Waiting game: Rick Hodges has built a company by customizing messages that callers hear while on hold.

ONE day in the late 1970s when Rick Hodges was selling advertising for a Santa Monica radio station, he was waiting to talk with a client and listening on hold to a radio broadcast that the business used to fill the dead air.

Suddenly, he couldn't believe what he was heating: an advertisement from his client's competitor.

"It just gave me a stomachache," said Hodges, who could only think about the opportunity lost for his client to sell to a captive audience. "I kept thinking there ought to be a way to put that store's own information up there."

Thus, in 1980, the custom on-hold message industry was born when Hodges founded Audio Marketing Systems Inc., now based in Culver City. But that was a long time ago, and since then many competitors have jumped into the market following technological advances that made it easier for companies to have professionally recorded customer messages.

Hodge's, though, has hardly stood still itself.

The company's first product used an eight-track tape player hooked up to a device that could detect a 24-volt drop in a business' phone line, signaling no conversation. It required around 50 wires to connect to a phone system.

Today, the technology is all digital, with Audio Marketing able to download a series of 45-word messages to a client's phone system over the Internet on an automated schedule to coincide with holidays and special sales (though many clients still prefer to receive a CD in the mail.)

And as competitors began entering the market, the company branched out into new ventures, including in-store broadcasts over a store's public address system. Earlier this year, the company also launched VoicePaint.com, a bundled service that includes access to voicemail prompters, Web site voiceovers and satellite audio.

Currently Audio Marketing racks up $1.5 million in annual sales. There are 3,000 locations nationwide, but the core client base remains in Southern California.

"We call him the Godfather of message-on-hold, because he basically started it as an industry," said Otto Mehrgut, president of New Orleans-based competitor Profit-on-Hold.

Regional firm

In his own marketing, Hodges points to industry studies indicating nearly 70 percent of all business calls get put on hold, and 90 percent of those who hear only silence will hang up before 40 seconds. Music may get them to stay at least 30 seconds, but a combination of music and message can keep a caller engaged for up to four minutes.

"This business is pretty simple, but the subtleties will make or break you," he said. "This isn't radio or TV advertising. You've got to keep the messages short and succinct so that callers are informed and when they get off hold and are talking with a live person, they start asking questions about what they heard."

Audio Marketing's latest innovation, VoicePaint.com, costs customers just $69 a month; access to satellite radio comes at a premium. The base fee is just under that of his major national competition, publicly held Muzak Holdings Ltd. of Fort Mill, S.C. Other companies in the sector are largely regional players like him.

"I built this business on onesies and twosies and found out the hard way that this is a better way to grow," said Hodges. "If you rely on a national client with lots of locations, a new management team could come in and cancel your contract just like that."

Unlike some early competitors from the phone equipment industry, Hodges didn't sell his messaging equipment. When a customer would return a unit, he would recondition it for use by the next client. That kept costs low for him and made his service affordable to a wider audience.

"The product is not the box," he said. "The product is the software. It's the content we provide, the talent we put into creating the messages."

Audio Marketing's in-store audio isn't limited to a business' public address system. At the Sagebrush Cantina in Calabasas, the voice of Bill the Buffalo, a life-size mounted trophy with a mechanical jaw, comes courtesy of Joe Westerberg, one of Hodges' veteran voice actors. A flash memory card uploads new messages about featured menu items alternating with hearty quips from the buffalo.

One of the company's mainstays is the automotive parts industry. It dates back to Hodges' first client, a warehouse distributor called Don's Supply whose owner was an old friend of Hodges' father, who operated a service station in downtown L.A.

Leopard skin

Hodges opened his first audio studio above a furniture store. As the business grew in the late 1980s and he took on a business partner, they leased space in a modern Culver City office building. As the partnership began breaking up in 2000 and the post-9/11 economic downturn slowed business, Hodges decided to retrench and shuck the corporate atmosphere.

Three years ago, he found an anonymous office space in an office park north of Loyola Marymount University. Over the course of a few weeks, he turned the drab interior into a Polynesian paradise with bamboo and fake leopard skin furnishings, tiki tchotchkes, and a surfboard countertop in the employee kitchen. Sharing space with the recording studio and mosquito-netted staff cubicles is Hodges' convertible, which he has rigged to play audio messages at trade shows.

"One thing I decided after the breakup was that I was going to have fun at work from now on and my employees would too," he said. The company has about eight workers, with Hodges' three top voice actors working out of home studios he had built for them. A separate sales office is based in Colorado.

Most clients take advantage of Audio Marketing's stable of scriptwriters and voice actors to record their messages. Other business owners, like Larry Miller, chief executive of Southland mattress discounter Sit 'n Sleep, prefer to go into the recording booth themselves.

Miller, who has created a distinctive corporate identity for Sit 'n Sleep with a comic marketing campaign featuring himself and an accountant character named Irwin, is one of Hodges' oldest clients.

"I hate to listen to dead air when I'm put on hold," Miller said. "(Audio Marketing) gives us the chance to market to our customers, entertain them and keep them engaged while they're waiting."

Audio Marketing Systems Inc.

Core Business: Telephone audio played for callers on hold

Year Founded: 1980

Employees in 2005: 8

Employees in 2006: 8

Goal: To be the kind of company that competitors want to copy

Driving Force: Businesses missing the opportunity to market to callers waiting on hold