Closing in: two big ad agencies compete with smaller entities that are after their market shares.

Everything is big in Alaska. So when market research revealed that local fast food customers were hungry for a Big Mac that was even bigger, The Nerland Agency--the advertising firm tasked with promoting the golden arches statewide--came up with the idea for the McKinley Mac, a custom version of the popular 40-year-old sandwich, but with more meat and more sauce. The namesake product, available only in Alaska, was as heavily marketed as the latest teen idol, appearing in TV, radio and newspaper ads, on city buses, in movie theaters and inside every McDonald's restaurant. The name of the sandwich, the tagline "Everything is big in Alaska," and the promotions, all the creative and strategic thinking of the well-known advertising agency, resulted in 50 percent more sales than expected and continues to outsell baseline projections. According to President and CEO Rick Nerland, he's lovin' it: today, the promotion is a model approach for the mega-franchise and continues to receive national attention.

GENERATING 'BUZZ'

Besides the typical footage of wildlife and scenery all set to inspirational music, the Alaska Travel Industry Association (ATIA) charged its long-term advertising agency Bradley Reid + Associates with thinking of a head spinning-way to convince baby boomers to visit Alaska sooner than later. Known for going to the creative edge, President and CEO Connie Reid reminded Outsiders that there is no reason to wait by launching the Alaska B4UDIE--Alaska before you die--billboard campaign. When the 14-foot by 48-foot signs, made to look like Alaska license plates, appeared in Seattle, Los Angeles and Minneapolis, the ads were mentioned by Jay Leno during his monologue on The Tonight Show and the campaign was covered by almost every single newspaper in the country. They were the subject of a poll on AOL.com, in which 75 percent of respondents said their opinion of the pitch was highly favorable, and the national Web site set up as part of the effort received 1,000 hits per hour, generating media exposure valued at $15 million. "We wanted to generate some buzz," Reid says of why she came up with the idea. "And we knew this would make peoples' palms sweat a little bit."

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Although it is big clients like Alaska McDonald's and ATIA that continue to keep The Nerland Agency and Bradley Reid + Associates locked in position as the state's two largest advertising and public relations firms, as Alaska's business climate grows, so do the number of smaller firms and sole proprietors rounding out the state's growing advertising industry and clamoring to handle the increasing marketing needs of mom and pop businesses, government entities, and companies in the state's largest industries. Statewide there are about 10 full-service agencies and countless freelancers competing for the work. Although they are not currently on the same professional playground that agencies like Nerland's and Reid's have dominated for more than 30 years, collectively they comprise a multi-million dollar industry that employs hundreds of well-paid artists, writers, TV and radio producers, account managers and support staff.

"The advertising industry creates value," Nerland says from his downtown Anchorage office. "That's our first responsibility. Whether you're marketing Alaska seafood, an Alaska experience, or an Alaska product, if you can increase the perception of the value of a product and influence consumers to try that product, or stay with that product, it grows the business. If you help a business grow you are helping the economy grow. That makes more jobs and more opportunities for Alaska."

LottsfeldtSmith, Marketing Solutions, Northwest Strategies, Porcaro Communications and Walsh Sheppard are five smaller, similar-size Anchorage agencies that range in size from about 10 to 20 employees with average annual billings of anywhere from $3 million to $6 million, compared to larger staffs of 30 to 35 employees and annual billings that flex between $10 million and $40 million. Although some smaller agencies have goals of one day rising to the top ranks, most of the agency CEOs will tell you that annual billings and number of employees are immaterial and the quality of the work is what determines who is the best.

'SMALL IS BEAUTIFUL'

"We believe small is beautiful," Jim Lottsfeldt, president of LottsfeldtSmith, says of his self-described boutique agency that has grown to about 10 employees since 1991 when he went into business for himself. "We would rather have a waiting list of clients than to chase every piece of business that comes down the road. A lot of agencies tend to be traditional: 'You want an ad, we'll make an ad.' We try to back it up and say 'Do you even need an ad?'"

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Although each firm has a slightly different business model, across the board they all say that what makes them better than the other firms is that they have a diverse client base, their campaigns are strategy driven, they exceed customer service expectations, and their work produces measurable results, rather than being only creative. While small agencies can grow up, the "rich get richer" phenomena continues the cycle: big clients typically require the level of service that can only be provided by larger agencies who have the staff to dedicate to an account, and it is these larger anchor accounts that have the marketing budgets to produce high-end work with costly media placement schedules. Although corporate giants such as ConocoPhillips, BP, AT&T Alascom, GCI and the University of Alaska tend to invest in one agency and keep their business with that firm for years, from time to time a client-agency relationship will dissolve and the smaller firms pounce.

There is a saying in the industry reflecting client sentiment when it comes to paying advertising agency fees that average $100 per hour: "Half of everything I spend on marketing is a waste of money. If I only knew which half it is, I'd cut it." In past years, the approach to developing ad campaigns has been to "grip it and rip it," with the focus on campaigns that were creative, but not necessarily credible. Today, agency CEOs agree, as marketing budgets have declined, client expectations have evolved and there is greater emphasis on producing work that is based on market research and will deliver measurable results, whether a campaign goal is to improve the image of a company, sway public opinion, or sell products and services.

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RAISING THE 'BAR'

"The bar is higher in terms of what clients expect to be able to measure," Tim Woolston, president and CEO of Northwest Strategies says. "So much of what we do is kind of squishy--we have to be able to show that our plan is the right plan, then show them that it's working. Companies today--small and large--understand that once their precious marketing dollar is out the door it's never coming back and they need to maximize those dollars."

While technology has played a key role in making the industry better, faster and cheaper, at the same time it has completely changed consumer and business behavior, competitiveness and business models. "The digital world has exploded over the past few years," O. Burtch Drake, president and CEO of the American Association of Advertising Agencies (AAAA) says, adding that the organization is focusing on helping member agencies prepare and capitalize on the new innovations emerging every day.

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THE WEB ADVANTAGE

The Internet not only puts consumers in control of what and how they consume content, but also integrates community, participation and interactivity into the media experience. New advertising models are emerging on the Internet, on mobile devices, in video games, and on public displays and failure to adapt to changing technology and user behavior will prove deadly for companies. Industry academics agree that ad agency executives need to be asking themselves: what technology is being developed today that will help clients tomorrow? "New media advertising" and digital opportunities such as Internet advertising, IPTV advertising, Internet TV, mobile TV advertising and in-game advertising are expected to collectively reach more than $31 billion by 2011.

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"Figuring out how to stay ahead of yourself is a never-ending challenge," Nerland says. "When looking at what the best solution is for marketing a client the question has changed to 'How do we solve this problem?' Not 'How do we solve this problem using the traditional tools?'"

Technology has also eliminated the geographical challenges for Alaska, Mike Porcaro, President and CEO of Porcaro Communications says. In addition to his Anchorage business, he has a firm in Vancouver, British Columbia, which he and his local staff can work for virtually. Porcaro is also the only firm in Alaska that has a separate public relations firm, Bernholz & Graham, dedicated to communications and specializing in public and media relations, special events, strategic marketing plans and creative planning.

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Technology is also a symptom of the increasing number of sole-proprietor freelancers who are able to compete against agencies for work by assembling a virtual team of consultants, including copywriters, graphic designers, web developers and project managers.

Dawn Gerety, a full-time freelance graphic artist specializing in logo development, print communication and Web site design, has been in business for 12 years and has statewide and national clients including Alyeska Resort, Anchorage Convention & Visitor's Bureau, Koahnic Broadcast Corp. and The Kuskokwim Corp., and she also freelances for local ad agencies. Gerety says her clients appreciate her big agency experience, without having to pay the higher rates resulting from overhead costs. When she first went out on her own, she says, her only goal was to be able to have enough side work to quit her job and work on her own for the summer. Since then, she has made anywhere from $50,000 to $75,000 a year, depending on how hard she wants to work.

"I want my accountability to be the quality of my work, not whether I punch in and work my set hours," she says from her Girdwood home-based office. "Being on my own has increased my quality of life and I'm proud to say that all the work I've done is my own."

Marketing Solutions, a 14-person firm run by President and CEO Laurie Fagnani, also grew from a one-person business she started 10 years ago when she took on a couple of clients to get back into the industry after taking time off to stay at home with her children.

'ONE CLIENT AT A TIME'

Since then, she says, "Growth has been one client at a time." The growth of the advertising industry over the past 20 years, she says, is a direct result of the level of service the big agencies are not delivering, and smaller firms like hers are benefiting from clients who want a level of personal service large agencies may not provide.

One of the fastest-growing agencies with 20 employees and billings of about $6 million, Walsh Sheppard is known in the industry for carving out a growing client base in the Matanuska Valley with a portfolio that includes the Matanuska Telephone Association, Matanuska Electric Association and the Valley Hospital Medical Center in Wasilla, in addition to several other statewide clients. Pat Walsh and her son Jack Sheppard are partners in the only family owned and operated agency in Alaska.

"It's a funny thing," Walsh says from the agency's new downtown offices. "As a family business, we were always very shy about telling people that because we thought it would impact hiring because they would think that working here would mean a lot of favoritism, but in our thinking 'family business' has always meant the whole group and we're just all in this together."

Editor's Note: Heidi Bohi has been an award-winning senior copywriter and creative director for advertising agencies in Anchorage and nationwide since 1995. She started her own business, Writing World Headquarters, in 2001.