I belong to several email groups, virtual places where people can jibjab about topics ranging from the sublime to the ridiculous – and between wine and digital marketing, that more than covers the gamut!  From one list, one person queried the group for their thoughts on whether it is a good time to start an agency business.  As some of you know, a good portion of my adult professional career comes with a healthy dose of professional services, including:

• A 2+ year stint at Agency.com (may it RIP), from the days when it was 150 people and two offices to a public company (ACOM) with 17 offices and 1,400 people.
• A year+ stint as a freelance partner/producer of webcasts for Outrageous Media, including global webcasts of Michael Jackson’s What More Can I Give? charity concert in Munich, Germany, and Paul McCartney’s return to the Cavern Club in Liverpool, England for his Run Devil Run tour.
• Founding a digital political marketing agency, Pericles Consulting (4+ yrs)
• Founding (3rd partner) a digital marketing agency, Underscore Marketing (7+ yrs)

(I left the agency business in late 2009 to join Lotame Solutions, Inc., and will share thoughts what I’ve learned in a later post. )

So, back to the question at hand, here’s my list of 8 reasons why it could be a good time to start an agency…if…

1) You don’t mind being a pimp. An agency business — like most services businesses — scales on human capital.  If you’ve never been a pimp before – selling people for time in exchange for money, and ‘taking in’ the profit margin between what you charge and what you pay – think about it carefully first.  Scaling human capital is doable but a tough business (see #2, #5).

2) If you can embrace pimping, you can embrace pimping around the world. There are highly talented pools of foreign resources that are +6 hours ahead (of EST) that speak and write excellent English, have a potentially stronger work ethic than some US employees, and cost significantly less than US resources.  I do not recommend a services labor pool (technology is an exception) that you can’t speak with or have overlap time with during your normal course of business.

3) You emphatically reject the proposition of being paid on a commission basis. The commission model is DEAD.  Repeat…the commission model is dead.  The agency business is a services business and as such, each client engagement needs to be thought of on a project assignment basis (and yes, there are other models – % of upside, get paid hourly based on marginal personnel cost, etc.).  Let’s say you choose digital planning/buying as your forte, and you CRUSH the strat/planning part of the assignment which may eat up 40% of the time of your team, and hope that your commission on the media will pay for the planning time (+ implementation, reporting, etc.).  Then you find out that, for forces beyond your control — even beyond your direct client’s control — that budget gets sliced by 50 – 90%.  Suddenly, your margins get squeezed to just above Kelvin.

4) You can start with one client. The notion of starting your own thing without any existing business – while quaint – is a fool’s errand and one where you can eat up a lot of time/capital searching for that first client to keep the lights on.

5) You are willing to invest in technology that scales beyond human capital. Take your pick of vertical – search monitoring (something I helped build and nurture at a previous agency), mobile, ‘listening,’ BuddyMedia-lite, etc., almost anything you can point to where you can say “I built that, it’s proprietary, it scales with servers and not humans” is a critical requirement for the next successful digital agency.  While you don’t need to build it all, you need to build and stand behind something.

6) You like to sell. As one of my very best friend’s in this business told me once a long time ago, “the phone doesn’t ring on its own, you make it ring.”  You need to be out there selling, picking up the phone, and generating demand.  No matter how smart you are, or how smart you think you are, you still need to be the phone everyday and work your network, your extended network, and in many cases, cold call with a warm proposition.

7) Don’t front-load the business with Chiefs…hire Indians quickly. Compartmentalizing the work ensures that you have time to run the business (build the plane) while others manage the work (fly the plane), and some of that work can potentially be completed overseas (re: #2 above).

8 ) Cash is king. If you are in the media business, get paid up front for any new client assignment.  You pay a lawyer a retainer, and typically a good law firm asks for the first payment upfront and won’t do business otherwise.  So can you. If, as with my old company of < 20 people, we were able to get a multi-billion dollar company to pay for media and services within 45 days or less, you can too.  If you embrace this notion from the start you will save yourself inordinate amounts of time and money chasing fiscal phantoms.

If I had to do it all over again, there are definitely some things I would keep/quit/start from the get-go.  Hopefully the above provides some helpful tips for the would-be agency entrepreneur.

Eric Porres Joins Lotame as Chief Marketing Officer

Digital Marketing Veteran to Educate Market on Value of Social Data

NEW YORK, NY–(Marketwire – December 14, 2009) – Lotame, the data-driven audience marketing platform that combines social data with audience insights to deliver greater marketing accuracy and audience engagement for brand marketers, today announced that Eric Porres has joined the fast growing company as Chief Marketing Officer.

“Eric will use his respected experience to explain, position, and demonstrate to brand marketers why social data revolutionizes their approach to online marketing,” says Andy Monfried, Lotame’s CEO to whom Mr. Porres will report. “He will be our leading voice to pioneer an evolutionary change in understanding the value of social data and its resulting return on marketing investment for brand marketers.”

One of those value initiatives is having Lotame included in the comScore Media Metrix advertising networks report, which will provide greater visibility into its social audience segments. “We are looking forward to including Lotame as part of our ad networks report,” says Lynn Bolger, EVP of Advertising Solutions for comScore. “As social media becomes a more integral component of digital initiatives, comScore is committed to providing the requisite digital market intelligence required to understand the reach and behavioral profile of important audience segments.”

Mr. Porres was a founding partner of Underscore Marketing, a fully independent, full-service digital media agency launched in 2002. He helped build the team into a recognized Inc. 5000 company and expand its presence internationally. Mr. Porres is also one of the founders of Pericles Consulting, an online political marketing firm that developed and executed online marketing programs for Presidential and Senatorial campaigns across the country. Earlier in his career, Mr. Porres held management positions at AOL Time Warner, Agency.com, and LiveTechnology, and as a partner with Outrageous Media produced two of the largest Internet webcasts in history, Michael Jackson’s “What More Can I Give” concert in Munich, Germany in 1999 and Paul McCartney’s “Run Devil Run” concert in Liverpool, England in 2000.

For two years Mr. Porres served on the board of 212, New York’s Interactive Advertising Club, most recently as its Vice-President. He is an active investor and advisor to several start-up companies and a frequent panelist and moderator at leading industry events. Mr. Porres graduated from Duke University.

“Lotame built an excellent reputation in social media, and with almost two billion daily points of social data rendered in our taxonomy of human behavior, it’s a great foundation for our path forward,” says Mr. Porres. “For marketers, we are able to answer fundamental questions like: ‘Did I reach my intended audience?; Did that audience engage?; Did I have brand impact?; Do I have a model of engagement that makes sense?; and Do I have insights into what my audience does online beyond content consumption?’ Aided by our technology and publisher partnerships, we will deliver against these objectives.”

In addition to his responsibilities as Chief Marketing Officer, Mr. Porres will lead Lotame’s brand research and insights initiatives.

Lotame (www.lotame.com) integrates anonymous social media activity data (such as blogging, uploading, posting and sharing) with intent, interest and demographic data in order to generate actionable marketing insights and waste-free audience delivery. This cumulative effect results in stronger consumer engagement and better campaign results for its brand, agency and publishing partners. The privately-held Maryland and New York-based company is backed by funding from Battery Ventures, Emergence Capital Partners, Betaworks and Hillcrest Management.

• 1991 Dominus
• 2001 Paul Jaboulet Aine “La Chapelle”
• 1997 Bartolo Mascarello Barolo
• 1999 Bovio Barolo Riserva Parussi
• 1996 Lynch Bages
• 1999 Hosanna
• 1998 La Fleur Petrus
• 1998 Trotanoy
• 2003 Torbreck Run Rig
• 2002 Torbreck The Struie
• 1996 Dunn
• 2001 Casa Lapostolle Clos Apalta
• 2003 Kilikanoon ‘Oracle’ Shiraz
• 2001 Elderton Command Shiraz
• 2001 Beringer ‘Private Reserve’
• 2001 Stag’s Leap ‘Cask 23′
• 1993 Ridge, Monte Bello, Santa Cruz Mountains
• 1985 R. Lopez de Heredia Vina Tondonia Gran Reserva Rioja
• 1998 Clarendon Hills Shiraz, Piggott Range Vineyard
• 1998 Talenti Riserva, Brunello di Montalcino, Vigna del Paretaio

To treat yourself this holiday season, what are some of your favorites?

There’s a perception that Twitter will have a grip on the real-time Web, which connects customers to brands.

So what was I talking about?  Well, there’s a notion in marketing circles that Twitter is the ‘first hop’ on the information superhighway of what’s ‘en vogue’ now, and that stream of real-time consciousness is made more prescient by the never-ending-friending/following phenomenon that’s unique to Twitter.  Therefore, marketers have first look at what’s hot or not, what’s new or through, and that is valuable for market research, product feedback, trend analysis, etc.

However, a billion dollars is a ludicrous sum and I cannot justify that valuation, not at least until Twitter starts earning revenue of its own and shows a path to break-even.

• Utne Reader – Music From Your Brain

Many ad buyers are maintaining a “test and see” approach, since it’s unclear whether behavioral data derived from online social networks will supercharge ad performance or merely provide incremental improvement. “The jury is still out,” says Eric Porres, a partner at New York digital agency Underscore Marketing. “Hypothetically, it makes a lot of sense.”

This was just a small part of our conversation. Suffice to say, it’s more than just hypothetical.  Social networking data presents an extraordinary trove of untapped potential for marketers to tap into active human interests (vs. the passive experience of consuming web page content).

What do these relationships [Twitter, Facebook, LinkedIn] say about us and the people in our networks? Companies armed with rich new data and powerful computers are beginning to explore these questions. They’re finding that digital friendships speak volumes about us as consumers and workers, and decoding the data can lead to profitable insights. Calculating the value of these relationships has become a defining challenge for businesses and individuals.

It’s a great article and worth your time.  Read it here.