in multicultural advertising, has been named one of the top agencies in its niche for the past several years. Along with longtime clients such as Anheuser-Busch and Lowes, it has added Target, Heinz, PepsiCo and Jamba Juice in recent years.

"We're very excited about the future that Austin holds for LatinWorks," said LatinWorks CEO Manny Flores. "We wouldn't be based anywhere else. I truly believe we have an edge being based here."

Austin agencies say they are making inroads in key growth areas such as digital advertising and "experiential" ads, which let consumers experience particular brands.

McGarrah Jessee executives say they are zeroed in on the growth in digital, which includes Web and mobile device ads. By 2012, those areas marked the fastest-growing part of the firm's business. That year, the firm bought local digital firm Exopolis, which specialized in Web and mobile development and design, social media strategy, motion graphics and online media planning and buying.

McGarrah Jessee, founded in 1996 by two former GSD&M staffers, has grown from 68 workers in 2009 to 104 today. Although it's known for its work with longtime clients Shiner and Whataburger, it's also added customers such as natural pet foods provider Merrick Pet Care as it continues to grow its client list.

"Our growth in employees is consistent with what you are seeing -- maybe a little bit better," McGarrah Jessee spokesman Eric Webber said. "And what I can tell you is the growth, in terms of the people who are in the digital space, is directly related."

As firms such as McGarrah Jessee "knock it out of the park," new agencies continue to move here and talent continues to grow, said Burns, the UT advertising professor.

"You've seen some interesting growth, and we've had a number of new advertising agencies since 2009," Burns said. "Things are looking far more positive."

Staff writer Dan Zehr contributed to this report.


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