The setting: a hotel lobby in Seoul, South Korea. Around a smallish table sits Horizon Media president and chief executive officer Bill Koenigsberg and several of his most trusted lieutenants, including executive vice president/marketing Carl Kotheimer. The topic of discussion: a just-completed final round of pitching for the Hyundai/Kia account, which pitted Horizon against global giant Carat. The account is potentially the largest in Horizon’s 14-year history. Cut to Kotheimer for the play-by-play:
“We’re all sitting there and thinking, ‘We’re an $850 million agency and we’re going mano a mano with Carat, who are in the billions.’ But even with the size difference, we knew we matched them idea for idea, cost for cost, and person for person at every level in the organization. At one point it sort of jumped out at everybody: We were truly on a level playing field with the big factories.”
OK, the story didn’t have a happy ending for Horizon: Carat won the account. But for the team that assembled in Seoul that day, the Hyundai/Kia pitch was a crystallizing moment of sorts. And most of those execs agree that the momentum from that near miss carried through 2002.
“Throughout the year, whenever we picked up a new client, it just solidified for me that our performance in the Hyundai/Kia pitch wasn’t a fluke,” says Kotheimer, who is also general manager of Horizon’s flagship New York office. “We never think we’re out of it.” Besides, he says, he recently heard from a company that Horizon unsuccessfully pitched less than a year ago: “They’ve already asked us to come back in. Number two can turn into number one overnight.”
By most measures, 2002 was very good to Horizon, the largest independently owned media shop. While many of its bigger competitors spent the year slashing staff and dealing with the internal ramifications of consolidation, Horizon continued to hire (the company had nearly 300 employees as of mid-December) and kept chanting the client-service mantra. Once all the beans are counted, Horizon should come in ahead of its 2002 projection of $860 million in billings, which represents growth in the 20% to 30% range over 2001.
“I go to the same trade events that you do, and the people on the dais were all talking about what a tough year 2002 was,” says Koenigsberg. “I’m not saying we didn’t have clients who cut their ad spending, because everybody did, but we made up for that with new clients and new business from existing ones.”
The secret of Horizon’s success, to hear company execs tell it, isn’t exactly rocket science: client service, client service, and more client service. “We’re not about nebulous promises,” Kotheimer affirms. “We’re about getting traffic in stores and butts in seats, and building brands.”
Horizon also places significant emphasis on developing proprietary research tools. The concept of proving value is discussed in almost reverent tones by Horizon higher-ups, all of whom point proudly to specific instances in which the agency truly moved the needle. To be fair, Horizon’s client roster, replete with retail, entertainment, and direct-response clients, makes the measurement task a bit less daunting. The agency’s work on behalf of A&E Network’s Biography and The History Channel’s Secret Passages can be evaluated almost immediately courtesy of the Nielsen ratings; its retail clients report sales figures every Monday.
That said, Horizon strives to include a measurement component in every business proposal, unlike some of its more laissez-faire competitors. Horizon’s successful Ace Hardware and Jack-in-the-Box pitches, according to Kotheimer, revolved less around costs or fees than around the specific steps the agency would take to effect growth. “It’s not about ‘Did you get a good rate?’; it’s about ‘Did you move the client’s business forward?’,” he says. When asked if this mentality ups the pressure on Horizon to perform at a high level, Kotheimer cracks, “Pressure? We love it and thrive on it. We always keep score.”
And then there’s the company’s prized independence, which manifests itself in a variety of ways. Obviously Horizon doesn’t have access to the resources enjoyed by companies sheltered under the Interpublic or Havas umbrellas. But Horizon’s leaders also don’t have to answer to increasingly frustrated stockholders, few of whom care about client needs or employee morale so long as the balance sheet looks healthy. “The independence thing becomes a service issue, really,” Kotheimer explains. “So many companies are cutting back on staff in order to meet the bottom line. We’re hearing a lot of ‘Our previous agency laid off the lead guy on our business’ from clients. When you’re independent, you don’t have to look at the stock price every 10 minutes.”
Adds vice president and director of media planning Eric Blankfein: “Size matters very little. If you’re a huge global company owned by a conglomerate, you better be getting your hands dirty every day, because you know that there are people like us nipping at your heels.”
If you get the sense that Horizon execs are at once proud, passionate, and even a bit defensive about the size and independence issues, you’re not too far off the mark. Indeed, they fervently believe that industry-wide consolidation has actually played right into Horizon’s hands and contributed substantially to the company’s recent successes. The rationale is that consolidation has reduced the overall number of players, giving advertisers fewer top-shelf agencies from which to choose as well as creating bucketloads of client conflicts of interest.
Koenigsberg, for one, freely admits that he respects and admires what a handful of Horizon’s competitors — he specifically mentions Starcom, Zenith, and Carat — have accomplished during the last year or two. On the other hand, he suggests that Horizon has benefited greatly from competitors’ — especially larger ones — being preoccupied with non-client-related issues. “They’re busy hiring chief risk officers and trying to figure out how to get their margins up,” Koenigsberg says. “I hope that by the time they get their acts together I’m a $3 billion company. I think our thinking has been borne out by the accounts we’ve won and the pitches we’re invited to.”
In 2002, Horizon netted the $100 million Jack-in-the-Box planning and buying account, trumping Mediacom, incumbent Carat, and others in a competitive pitch. The company also won $50 million in business from Ace Hardware and nearly $20 million from Mutual of Omaha, and expanded its 14-year relationship with NBC (Horizon is now the agency of record for the media behemoth’s network radio, national cable, and spot cable).
Koenigsberg points with pride to Advertising Age’s naming Horizon senior vice president/director of research Brad Adgate as one of its so-called media mavens. “They basically said that Brad is the best research guy out there,” he says, beaming. “It meant a tremendous amount to the company.” One of the innovations that led to Ad Age’s accolade was a new monthly series of online surveys designed to tap into the current consumer mindset.
This past year also saw edgy guerrilla-marketing campaigns for a handful of The History Channel’s original programs, including a Secret Passages blitz in major cities that featured street decals and what a Horizon press release refers to as “restroom domination advertising.” The guerrilla component of the campaign was supplemented with viral email marketing, an on-air sweepstakes, and a radio trivia tie-in; without such support, Horizon execs suggest, guerrilla tactics are little more than clatter.
“We’re big on guerrilla marketing where it’s appropriate, but it’s not exactly a strategy for, say, Mutual of Omaha,” Kotheimer cracks. “For The History Channel, it was a natural fit. Viewers have a smorgasbord of choices every night, so it was essential to design a program that would capture attention in a dramatic way.” Blankfein credits Horizon’s client roster for embracing non-traditional programs. “A lot of agencies bring good ideas to the table, but you’ve got to have clients who will buy into them.”
As for where the company could stand to improve, Koenigsberg acknowledges that Horizon’s relatively small presence overseas (the company employs eight people and services roughly $50 million in business from its single non-U.S. office in Amsterdam) may have been responsible for its second-place finishes in the Hyundai/Kia and $100 million Schering-Plough derbies. “In the unlikely event that I were to sell the company, one of the reasons would be to get a stronger global presence,” he says. “But it’s not like global dominance is one of our major goals. We’re just a little guy trying to do a good job.”
Of course, if Koenigsberg hits his 2003 goal of $1 billion in billings — which would require growth in the 17% range, modest by Horizon’s recent standards — the company may have to retire its “little guy” pretenses. “To be perfectly honest, if we’re not at $1 billion by the end of 2003 I’ll feel that we didn’t meet expectations, even though hitting a number is not how we measure our success,” Koenigsberg admits.
Given the company’s satisfaction with its performance during a sluggish 2002, it’s not much of a surprise that few large-scale changes are planned for 2003. Koenigsberg anticipates solid results from Horizon’s direct marketing/direct response unit and plans further investment in research tools. Expansion, either via buying a smaller firm or opening new offices, is not currently on the company’s agenda, though Kotheimer acknowledges that Chicago would be a natural fit.
Looking at the bigger picture, Horizon’s top minds have more than their share of ideas as to where the business is heading in the months ahead. Kotheimer tags telecom — surprise, surprise — and entertainment as hot properties in the months ahead. “With entertainment, you’ll see the studios following the Spider-Man model,” he predicts. “The campaigns will start earlier and run longer, and they’ll be spending more per film.” He also has high hopes for travel (“It’s been a tough year, but sooner or later they’re going to have to spend some marketing dollars”) and automotive (“The manufacturers are in a place right now where they’re going to have to up the ante”).
Like everybody else, Horizon is struggling with the question of what the media landscape will look like when viewers can skip over commercials. TiVo isn’t seen as an immediate threat — “It hasn’t met expectations,” Koenigsberg says flatly. Ultimately, the company is ready to embrace the revolution, whether it occurs tomorrow or five years from now. “It’s going to happen sooner or later, whether via the satellite receiver or stand-alone units.”
Though Horizon’s soothsayers are hesitant to proclaim that the advertising recession will end in 2003 — by way of explanation, they cite minimal job growth and fears of a war with Iraq — they see pockets of strength in a handful of categories. Koenigsberg is particularly bullish about outdoor. “In the big metro areas that allow it, outdoor has become a form of entertainment — just walk around Times Square or take a drive down Sunset Boulevard in Los Angeles,” he says. “Before, outdoors was underused even though it is relatively cost-effective. Now, advertisers are breaking through with substantially better creative than what we’ve seen in the past.”
The consensus Horizon prediction is that national broadcast will remain relatively strong, with local broadcast generating only low-single-digit growth. Radio should inch up a bit (“It’s not going to lose much ground,” Blankfein predicts), while Koenigsberg believes that the “lull on the interactive side of things” could end as soon as media planners and buyers are able to show better ROI. Blankfein’s expectations for the Web are more modest: “Me, I’m just enthused that clients aren’t saying ‘I don’t want to get anywhere near the Internet’ anymore. After what we’ve seen recently, that passes for good news.”
Horizon’s experts anticipate only marginal growth in newspapers and magazines. “If retail turns around very briskly, I think you’ll see newspapers pick right up. But they’ll be lagging behind the others in 2003,” Blankfein says. As for magazines, Koenigsberg remarks, “Look at how many get launched and how many fail — there’s your barometer.” Blankfein is slightly more optimistic: “You’re not going to see the same turnaround that happened in TV, but it will happen eventually. The growth, whatever little we see, will be gradual.”
Finally, no story about Horizon’s outlook for the future would be complete without the requisite speculation about its ownership status. “Every time I get interviewed, people ask when I’m going to sell the company,” Koenigsberg says. When the reporter humbly concedes that yes, that was among the many topics he was hoping to probe, Koenigsberg laughs. “I didn’t mean to imply that I wouldn’t answer it. Anyway, my answer is that as long as we continue to outperform the competition, I don’t see any reason to go that route.” He pauses for just a second before adding, dryly, “Well, other than some nice personal rewards.” One gets the sense that for Koenigsberg and his Horizon peers, just being in the media business is reward enough.